Russia’s domestic e-commerce market grew by more than 50% last year, reports research agency Data Insight, reaching 4.1 trillion rubles (around $55 billion at the average exchange rate). No less than 1.7 trillion orders were made, more than doubling (+104%) year-on-year — in which Data Insight sees an all-time record.
Online sales accounted for some 12% of Russia’s total retail market — and as much as 26% if excluding the food market. These indicators were up 3 percentage points and 5 percentage points, respectively, from 2020.
Fast market growth was fuelled mainly by big marketplaces, such as Wildberries, Ozon , AliExpress Russia, Yandex Market and Sber Mega Market. Their market share jumped from less than 30% of online orders in 2018 to 49% in 2020 and 62% in 2021 (35% in sales volume). However, the average value of these orders decreased by 18% to 1,420 rubles (around $50), notes Data Insight.
Russian B2C e-commerce orders
Online share in total Russian retail
Reaching 329 billion rubles (around $4.4 billion), e-groceries expanded faster in volume (+159% year-on-year) than any other market segment. Growth was even more spectacular in number of orders (from 69 million in 2020 to 237 million in 2021).
Russian e-commerce had grown more moderately in the past decade. Fuelled by the pandemic, market expansion accelerated dramatically in 2020. That year, domestic sales of physical goods amounted to 2.7 trillion rubles (some $37 billion at the average exchange rate of that year), up 58% from 2019, placing Russia among the world’s fastest-growing e-commerce markets.
Positive prospects in time of war
In 2022, in spite of the economic turmoil associated with the war and the sanctions, Russian e-commerce could keep a positive track, believes Boris Ovchinnikov of Data Insight.
“Online sales seem to suffer from the crisis much less than other segments of the economy. The shift of shopping from offline to online will not stop; it could even accelerate,” the expert said in an exchange with East-West Digital News.
“This could come from the decline of offline shopping malls, where many [international] brand stores have shut down.”
Ovchinnikov also sees new brands and new distributors emerge to fill the new assortment gaps — operating via new, unofficial import channels — which ultimately fuels the growth of marketplaces like Wildberries and Ozon
In addition, as retail assortment is being destabilized, “people will tend to go online to check product availability and compare prices, boosting online sales even more,” Ovchinnikov believes.
Despite the expected growth, however, a number of e-commerce companies are exposed to hard challenges. These include the disruption of traditional import and distribution chains; the lack of funding and high interest rates; a variety of technical issues — from deteriorated web connectivity to cyber attacks; — and the shortage of IT workforce as brain drain has accelerated dramatically since Russia attacked Ukraine in late February.
