The document summarizes research on cross-border e-commerce, including: - Cross-border e-commerce is a growing market in Russia, particularly from China, but data is inconsistent due to different sources and definitions. - Joint purchases from China are popular, as are "showrooming" and reselling purchases. The typical cross-border shopper is aged 25-34. - Global cross-border e-commerce is expected to triple by 2018, with China playing a major role. Case studies show opportunities and challenges for countries, companies, and shoppers. - In conclusion, the document recommends that Russian companies exploit the opportunities of cross-border e-commerce rather than fearing threats from foreign

1. Cross-Border E-Commerce:
Russian and International Experience, Opportunities & Threats
October 2013

2. Content
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About Hermes – 3 slides
Cross-border e-commerce in Russia: volume, dynamics – 5 slides
Russia’s regions cross-border unique features – 3 slides
Audience socio-demographic characteristics and customer opinion – 4 slides
Global cross-border e-commerce – 3 slides
Country cases – 4 slides
Conclusions: cross-border e-commerce opportunities & threats – 4 slides

3. About Hermes

4. Hermes in European Delivery B2C Market (num. of parcels)
Others
Source: Statista

5. Volume Comparison: Hermes vs. Russian Post

6. Hermes NexTec
– e-commerce projects development for clients: platform,
logistics, payments, digital marketing, client support services, etc.
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Hermes NexTec countries of operation: the EU, USA, China, Brazil, Russia.
– Launching e-commerce projects for global
brands in the Russian Internet.
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The unique e-commerce experience of Otto Group & Hermes.

7. Cross-Border E-Commerce in Russia

8. Russia’s E-Commerce Market Volume (2012)

9. Cross-Border E-Commerce Data Sources
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Customer surveys
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State institutions
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Market players
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Delivery companies
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Experts

10. Cross-Border E-Commerce Facts Mismatch
orders per year
orders per day
orders per day
of orders
per year
of orders per day
parcels per year
of orders per day
Source: companies ‘ data, Russian Post, Federal Customs Service
cross-border
e-commerce
market volume

11. Data Mismatch Reasons
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Mixture of B2C and B2B cross-border e-commerce markets
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Joint purchases
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Mail forwarding companies consolidate 5-10 orders in 1
parcel
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Russian Post’s cross-border delivery market share steadily
decreases, it means the less centralized statistics

12. Growth Dynamics
Experts forecast 30-50% of the cross-border
B2C delivery market growth (in num. of
parcels).
China-Russia direction growth rate is expected
to reach 100%.
According to the financial projection the crossborder e-commerce market might be up by 6080% in 2013.
At year-end 2012 a share of parcels
coming in Russia from China in the total
amount has risen from 8 up to 17%
(Russian Post’s Data).

13. Russia’s Regional Cross-Border E-Commerce Particularities

14. Joint Purchases(JP)
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750 000 search queries about JP per month
Internet interest in JP has risen 2.5 times within 2 years
Typical cross-border JP in Russia:
- A dozen of purchasers is united in one order by a private facilitator
- Parcel weight – 15-20 kg
- Delivery cost - $10-15 per 1kg
- Dispatching point – China
Source: Hermes NexTec, Yandex

15. Cross-Border Showrooming
Showrooming is still a phenomenon of big
cities.
The
cross-border
showrooming
is
especially popular for apparel & footwear,
personal electronics.
The product line stretching in offline retail
ironically provokes showrooming.
Client services and marketing to some part
might help the offline retail.

16. Cross-Border Purchases Re-Sale
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More than 100 000 private classified ads aiming to resell cross-border purchases
appear in the Russian Internet monthly.
The most popular reason for reselling is «It doesn’t fit».
It’s easier to resell than to return or to change.
Sometimes it’s a kind of business.

17. Audience Socio-Demographic Characteristics & Customer Opinion

18. Age of Cross-Border Purchasers
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A considerable part of the cross-border audience – 25-34 yo.
Source: Hermes NexTec Russia, websites statistics

19. Gender of Cross-Border Purchasers
Source: Hermes NexTec Russia, websites statistics

20. Cross-Border Purchasers Opinion (about China’s e-shops)
Source: Hermes NexTec Russia

21. Cross-Border Purchases Opinion (about US’s and EU’s e-shops)
Source: Hermes NexTec Russia

22. Global Cross-Border E-commerce

23. Cross-Border B2C E-Commerce 2013
World facts (2013):
B2C e-commerce ≈ $1 298 bln
B2C cross-border e-commerce ≈ $209 bln
One expects the cross-border B2C ecommerce to triple by 2018.
China will provide the greatest contribution in
a growth rate.
Source: eMarketer, Nielsen, Hermes NexTec Russia

24. Most Popular Cross-Border B2C Products

25. Leading Cross-Border B2C E-Commerce Markets
Source: Hermes NexTec Russia, eMarketer, Nielsen, PayPal

26. Country Cases

27. China
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There are 18 mln of cross-border purchasers in China.
The Chinese shoppers prefer to buy goods via the Internet in the US
(84%), Hong Kong (58%), Japan (52%), the UK (43%), Australia
(39%).
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The cross-border B2C e-commerce export is equal to $ 18.2 bln.
95% of cross-border e-commerce export qualify as B2B ($376 bln).

28. China’s Cross-border E-commerce Inspiration
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China sees the huge development opportunities in
the cross-border B2C e-commerce.
Since 2012 China pursues an active policy of the
cross-border retail stimulation.
5 industrial estates specialized in the cross-border ecommerce are already founded.
A simplified procedure for the cross-border retail
payments is also adopted.

29. Canada
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30% of the retail e-commerce account for cross-border.
This share is expected to rise even further.
68% Canadian shoppers buy goods via the Internet from
abroad.
Prices in Canada are on average 30-40% higher.
The cross-border retail skewness costs Canada $20 bln
yearly, thereby the Canadian treasury receives $8-10 bln
taxes less.

30. The EU
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In 2013 the cross-border online retail sales are expected to reach $47 bln. It
amounts to 11% of total B2C e-commerce volume.
38% year-on-year growth rate.
1/2 European purchasers buy online.
1/3 online shoppers are the cross-border e-commerce market participants.
60% of cross-border order attempts within the bounds of the EU are not
successful due to technical and legal reasons.
Still there is no integrated e-commerce space in the EU.
The European Commission has developed and finally approved The
Common European Sales Law (CESL) being a uniform set of EU-wide
rules for cross-border sales (September, 2013).

31. Conclusions: Cross-Border E-Commerce Opportunities & Threats

32. Cross-Border B2C E-Commerce for States
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Price spread means cross-border ecommerce export growth (China)
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Price spread means cross-border ecommerce import growth (Canada)
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Economic benefits (China)
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Economic losses (Canada)
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Tax benefits (China)
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Tax losses (Canada)
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Legal regulation
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Customs regulation
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Infrastructure development

33. Cross-Border B2C E-Commerce for Shoppers
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Price reduction
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Legal insecurity
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Product mix extension
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Customs duties & restrictions
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Quality assurance
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Red-tapery (delivery, return, exchange)
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Service improvement
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Quality fall-off

34. Cross-Border B2C E-Commerce for Companies
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New markets
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Market share decline
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Competitiveness growth
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Competition growth
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Margin growth
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Margin decline
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Lobbyism

35. What Should the Russian Companies Do?
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One shouldn’t be afraid of the cross-border ecommerce. It is essential to avoid threats and
exploit opportunities.
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The Russian companies can and should come
into external markets, the cross-border ecommerce provides exiting opportunities for that.
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One might produce consumer goods anywhere –
in China or in Russia (as international companies
do) and to come into the external markets with
the Russian brands.
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The Russian brands have a great potential in
many countries. All one needs to do is to set up
the process.

36. Thank you!
Contacts:
Internet Marketing Manager Oleg Zhukov
Oleg.Zhukov@hermes-europe.de
Phone: +7 (495) 775-86-87 ext.1176