E-commerce in Russia: discover how to win a large and rich country!

Selling online in Russia means entering the world’s largest country with your own business and brand, in an online market with strong and steady growth.

E-commerce in Russia is booming: According to Data Insight, Russian ecommerce was worth 2.5 billion roubles ($33 billion) in 2020, instead of 2.2 billion ($29 billion) predicted in the pre-pandemic scenario. Between 2019 and 2020 there was +44% growth and an increase of 10 million new online shoppers.

Data Insight’s latest forecast indicates that, due to the pandemic phenomenon and the subsequent self-isolation observed by Russian citizens, e-commerce will grow further than previous estimates.

In 2021, the market will have a turnover of 3.3 billion roubles ($44.5 billion), instead of the previously estimated 2.8 billion ($37.8 billion). Overall, Russian ecommerce between 2020 and 2024 will be worth 23.4 trillion roubles thanks to the new scenario.

e-commerce growth in Russia according Data Insight

Russia is among the 5 fastest growing online markets in the world: an analysis by Data Insight shows that online trade in Russia grew by 26% year on year in the first half of 2019. During this period, 191 million online purchases were made, an increase of +44%. According to Mediascope, 95.8% of internet users buy goods online.

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Table of Contents

Overview and developement of the online market

A previous report by Morgan Stanley indicated in 2018 that the Russian e-commerce market, in physical products alone, was expected to reach a turnover of $30 billion in 2020, and $52 billion in 2023, thus seeing growth of +170% in a few years.

Russian online market growth according to Morgan Stanley

Among the most interesting aspects for international brands wishing to enter the market: digital commerce represents only 3% of the traditional market, leaving ample room for growth. The continuous and rapid development of digital commerce, an 80% penetration rate and improvements in logistics and delivery make the Russian market one of the most interesting in the world.

Forecast by Morgan Stanley

Despite the crisis of 2014, overcome with the stabilization of the rouble, at the end of 2016 which impacted consumption in the traditional market, online trade has seen very strong growth due to the strong development of internet penetration in the Russian Federation by 80% and the widespread, and increasingly increasing, use of smartphones (66%).

In November 2019 the Russian digital market was estimated to be worth 425 million orders with an average purchase value of 3800 roubles, worth around 50 euros. Revenue for B2C is 1620 billion roubles, which is about 20 billion euros. The number of online purchases in 2019 doubled compared to 2018.

In 2020 with the advent of Covid-19 some product categories, especially in the grocery sector, recorded significant increases in online sales according to AKIT analysis – E-commerce Association of Russia – or as shown by Nielsen Russia data.

Among the sites with the highest sales growth was Wildberries, which almost doubled orders to 61 million – representing one in three purchases in the Russian Federation. Wildberries.ru is the largest online shop in Russia and founder Tatyana Bakalchuk became the second richest woman in the country after the company reached $1.9 billion in sales. Wildberries remains the leader in online sales in 2019 with 210.6 billion roubles according to Statista (April 2020), followed by citilink.ru and ozon.ru with 90.42 and 80.69 billion roubles respectively. These figures refer to the amount of online transactions including VAT from local sellers to local buyers.

In addition to the big players, the other 500 online retailers were not cannibalised by the larger ones, with an increase in orders of 21% overall, with a growth rate of more than 14% in 2018. The second most popular online shop is Ozon.ru, considered the “Russian Amazon”, with a turnover of $832 million, citilink.ru with $737 million. The three stores together account for 20% of Russian e-commerce turnover. Among the stores with the highest economic growth is floradelivery.ru with a turnover of $1.6 million in 2019. Its revenue growth was 184% in the previous year.

What do Russians buy online?

Russians mostly buy online: travel and tours, fashion and luxury, electronic equipment, cosmetics and body care, children’s items and food products.

Online shoppers are making more and more purchases on the web and the main categories of physical products and not only: hotel reservations, ticket and tour reservations for tourism; tickets for events. As far as physical products are concerned, the most purchased items online are: household appliances and electronic equipment, fashion and accessories, cosmetics and beauty products, children’s products, canned food products, household and paper products, fresh food products.

In particular, the most popular purchases in 2019 were: fashion and shoes 46%; beauty and body care products 43%; perfumery and cosmetics 37%; vitamins and supplements 35%; phones, tablets and accessories 35%; toys and handmade products 35%; small household appliances 35%.

According to AKIT, in 2019 Russians bought on foreign sites: 31% clothing and fashion, 27% electronics, 7% beauty products, 7% furniture and design, 7% accessories, 2% sporting goods, 1% food and 18% other goods from foreign sites. More info here>>.

Who are the online shoppers?

Russian customers

Most people who buy goods online in Russia are young people, the so-called millienials, between 24 and 39 years of age, mainly from larger cities such as Moscow or St. Petersburg. With self-isolation, new users with older age groups have started shopping online: in the 35-44, 45-54 and over 55 age groups.

According to the report by Fashion Consulting Group, Yandex and FashionSnoops, with the advent of the pandemic, 15 million new users are shopping online. The share of web sales could reach 20-25% of traditional retail by the end of 2020. At the beginning of 2020 Russian online consumers were estimated at around 60-65 million, while after quarantine a total of 75-80 million online shoppers were estimated.

How to start selling online?

To sell online in the Russian Federation you need to use the right local platforms, or develop a localized site for Russian language and culture and promote it through the main Russian search engine Yandex with SEO, PPC or online advertising strategies, or through the VK social network or other social media platforms.

This is possible both for companies operating in B2B and B2C, either by selling products or services through online sales, or as support for digital export. In order to do this, it is essential to know the market and therefore rely on digital marketing professionals able to develop an ad hoc digital marketing project in its entirety. In 2019, the turnover of the e-commerce market in Russia represented about 28 billion euros.

What is important to know to begin with?

Together with the country’s great opportunities, it is necessary to keep in mind some crucial aspects to evaluate the feasibility of an online sales project aimed at the Russian public. Among the great opportunities in online business, it is important to keep several aspects in mind before starting a project in the territory:

  • Analysis of the market and competitors
  • The compatibility of products or services with the market and the laws of the Russian Federation
  • Intellectual property
  • The sustainability of the project costs
  • The logistics required
  • The bureaucracy to deal with
  • Different payment methods
  • The delivery system
  • Customer support
  • The possible presence on the territory

Main e-commerce platforms

For an effective digital marketing strategy it is important to select one or more ecommerce platforms on the market. Among the main players are Wildberries.ru which is the biggest player in terms of sales, dealing with clothing, shoes and accessories. Citilink is a popular electronics and household appliances website. Mvideo.ru also deals in household appliances. Ozon.ru is the largest Russian generalist website, considered the “Russian Amazon”. LaModa.ru, as you can guess, offers fashion, footwear and various accessories.

Leading e-commerce stores in Russia

Among the most important ecommerce sites in Russia are the top ten according to Data Insight’s annual ranking by revenue:

  1. Wildberries: – 210.6 billion rubles.
  2. “citilink.ru”: – 90.4 billion rubles.
  3. Ozon: – 80.7 billion rubles.
  4. “«М. Видео”: – 57.5 billion rubles.
  5. DNS: онлайн – 53.7 billion rubles.
  6. AliExpress Russia: – billions of rubles.
  7. Apteka.ru: – 34.2 billion rubles.
  8. Lamoda: – 33.2 billion rubles.
  9. “Beru”: – 27.7 billion rubles.
  10. “Eldorado”: – billions of rubles.

The well-known generalist portal deals with a wide range of goods: food products, books, clothing and footwear, children’s articles, household and gardening articles.

Cross-border e-commerce

Digital commerce has proved to be an excellent tool to sell online quality products from foreign countries, both in B2C and B2B. If on the one hand Russian users buy with confidence from local online stores, the interest and consequently the purchases of Russians in foreign online stores have been increasing more and more. According to a Deloitte analysis, 49% of Russians prefer to shop online at foreign sites. In this regard, it is worth mentioning the importance of the website location for the local market.

E-commerce in Russia: what Russians buy online abroad

E-commerce in Russia: what Russians buy online abroad

As mentioned above, Russian consumers increasingly appreciate cross-border shopping, i.e. from foreign sites. The well-known Aliexpress portal of the Alibaba Group is very successful. Among the best-known local platforms are Yandex.Market, Ozon.ru, LaModa, etc. Recently Aliexpress has opened up to the Italian market, effectively opening up the possibility of selling made in Italy directly in Russia through the Chinese platform.

Foreign purchases in 2018 are estimated at $3.24 billion according to AKIT and $5.5 billion according to Data Insight. 76% of users in 2018 said they had made purchases on foreign sites; up 65% from the previous year.

Reasons why Russians shop on foreign stores:

  • competitive prices
  • greater choice
  • uniqueness of the products
  • higher quality
  • new products are available earlier
  • entertainment value
  • fast and coveniente delivery
  • possibility to use aggregator services
  • the majority of online purchases abroad are tax-free

Among the differences of the local market compared to the western one there are the payment methods: in the past years the main medium was cash, while nowadays cards are the most used medium (65%). However, according to GFK Rus and Yandex.Market data, 18% of users use e-wallets, cash payment still weighs 51%, while bank transfers are used with 7%. In this context, the use of cards and digital payments for online shopping continues to grow. The report differentiates between payments on receipt of goods and prepaid systems. Credit cards are also used 47% for payment on delivery. The analysis below, dated September 2019, was carried out on residents of Russian cities between the ages of 16 and 55.

Main payment methods

Payment methods in Russia for e-commerce

Several payment systems are used locally and are payment on delivery and prepaid: these are divided into cash, credit cards, e-wallet, bank transfer and mobile payments. Among the main credit cards accepted in Russian online shops, besides Visa and MasterCard, there is also the national payment system MIR of the Russian Central Bank.

Payment operators in Russia

Delivery methods

The methods of delivery of goods must also be well evaluated in an online sales project in the Russian Federation, as they represent an essential aspect of logistics. According to Statista, in 2019 stores delivered goods to their customers through: 49% by store means, 20% by Russian Post, 18% by postamat (automated collection points) and 11% by courier.

Delivery methods in Russia for e-commerce