Addressing the lack of internationally-available information on Russian e-commerce, East-West Digital News has just released an in-depth study on this market.
Among EWDN’s partners in this initiative are Data Insight, Russia’s leading data provider in this field, the E-Commerce Russia Association (NAMO), Ecommerce Foundation, an international expertise center based in the Netherlands as well as such industry resources as CrunchBase, InternetRetailer.com (Digitial360) and ThePaypers.
The research was also supported by the Yandex Market group of companies, Ozon and Lamoda, three leading companies, along with 50 Russian and international market experts and players.
Here are the key findings of the report:
- Russian e-commerce is entering an accelerated development cycle. A range of major online retailers see their sales volumes grow annually between 50% and 150%. The market is expected to reach some $22 billion in 2019 and jump to $50 billion or more by 2023 (physical goods only, not including the cross-border segment).
- There is no predominant player on this fragmented market. While existing leaders such as Wildberries, Citilink, Ozon and Lamoda are in the running for leadership, the emergence of giant e-commerce joint ventures could change the game. These are the Yandex Market Group of companies, backed by Sberbank, and the Alibaba-Mail.ru Group alliance. The future market leader could be valued at some $10 billion.
- These moves reflect renewed investor interest. In 2018, VC/PE/JV investment in Russian e-commerce exceeded $755 million – the highest level ever reached in this industry. However, this accounts for less than 1% of the global e-commerce investment market.
On the cross-border segment:
- Even though Chinese sellers still dominate the market, the cross-border scene is becoming more diverse. Western online retailers see their sales to Russia resume – after their setback in 2014-2016 – while new players from Turkey and other countries are entering the market.
- With around $7 billion expected in 2019 (physical goods only), the market is still tiny, but it is growing fast. It could reach some $20 billion by 2023.
- Electronic appliances, apparel and footwear are the most important categories in sales volume. However, international players can find their niche in a variety of other segments.
- The majority of cross-border purchases are tax-free. There is no major obstacle for international players to succeed – be it in logistics, payments, customs or marketing. Market entry is made easier by new marketplaces and a variety of strong local service providers.
- Foreign e-commerce and e-payment companies should pay particular attention to Russia’s personal data laws, which are distinct from the EU’s GDPR and may require substantial adjustments in data collection, processing and storage.
