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Prestudy Russia eCommerce Growth 27.10.2015

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Prestudy Russia eCommerce Growth 27.10.2015

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Prestudy Russia eCommerce Growth 27.10.2015

  1. 1. How to benefit from 25 million Russian online shoppers Anna Vetrova, Finpro Russia & Kazakhstan 27 October 2015
  2. 2. Russian Market
  3. 3. Total potential market 100 million people © Finpro3 25 % shop online 7 % shopped online 42 % online, do not shop 23 % are offline Potential for Growth 11,1 13,0 16,6 21,2 27,0 34,3 43,6 2014 2015 2016 2017 2018 2019 2020 Forecast of domestic online sales, billion euros Source: Data Insight www.datainsight.ru
  4. 4. Ecommerce market Russia: volume & value © Finpro4 Online sales, RUB billion (2014) Direct B2C cross- border Number of orders Value of orders rate 50,5 China 35 million 900 million € Other countries’ e-retailers 15 million 800 million € 1,7 bln € (13 %) CROSS-BORDER DOMESTIC 50% 50% USA: mainly electronics, average purchase 100-150 $ Europe: mainly clothing, leaders are brands from Italy (yoox.com) and casual from the UK (asos.com) with average purchase of 200- 250 €. Source: Data Insight www.datainsight.ru
  5. 5. Ecommerce Russia: 5 Key Trends 1. Cross border: growing share of Chinese online stores 2. Availability: faster delivery + decrease of the shipping costs 3. Commonness: growing share of inexpensive orders, including FMCG segment 4. Mobility: growing number of orders submitted on mobile devices 5. Brands and loyalty: growing # of repeat purchases, growing importance of retailers’ brands 5 © Finpro
  6. 6. Product categories
  7. 7. Growth leaders and potential Fastest growing product categories* – Food & beverage +55 % – Furniture +35 % – Pet supplies +30 % – Medicines, medical supplies 20-25 % – DIY supplies 20-25 % – Sporting goods 20-25 % – Consumer electronics 20-25 % – Books 20-25 & – Tickets to events 20-25 % * (growth of traffic in 1H 2015/1H 2014; median across the stores in TOP-1000 list) The market growth is expected in the categories with – low share of online sales at the moment – high buying frequency (FMCG) The following categories meet the criteria: – Low share of online sales at the moment – Food & beverage – Pet supplies and detergents – Household goods 7 © Finpro
  8. 8. Customers in Russia
  9. 9. Operates in RU-NET (Russian Internet) © Finpro9 Search traffic, web-sites in the category products and services 62 % 31 % 5 %2 % Yandex Google Search.mail.ru others Socialize in Vkontakte По-русски Largest social media and the most visited site in Eastern Europe. Vkontakte audience: • 270+ million accounts • 62+ million average daily users Source: Data Insight www.datainsight.ru
  10. 10. High loyalty to shops but fierce competition © Finpro10 44 % 4 % 25 % 27 % competition of stores loyalty purchases Knew in advance at which particular store they would make a purchase Did not plan this purchase - online store offered/ recommended this product Choose from several shops’ offering Did not know where to buy the product (price competition between shops) Source: Data Insight www.datainsight.ru 150 000 internet shops in Russian Internet Only 4000 receive more than 10 orders daily
  11. 11. Great service and usability required © Finpro11 Fast delivery with various options: courier, sales agent with try-on option, pick-up at various locations, postamat, delivery service, Russian post Payment options: • Cash on delivery (still 50-60 %) • Card on delivery • Card pre-payment • E-money • Offline prepayment Return management: • Majority is not executed orders (yet unpaid) • Pre-paid orders returns <3% Customer-centric approach Client service & support
  12. 12. Quick adoption and progress • Online payments are getting more common: Yandex.Money, Kiwi, PayPal, bank cards, loyalty programs with payment options • Mobile purchases: driven by women 20-30 with kids (can buy online from smartphone) => responsible for 2/3 of household purchases • Cross-border shopping via middle-man companies warehousing in USA & EU, deliver from Amazon, Ebay, Taobao, etc • BRINGO: online platform to distribute couriers. Delivery via a “bringer” – new approach © Finpro12
  13. 13. Russia is much more than St. Petersburg Online sales is the most popular in Moscow and St. Petersburg: – 44% of residents (aged 18-65) buy goods online as compared to the national average of 26% 85% of all sales concentrated in European part of Russia (2000 km around Moscow). 18 cities with more than 1 million citizens are growing their share in ecommerce together with smaller towns. © Finpro13 Source: Data Insight www.datainsight.ru
  14. 14. How to get on board
  15. 15. How you can get to the Russian market © Finpro17 Your Expenses Selling B2C cross-border Contracting e-retailers in Russia Establishing presence in Russia Marketing in Russia Managed by e-retailer for a fee up to 25% Customer service & support Payments Deliveries & returns Customs Applies to receiver >1000 € Legal issues (personal data law) Not applicable Not applicable You are in charge Risk Medium Low High Personnel required None or few None or few Team Potential sales volume
  16. 16. Food for thought 1. Almost all cross-border purchases are 100% pre-paid. Returns are <3%. 2. Private citizen of Russia can import up to 1000 € per month with no duty. 3. High-end and luxury goods are in demand and Finland is known for high quality goods. Such demand is concentrated in Moscow. 4. Contracting local e-retailer is the easiest way to penetrate the market. 5. Numerous service providers for everything are looking forward to partners. © Finpro18

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