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Russia is currently in the spotlight, preparing to host the Winter Olympics, with all the associated negative press for its government.

But whatever the irregularities of Vladimir Putin, Russia has the third highest economic growth rate in the world.

Although online sales in Russia account for just 2% retail sales, this is estimated to rise to 5%, or $46bn, by 2015 according to Morgan Stanley.

And Russian internet users are in thrall to overseas brands. In 2013 the top 25 brands searched for on Yandex, the top Russian search engine with 61% share, were all overseas fashion brands.

So what are international ecommerce outlets waiting for? Shouldn’t everyone be importing into Russia?

One new hurdle to expansion into Russia is increased complexity in shipping since new import laws were implemented in December 2013.

What do you need to know about Russia, who’s already taking advantage and how can you follow suit? This post and our Russia Digital Market Landscape report can help.

I heard wnDirect’s Jonathan Matchett talk about ecommerce distribution into Russia at MetaPack’s Delivery Conference earlier this week.

Here are the key takeaways. 

The market

There are certainly lots of Russians online. With 70m already online in 2013, by the end of 2014 the country is predicted to have 80m internet users. This will equate to 56% of the population.

Who is there already?

ASOS has been selling into Russia since December 2012, as has Net-A-Porter.

eBay and AliExpress (part of Alibaba) have Russian sites and Amazon ships most products to Russia. Amazon’s platform will even translate a brand’s British store automatically. 

Ozon, Russia’s own marketplace, is the current market leader, reporting $492m in revenue in 2012.

Here is Ozon CEO, Maelle Gavet, on consumer trends in Russia.

Delivery

Shipping and payment are cited as the most common hurdles to market entry. Cash on delivery is a common payment method, which can result in high returns rates.

In Russia there’s the perception of unreliable end-carrier postal service but in actuality the fulfilment levels are relatively high.

However, many carriers into Russia, including DHL and FedEx, have pulled out due to changes to import laws.

The documentation needed for ecommerce imports has increased dramatically and includes proof of value and credit card ownership. Credit card documentation in particular, having to be presented at customs, has caused problems for carriers. 

Search

Getting to grips with Yandex is one of the other difficulties for importing retailers.

Russia has more internet users than any other European nation and 61% of them search on Yandex. 6% of internet users have already bought online from a foreign retailer.

Social can also influence search, with around 40m Russian users using social media sites every month. Having a social strategy can be a valuable boost to getting a foothold in the ecommerce market.

Ben Davis

Published 7 February, 2014 by Ben Davis @ Econsultancy

Ben Davis is a senior writer at Econsultancy. He lives in Manchester, England. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

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Cranes for sales

Awesome!Very nice post.

over 2 years ago

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Chelsea

haha lol

over 2 years ago

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Erica

over 2 years ago

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Barbara Hoover

Great article. Thanks for sharing this information Ben.

over 2 years ago

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Higher Needs

Nice Information

over 2 years ago

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Elena Models Review

I am a French marketer and I married a Russian woman (you can read about my story on my blog).

I did not read the report but I have to agree that cash on delivery is very common, particularly in Moscow.
Internet connection is also quite good in many cities.

I see different risks in entering the Russian market, and one of the biggest is distance. Moscow and Saint Petersburg are OK but you want to avoid other cities unless you can rely on a well established company. If you think about it, Novosibirsk is more than 3300 km from Moscow, and that's only the center of Siberia.

I am taking the example of Novosibirsk, because it's the 3rd largest city in the country with 1.5 million people approximately.
Saint Petersburg is 3 times as big as Novosibirsk, at nearly 5 millions. Moscow is 10 times bigger than Novosibirsk. And other cities are even smaller than Novosibirsk : there are only 10 cities around the 1 million mark.

Plus, the money is in the two capital cities, the current capital and the imperial capital. So when we are talking about Russia, we are in fact talking about Moscow and Saint Petersburg. You don't want to lose time and money with other cities.

If you are in the EU and want to deal with Russia, a good idea can be to start from Latvia : Riga is only 1000 km away from Moscow and 600 km from St Petersburg, so that's where I would put my warehouse if I had a need for one, plus the labour cost is cheap in Latvia.That's just one solution though, there are many.

One booming business is the software business there: young russian people read a lot, and everybody owns a Kindle or an iPad, but there is very little good quality content in Russian. However there's a strong risk of piracy, which is common in Russia. The main social network, VK.com, allows to watch recent Hollywood movies without anyone paying attention to it.

Also remember that doing business in Russia is OK as long as you don't cross the path of someone close to the government : if any trouble arises you are likely to lose. In my opinion Putin is here to stay so I would not take opposite views to him.

But overall remember that Russian are quite dynamic people: in Moscow, supermarkets are open 7/7, 24 hours, and it's common to see people working on the streets at 6 AM on Sunday. Hardworking people, who really want a better life. If you sell nice products with a "western" taste to it it's likely to succeed but the competition can be fierce unless you have a niche product. Or a luxury brand.

over 2 years ago

Ben Davis

Ben Davis, Senior Writer at EconsultancyStaff

What a great comment! Thanks

over 2 years ago

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www.lifedeal.com.au

Most of the Russian Internet users form Moscow and St.Petersburg

over 2 years ago

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Alexander Shchekotin

Thank you for the article. Couple of comments:
1. New import law has had no impact on Estonian Post operations, see http://www.post.ee/?id=12017
2. We also offer cash on delivery on cross-border parcels. Return rates are very low - around 1%

For more information please contact pro.ject@post.ee

over 2 years ago

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Elena Models Review

@Alexander I don't know about Estonian post, but my own experience is not good. The Russian customs officers still behave in a soviet-time way, ie really weird. Once I sent a package from Paris to Moscow via DHL : it took 25 days to get there, including 10 days blocked at the customs who opened it and stole the content. The empty box was delivered correctly. As one can imagine there was little I could do, so my partners in Russia suggested we just forget about it. Final cost, around € 100 for nothing.

over 2 years ago

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