Illustrating the growing appeal of the Russian market, three significant Chinese e-commerce platforms have been launched in Russia for the past two weeks. In late August, as reported by business daily Kommersant, DHgate announced a partnership with two key Russian service providers, payment service provider QIWI and shipment company SPSR Express, to develop its activities in Russia.
SPSR Express will deliver the DHgate packages in “2-3 days in Moscow and up to six days in other locations,” pledged Alex Vasiliev, Head of International development.
Huge progress has been made since just one year ago, when Russian online consumers were used to waiting weeks, or even months, to get their orders delivered from China via the postal operators.
What’s more, DHgate will accept cash payments upon delivery. This option is, by far, the main payment method used by Russian players as far as physical goods are concerned, as consumers are reluctant to pre-pay their orders through electronic means. However, for cross-border orders, the cash-on-delivery option had been the exception so far. It has not been made available on AliExpress and JD.COM, two key Chinese platforms, for example.
A major marketplace for Chinese goods operating globally, DHgate claims to host over 30 million products in a wide range of categories including apparel and accessories, computers, consumer electronics, toys, health and beauty, bags and jewellery, home appliances, etc.
Russia-oriented platforms
Another platform, TradeEase, has been designed specifically to target Russian consumers, offering household appliances, electronic devices, clothing and footwear, as well as car parts. The project is backed by affiliates of Bank of China, the authorities of the Suifenhe region – which is close to the Russian border, – and payment operator PayEase. On the Russian side, the platform is being supported by Yandex.Money, a major PSP and e-currency company, notes e-commerce blog Shopolog.ru.
TradeEase plans to attract “one million Russian clients by the end of the year” before targeting consumers from other Eastern European countries.
In the middle term, TradeEase also plans to enable Chinese consumers to purchase items from Russian merchants.
Russians may order virtually anything on TradeEase – from electronic devices, to watches and jewellery, to food and tea.
Also targeting Russian consumers is Umkamall, which presents itself to its business partners as “the most innovative vertical wholesale and retail platform” for the Russian market. Available in the format of a mobile application, Umkamall offers household appliances, consumer electronics, clothing and footwear as well as children’s goods. The orders are delivered from the company’s warehouse in Russia to both wholesalers and end consumers, reported e-commerce news site Oborot.ru.
Focus is being made on product and service quality, according to the company, which has set up a 24/7 support service for its customers.
AliExpress still dominates the market
Since both the ruble and consumers’ demand began falling in 2014, Chinese online retailers have seen their share of the Russian online retail market increase dramatically. While many western e-commerce companies have seen their sales to Russian consumers stagnate or fall, early mover AliExpress has become number one e-commerce operator in Russia by traffic and number of fulfilled orders, overrunning even the most popular Russian websites.
In late 2014, this Alibaba subsidiary sent hundreds of thousands of packages to Russian consumers every day, and the numbers were reported to have been growing in 2015.
Following the steps of AliExpress has been JD.COM, China’s largest online retailer, which launched a Russian version of its platform this past June. Its stated goal is to conquer a 20% share of the Russian e-commerce market.
Among other major Chinese players having entered the Russian market over the last couple of years are DinoDirect’s subsidiary Osell, which is developing an original B2B2C approach, as well as LightInTheBox.com and DealeXtreme.com. Worthy of note are also such Russian platforms as Kupinatao, Shopotam and Vivatao, which offer a fully localized interface as well as mail-forwarding services to make purchases on Chinese websites even easier.
Thus, Chinese merchants are capturing almost the entire growth of cross-border e-commerce flows to Russia. In 2014, their share accounted for around 70% of fulfilled orders and 50% of market value, according to expert estimates cited in EWDN’s report. Total cross-border e-commerce flows amounted to some $2.5 billion, up 75% from the previous year.
- Market players, service providers, government officials and top experts from Russia and China will be gathering on October 5-6 at the China-Russia E-Commerce Summit. Beyond the analysis of the currently growing China-to-Russia flows, the speakers will also discuss the future evolutions, from new market entrants, to anticipated changes in infrastructure and legislation, to Russia’s export potential to China. This event – the very first of its kind – is being organized jointly by East-West Digital News, the NAMO industry association and Chinese commercial platform Osell, together with other key market players.
