Intended for practical use by online retailers and service providers, this research study – the first of its kind – sheds full light on cross-border sales to Russia. Based on interviews with 50 top market players and experts, this study provides fascinating data and insights about:
The latest market evolutions: How the market skyrocketed in 2013, why some Western e-merchants are recording slower growth in 2014, and what to expect next;
Russian consumers’ preferences and fears, how to inspire their trust and turn them into loyal consumers;
Why and how international online stores and PSPs should integrate localized payment methods;
How to optimize shipments to Russia and get through the Russian customs seamlessly;
How to fight fraud, and how to increase payment acceptance rates when working with Russian card holders;
How to comply with the Russian legislation – from forbidden goods, to IP protection requirements, to personal data collection, storage and use.
Digital Business Strategy - How Food Brands Compete Through Technology
Ewdn cross-border summary
1. E-Commerce in Russia
E-COMMERCE IN RUSSIA
What brands, entrepreneurs and investors need to know
What international merchants, service providers and entrepreneurs
to succeed in one of the world’s hottest markets
must know to succeed in one of the world’s hottest markets
PART 2 – CROSS-BORDER SALES
EEXECUTIVE SUMMARY – SEPTEMBER 2014
I N P A R T N E R S H I P W I T H
The National Mail
Ordering Association
Merchant Risk
Council
W I T H T H E S U P P O R T O F
2. About this study
This short, ad-funded version contains excerpts from a comprehensive research
study created by East-West Digital News, the international resource for Russia’s
digital industries, in partnership with e-commercefacts.com.
The research was conducted in cooperation with leading consultants and
universities, and based on interviews with over 50 industry players and experts.
To order a copy of the full version (8 chapters, 150 pages – see table of contents
at the end of this document) please email us at report@ewdn.com.
About the publisher
East-West Digital News is the first international information company dedicated
to Russian digital industries. Its website EWDN.COM provides news, market
data, business analysis and updates pertaining to the Internet, e-commerce,
mobile and telecom industries, digital TV and satellite systems, software and
hardware innovation, as well as to related investment activity and legal
developments.
A consulting branch, East-West Digital Consulting, provides international players
with business development assistance in Russia and advises Russian
companies on their international strategies.
For more information, please contact us at contact@ewdn.com
Advertising, sponsorship
and distribution opportunities
To inquire about advertising and sponsorship opportunities, or if your would like
to get involved in the distribution of this study, please contact us at
ads@ewdn.com.
2
CROSS-BORDER SALES TO RUSSIA
3. Chief editor’s note
Far from the international turmoil, the Russian e-commerce market is still
growing – and many players across the globe continue serving an ever increasing
number of online shoppers from this country.
But this very young market is also one of the least known and understood in
today’s globalized e-commerce industry, due to the language barrier as well as to a
lack of information and data.
For the first time, this research project, which began in 2013, sheds full light on the
cross-border sales market. It is based on exchanges with more than 50 market
players and experts and includes a set of reliable data.
Much credit for this breakthrough is due to Russia’s National Mail Ordering
Association (NAMO) and its president Alexander Ivanov, who have patiently
collected information from the Russian Post and key market players – be it officially
or from insider sources.
Yet this document is, above all, a practical guide. In the full version, more than
100 pages are dedicated to analysis of, and recommendations for, each of the key
operational hurdles confronting international online retailers willing to sell to
Russian customers – from shipment, to customs clearance, to cross-border
marketing and payments, to legal requirements.
Finally, our special gratitude goes to the sponsors and advertisers behind this
study, who provided us with the support necessary for a pioneering, in-depth
investigation.
We hope you enjoy this groundbreaking collaborative effort and wish you every
success in your e-commerce projects.
Adrien Henni is co-founder and chief editor of East-West Digital News
3
CROSS-BORDER SALES TO RUSSIA
4. Participating organizations
ONLINE RETAILERS
SERVICE PROVIDERS
RESEARCH PARTNERS
! !
National Association of
Mail Order and Distance
Selling (NAMO)
MEDIA PARTNERS
Merchant Risk
Council
4
CROSS-BORDER SALES TO RUSSIA
5. Table of contents
of this free summary
Key numbers 6
Executive summary 8
1. The Russian Internet market 9
1.1. Internet penetration 9
1.2. Regional contrasts 11
1.3. Russian audience world-wide 11
2. The domestic online retail market 12
2.1. Market size 13
2.2. Market growth forecasts 13
2.3. Number of users; user profiles and behavior 15
2.4. International comparisons 16
3. Cross-border sales 18
3.1. Market figures and trends 19
3.2. Why Russians buy abroad 21
3.3. What Russian consumers like – and fear 23
3.3. Customs clearance and shipment issues 23
3.4. From cross-border sales to market entry 24
Interviews & Analysis 25
Alex Vasiliev of SPSR: “Even a sharp increase in taxes would not be
a problem if at the same time procedures are being simplified” 26
Alibaba PM Guzel Galeeva: Why we launched a social network
for Russian cross-border shoppers 30
Merchant Risk Council: “Russian consumers are not all fraudsters” 31
Case studies 35
eBay: Cross-border leader sees Russia as priority market but feels
threatened by troubled international relations 36
Shoes of Prey: Tailor-made Australian shoes for stylish Russians 40
About the full version 45
Key industry events 50
Download the free summaries of EWDN’s report on Russian e-commerce
PART 1: The domestic e-commerce market: http://www.ewdn.com/e-commerce/summary-part1.pdf
PART 2: Cross-border sales: http://www.ewdn.com/e-commerce/summary-part2.pdf
5
CROSS-BORDER SALES TO RUSSIA
6. CROSS-BORDER SALES TO RUSSIA
CROSS-BORDER SALES 2013
KEY NUMBERS
(PHYSICAL GOODS ONLY)
Source: East-West Digital News unless stated otherwise
Approximately
$3bn
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
10 million
Russians shopped in
foreign online stores
With
and
capturing the lion’s
share of the market
+75%
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
Total
market
size:
About
generating 38 million parcels
$2bn
UP from 2012
in number
of parcels
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
Average
order
value
$400
(for repeat
purchases)
Aliexpress
$180 $160 $ 105 $40 $24
eBay
Clothing
Electronics
Rutaobao.ru
Dostami.ru (BayRu)
Source: NAMO
Sources:
Dostami, HSE,
NAMO
S o u r c e : NAMO
6
Key numbers
7.
8. CROSS-BORDER
SALES TO RUSSIA
E X E C U T I V E
S U M M A R Y
To receive the full version of EWDN’s report on cross-border
sales to Russia (8 chapters, 150 pages) or inquire
about other EWDN reports, please contact us at:
report@ewdn.com
8
9. 1. The Russian Internet market
1.1. Internet penetration
In the spring of 2014, 61% of the adult population, or 71 million people, were connected on
a monthly basis, according to the Public Opinion Foundation (FOM). Of them, 58 million
people – 50% of the adult population – used the Internet daily.
The Internet became popular in Russia much later than in advanced European countries,
with a mere 10% of the adult population connected in 2003 and just 20% in 2007.
Today, Russia still lags behind most other European countries in terms of penetration, with
roughly half of the adult population connected. Russia is catching up quickly however, with
average annual growth in Internet users exceeding 10% over the last few years. In
September 2011, Russia overtook Germany as the market with the largest number of
unique Internet users in Europe.
If growth continues at its current rate, it will take Russia less than a decade to reach the
current levels of Europe's most connected countries.
60%
50%
40%
30%
20%
10%
0%
Spring
2003
Internet penetration rate in Russia (2003-2013)
Spring
2004
Spring
2005
Spring
2006
Spring
2007
Spring
2008
Spring
2009
Spring
2010
Spring
2011
Spring
2012
Spring
2013
Daily users Weekly users Monthly users
Source: Public Opinion Foundation (FOM)
Executive Summary
9
CROSS-BORDER SALES TO RUSSIA
10. Executive Summary
28%
19.3 M
11%
7.6 M
19%
13.3 M
15%
10 M
9%
6.3 M
14%
9.3 M
4%
3 M
South
North-West
Volga
Urals
Siberia
Far East
Source: FOM
Distribution of Internet users by federal district
(winter 2013-14)
Center
incl.
Moscow
Nationwide – 100% (68.7 million unique users)
International comparison: Internet user engagement across Europe
(average hours per visitor 15+, April 2014)
39
37
36
33
European average: 23h
Source: comScore MMX
28
26
24
23
22
18
17
17
16
16
16
15
13
12
Turkey
Russia
Netherlands
UK
France
Spain
Italy
Poland
Finland
Norway
Germany
Portugal
Sweden
Belgium
Ireland
Denmark
Austria
Switzerland
10
CROSS-BORDER SALES TO RUSSIA
11. Executive Summary
1.2. Regional contrasts
Internet penetration in Russia is still uneven. There is a nearly two-fold difference in the
percentage of monthly Internet users between the capitals, Moscow and St. Petersburg,
which have over 75% Internet penetration, compared to 45% in Dagestan and 42% in
Mordovia, according to a FOM report from February 2013. The average penetration across
Russia was 58%. Among the key factors driving these regional contrasts are differences in
the standard of living, purchasing power and development of broadband and wireless
Internet access, as well as computer and Internet literacy.
As of Summer 2013, just 11% of Russian Internet users lived in Moscow, 4% in St.
Petersburg and 9% in cities with more than 1 million inhabitants, while 20% lived in rural
areas. Almost three quarters of all Russian Internet users live in the European part of Russia.
1.3. Russian audience world-wide
The Russian-speaking internet audience numbers in the range of 90 million users, including
an approximate 20 million Russian speaking users in the former Soviet republics, Western
Europe, Israel and North America.
A D V E R T I S E M E N T
11
CROSS-BORDER SALES TO RUSSIA
12. Executive Summary
2. The domestic online retail market
2.1. Market size
In 2013, according to Data Insight, the Russian online retail market neared ($16.5 billion),
up 28% from the previous year. This volume includes online sales of both physical and
digital goods, as well as ticket sales (airline, train and entertainment tickets) – but not hotel
bookings ($2 billion), sales to corporations ($3 million), and cross-border sales of physical
goods (approximately $3 billion).
Thus in total the Russian online retail market reached about ($25 billion). On a yearly
basis, in 2013, 30 million Russians bought physical goods online.
Turnover by segment in Russian domestic online retail
Source: InSales
(2013, in billion rubles)
Segments
2013 Growth/2012
Household appliances & electronics 107 34%
Clothing, footwear 76 34%
Computer, notebooks, computer parts 56 23%
Car parts 26 43%
Mobile phones 26 32%
Children’s goods 24 29%
Home items 22 97%
Furniture 20 36%
B2B equipment 19 55%
Construction materials 15 40%
Sports, tourism, leisure 14 42%
Groceries 13 -1%
Office appliances 12 30%
Cosmetics, perfumes 9 31%
Accessories 7 37%
Books 6 3%
Gifts 5 50%
Medicine 3,5 63%
Pet goods 3 95%
Flowers 3 31%
12
CROSS-BORDER SALES TO RUSSIA
13. 2.2. Market growth forecasts
We anticipate that, in 2015, Russia’s domestic online retail market will amount to at least
$27 billion in turnover (domestic sales of physical and digital goods, including tickets but not
hotel bookings, B2B sales and coupons). The fastest growth rate is expected to be found in
the regions.
According to moderate forecasts, Russia’s online retail market could reach $50-70 billion by
2020. In no case should this figure, which represents around 7% of Russia's total retail
market, be regarded as a maximum. In the long term, strong growth will be fueled mainly by
such structural factors as:
• E-signature and online payments becoming more popular: mass demand for
non- material products such as insurance and tour package offers.
• Fulfillment infrastructure reaching maturity: With reduced delivery costs the
scope of e-commerce will extend to cheaper product categories and be made
available even to small cities and remote areas.
Russian e-commerce could thus represent a market of up to $150 billion within 10 to 15
years.
Russian domestic e-commerce market
growth forecast
2010:
$8bn
2013:
$16.5bn
2020:
$50bn to
$70bn
Long term:
> $100bn
Executive Summary
Domestic sales of physical and digital goods, including tickets but not hotel bookings,
B2B sales and coupons – Source: EWDN
13
CROSS-BORDER SALES TO RUSSIA
14.
15. Executive Summary
2.3. Number of users; user profiles and behavior
Online shopping has already become a common method of consumption for active Russian
Internet users, particularly those with upper middle and high income levels living in Moscow,
St. Petersburg and large Russian cities. This is why online shopping penetration in Russia,
which is still weak compared to some Western European countries, is expected to
eventually catch up with the most connected countries like the UK, where up to 85% of
Internet users are involved in online shopping.
According to Data Insight, the Russian online retail market could well involve 44 million
shoppers in 2015 (doubling from 2012) and tens of millions more by the end of the decade.1
Significant differences regarding online purchasing can be observed between different
population groups. For example, men tend to spend more online than women; they more
actively purchase car parts, mobile phones and computers, while women are more likely to
purchase from such categories as clothing and children’s goods. Generally speaking,
people from younger age groups, with middle to upper class salaries, who have completed
higher education, tend to consume more online than those from the opposite groups.
1. Three groups drive this growth in the number of online shoppers: individuals in the regions, especially in small
towns, individuals with low incomes and individuals newly connected to the Internet.
A D V E R T I S E M E N T
RussianSearchMarketing.com is your
source for news and information on the
Russian Digital Advertising Market
Yandex European sales
+41 041 248 08 60
europesales@yandex-team.ru
RUSSIAN
SEARCH
MARKETING
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Yandex US sales
+1 617 398 7870
ussales@yandex-team.ru
15
CROSS-BORDER SALES TO RUSSIA
16. Executive Summary
According to various surveys, online shoppers most appreciate lower prices, easier
comparisons and convenient delivery. Variations can occur depending on socio-geographic
criteria. For example, more so than others, inhabitants of the capitals and the largest cities
appreciate the time saving aspect of online shopping and the higher service level offered by
online retailers, when it comes to delivery questions.
Symmetrically, users are very sensitive to price and product information on the website,
while pricing and delivery conditions are common causes of dissatisfaction. Trust is a key
issue, with at least 30% of Russian Internet users declaring they never shop online versus
10% to 20% in most Western countries.
2.4. International comparisons
In 2012, the sales volume of online retail in Russia was similar to that of Brazil, while
significantly behind the USA and Western Europe. The share of online retail to total retail
amounted to approximately 2%, compared to between 5% and 10% in the USA and most
West European countries. In the UK, this share reaches 13%.
Research by PwC in 2012 found that only 43% of Russian Internet users made frequent
purchases online, meaning one or more purchases per month, compared to the
international average of 60%.
Nevertheless, the low penetration of e-commerce in Russia is primarily due to the relatively
low level of Internet penetration. If judging by the number of Internet users shopping online,
the share of online retail sales in Russia is more or less comparable with the situation in
Italy, Greece and the new EU members from Central Europe and the Baltic states.
Online retail in Russia and other markets in 2013
(physical and virtual goods, not including games, in billion USD)
Market size
Yearly growth
Estimates of Data Insight (Russia), eMarketer (other countries)
16
CROSS-BORDER SALES TO RUSSIA
17.
18. Executive Summary
3. Cross-border sales
Foreign retailers’ online sales of physical goods to Russia have grown considerably over
the last few years and reached an estimated $3 billion in 2013. Russian consumers
appreciate foreign retailers’ diversified assortment and enjoy the virtually tax-free
purchases.
Although this market remains opaque, the following picture has emerged from our one-year
inquiry:
• International giants eBay and Amazon, as well as a number of Western fashion
brands in the clothing segment, enjoy high trust and popularity among Russian
customers, but Chinese retailers are currently gaining an even stronger traction,
although in different product categories.
• Apparel and accessories, consumer electronics and gadgets, as well as
automobile parts are the most in demand product categories.
• Besides common localization, marketing, and customer service issues, foreign e-merchants
run into three key difficulties: customs clearance, delivery to the
consumer, and payment process.
A D V E R T I S E M E N T
18
CROSS-BORDER SALES TO RUSSIA
19. CROSS-BORDER SALES TO RUSSIA
Executive Summary
3.1. Market figures and trends
With 38 million parcels delivered in 2013 (up from 22 million in 2012, according to the
NAMO association), the market is developing fast and challenging the country’s transport
and customs infrastructure. In the spring of 2013, Moscow airports were congested with up
to 500 tons of parcels backed up at customs check points. A few months later, the Federal
Customs Service pledged to add hundreds of new employees to help deal with the growing
influx of parcels. In 2014, the Russian and the Chinese postal operators expanded their
partnership to enhance deliveries.
Average order value: Russian and foreign e-merchants compared (Q3 2013)
Source: Higher School of Economics
Average order value from some significant cross-border retailers (2013)
Dostami.ru
(ex-BayRu) Rutaobao eBay Aliexpress
> $400 $160 ~$40 $24
Estimated Russian cross-border sales volume (2012-2016)
$19bn
Source: EWDN
Clothing:
Russian online
stores
Clothing:
Foreign online
stores
Electronics:
Russian online
stores
Electronics:
Foreign online
stores
$115 $105 $455 $180
Sources: NAMO (Rutaobao, eBay, Aliexpress), Dostami.ru
19
$2.5bn
$4.2bn
$6.5bn
$8bn
$11.5bn
$6bn
$3bn
$1.7bn
20. CROSS-BORDER SALES TO RUSSIA
Russian audience for AliExpress and eBay (Sept. 2013 – Aug. 2014)
AliExpress and eBay audience share by income (August 2014)1
13% 17%
54%
55%
33% 28%
45,001-60,000 rubles
15,001-45,000 rubles
5,000-15,000 rubles
Executive Summary
20
CHART
2-1
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Source: Gemius
CHART
2-2
At 2014 average exchange rate: 5,000-15,000 rubles = $141-$423;
15,001-45,000 rubles = $423-$1,271; 45,001-60,000 rubles = $1,271-$1,695
The full version of this study includes a full set of data on the Russian audience of five top cross-border
sites over the past two years, in partnership with research company Gemius.
21. Executive Summary
Market growth benefits major international online retailers – first of all, Alibaba’s subsidiary
Aliexpress and eBay – as well as many sites selling small quantities in niche segments.
Some of them report their sales volume and order size from Russian customers are
significantly larger than with any other country.
However, since late 2013, some Western online stores have seen sales to Russia grow
more slowly – or even stagnate or decrease in specific cases – while sales from China
reached ever higher levels.1
3.2. Why Russians buy abroad
Even taking into account delivery costs, many products are still cheaper if bought abroad
than on the domestic market. Price differences may be even more considerable with some
rare items.2
One reason for the price advantage in some categories is that parcels received by
inhabitants of the Customs Union (including Russia) are not subject to customs taxation if
they do not exceed 31 kg in weight and 1,000 euros in value per month, for each recipient.3
Reasons for shopping in Russian vs. foreign online stores (2013)
Clothing:
Favor Russian
online stores
However, foreign Internet stores do not always have a price advantage over Russian ones,
and often the advantage will not carry across all products the retailer offers. In the
electronics segment foreign online stores, especially in China and Germany, offer more
favorable prices for cameras, but have no clear price advantage for smartphones. Russian
online stores show a wide range of prices for clothing and footwear and foreign stores are
located within this price range.
1. In July 2014, AliExpress became Russia’s most visited e-commerce platform and one of the country’s top 10
most visited website. http://www.ewdn.com/2014/09/09/chinas-aliexpress-breaches-russias-rankings/
2. A bolo tie aficionado interviewed by EWDN says there can be ten-fold price difference between a local
Russian shop and a foreign online retailer.
3. If weight or value do exceed these numbers, customs duty amounts to 30% of the value of the part in excess,
with a minimum tax fare of 4 euros per kg. Russian authorities are expected to switch to a less liberal customs
regime before the end of 2014.
21
Clothing:
Favor foreign
online stores
Electronics:
Favor Russian
online stores
Electronics:
Favor foreign
online stores
• Faster delivery
(49.2%)
• Ease of returns and
exchanges (21.7%)
• Less risk of
package loss (23%).
• Can purchase
products not available
in Russia (63.3%)
• Price differences
(46.6%)
• Wider assortment
(39.3%)
• Higher quality
products (35.8%).
• Faster delivery
(54.8%)
• Ease of returns and
exchanges (28.1%)
• Less risk of package
loss (27.8%)
• Product guarantees
(27.8%)
• Can purchase
products not available
in Russia (61.4%)
• Price differences
(48.5%)
Source: Higher School of Economics
CROSS-BORDER SALES TO RUSSIA
22.
23. Executive Summary
Additionally, a number of products are simply not available, or are hard to find, on the
domestic market. This concerns not only obscure collectables, but other items such as a
number of spare automobile parts and accessories, which when related to rare or little
known car brands are virtually nonexistent in Russia, especially in the regions. BayRu has
built its assortment of car parts by identifying the products that were most lacking on
existing Russian online resources and offline shops.
3.3. What Russian consumers like – and fear
Russian consumers have unique qualities that often necessitate specific merchandizing
strategies to attract purchases. A website marketing template that successfully caters to
Western audiences would not be as effective if simply transferred to the Russian
marketplace. Local consumers require more guarantees and conviction in display content
pre-purchase. Among their fears and expectations are the following:
• Russian consumers are more distrustful of retailers and fearful of artificially
high pricing. They must be certain a product is worth paying for, whether this is
based on quality, warranty, brand recognition etc..
• Unlike Western consumers, Russians are anxious in regards to international
delivery and fearful of unscrupulous suppliers. High visibility and display of
postage conditions is vital. For example, retailer Net-a-porter.com has a permanent
banner and link across all its Russian-version site pages stating “Express delivery
to Russia,” while the UK’s Next retail store assures customers of “quick and
reliable” delivery on its homepage.
• Russians love promotional offers and activities, especially those linked to their
cultural and social habits. Frequent and catchy promotions and discounts are
important to sustaining local consumer loyalty. However, Russian consumers also
respond better to clearly stated links or “buttons”, which describe the promo in
detail. For example, in May 2014 ASOS.com focused on the traditional May
holidays in Russia with an offer on its Russian-version site that touched on the
“dacha” (second home in the countryside). The promo read “20% sales + free
express-delivery with promo code Dacha20”.
3.4. Customs clearance and shipment issues
Occasional slowdowns at customs checkpoints and the slow service of the Russian Post
create serious obstacles. However, a new generation of Russian and international delivery
providers and cross-border operators are emerging, thus offering more choices to
international players. Meanwhile, the Russian Post is progressively enhancing its capacities
while the customs service is introducing simplified and faster procedures.
23
CROSS-BORDER SALES TO RUSSIA
24. Executive Summary
3.5. From cross-border sales to market entry
Some foreigners assume that they can start selling significant volumes to Russian
consumers by simply extending their existing businesses. This is possible, as shown by the
experience of eBay, Aliexpress, Amazon, Asos and a number of other e-merchants.
However, cross-border sales in large volumes are possible only if the foreign e-store or
brand is perceived by local consumers as having significant and distinctive advantages (in
terms of price and product assortment in particular) and adapted to the specifics of the
Russian market and the expectations of local consumers.
At a certain stage, a stronger local presence – or full market entry – may be required to tap
the Russian market’s true potential. On the domestic e-commerce scene, four foreign
companies – or Russian companies with foreign shareholders and management – are
among the top 10 players (Otto Group, Ozon, Lamoda and KupiVIP). These cases show
that foreign retailers can succeed on the local market at a significant scale when relying on
a strong local team and taking into account local specificities – including, in certain cases,
the development of their own local fulfillment capacities.
A D V E R T I S E M E N T
24
CROSS-BORDER SALES TO RUSSIA
25. CROSS-BORDER
SALES TO RUSSIA
I N T E R V I E W S
& A N A L Y S I S
To receive the full version of EWDN’s report on cross-border
sales to Russia (8 chapters, 150 pages) or inquire
about other EWDN reports, please contact us at:
report@ewdn.com
25
26. Interview | Alex Vasiliev (SPSR)
Alex Vasiliev of SPSR on cross-border sales:
“Even a sharp increase in taxes would not be
a problem if at the same time procedures are
being simplified”
Responsible for the international activities and business development of Russian delivery
service company SPSR, 32-year-old Alex Vasiliev personifies Russia’s new generation of
internationally-oriented retail and logistics professionals. Before joining SPSR in 2011, he
served Turkish companies operating in Russia in the bank card and logistics industries.
In this interview with East-West Digital News, Vasiliev describes SPSR’s thriving e-commerce
shipment business and shares his views on market prospects in the field of cross-border
sales.
– To begin with, please briefly introduce SPSR
SPSR Express is the leading privately-owned Russian express delivery company, with more
than 13 years of experience in the Russian market. It is second only to the Russian Post in
terms of coverage, delivering to more than 6,000 cities, towns and villages across the country.
We are the only express delivery company in Russia operating exclusively through its own
network – which ensures better security and control over delivery routes. With more than
3,900 employees, there are no third parties involved in our operations.
– What about your e-commerce cross-border shipment business?
When we launched this activity in 2012, practically all cross-border shipments were handled
by the Russian Post and its subsidiary EMS, leaving alternative providers – at the time mostly
international companies – a negligible share of this market. However, there was growing
demand for services superior to that of the Post. [Editor’s note: Mr Vasiliev is hinting at the
slow and unreliable service of the national postal operator when it deals with e-commerce
parcels.]
On our side, we had strong assets – including customs expertise and a customs broker’s
license – to launch such a business. This is how we became the first Russian alternative
provider serving large foreign online retailers.
We are still a pioneer on the market. We were the first to introduce an electronic customs
declaration system two years ago. Today, Russian customs officials have introduced such
forms largely inspired by us. It even became a template for some of our partners, like
wnDirect, who used it as a model for other countries.
26
CROSS-BORDER SALES TO RUSSIA
27. Interview | Alex Vasiliev (SPSR)
Our international operations are managed and developed by a dedicated team of 30
professionals. The company’s couriers, meanwhile, operate with no distinction between
domestic and international shipments.
– Do you offer any services besides shipment itself?
Sure. We have introduced a cash-on-delivery service for foreign retailers – once again
pioneering the market. Returns may jump from less than 1% to 7-8% – but sales can double.
We also position ourselves as a solution provider with a consulting offer for payment or
marketing issues. Thus we have introduced some of our clients to Qiwi Wallet, and to banks
for joint marketing actions, etc.
– How does the cross-border shipment business look in terms of volume?
The Russian Post still accounts for more than 90% of e-commerce shipments to Russia. For
the remaining fraction, SPSR has established itself as a key alternative provider and the clear
leader among Russian companies.
In 2013, we handled about one million parcels, and expect that figure to double this year.
Existing clients account for one half of this growth, while new clients account for the other. To
date we serve more than 200 foreign online retailers – compared with 300 Russian e-merchants
for domestic operations.
We’re especially strong in the UK market with a near monopoly there. It was the first market
where we landed important companies like ASOS and Next as our key clients.
Now the UK accounts for approximately 40% of our activity. Another 40% is generated by US
clients and 20% by other countries. We’re developing actively in Germany, France and Italy.
We are more cautious about the Chinese market, where dubious practices with customs
declarations are still widespread, not to mention the potential quality and legal issues with
some of the products coming from there.
If we take the market in general – putting aside SPSR’s activity – the split is a bit different. We
estimate that US e-merchants account for about 40% of cross-border sales to Russia, with
Chinese companies representing another 40%. At most 8% comes from the UK.
– To what extent could the more restrictive customs rules – with the threshold of tax-free
shipments lowered – affect cross-border e-commerce?
It is hard to predict, as the new rules have not yet been adopted. However, since 76% of our
parcels have a value of less than 150 euros, it seems that a significant portion of cross-border
shipments will remain unaffected.
Even a sharp increase in taxes would not be a problem if at the same time processes and
procedures are being simplified. This is why we support and trust the state’s efforts to make
cross-border sales transparent and simple. The introduction of electronic forms was an
important step, and we believe the general trend is positive.
27
CROSS-BORDER SALES TO RUSSIA
28. One of the remaining difficulties lies in the fact that national postal services and alternative
operators are subject to different customs rules and processes – and it is not always easy for
online retailers to navigate between them. For example when we started working with ASOS
they had to introduce specific standards for Russia, which was rather unusual for them.
– How does your offer compete with the Russian Post, on the one hand, and with an
international shipment company like DHL, for example, on the other?
Our standard delivery time for shipments from the UK ranges from five to seven days, versus
about 2-3 weeks via the postal service. In terms of tariffs, we are about twice as expensive as
the Post for parcels larger than 2kg– with an even bigger premium for small packages.
However, we are going to launch a budget offer called “Deferred Solution”, which will be much
closer to the Post’s rates.
In terms of delivery time, our offer for cross-border B2C shipments is more or less
comparable to what DHL Express offers to global Internet stores selling on the Russian
market. Regarding rates, we are significantly more affordable.
– Some international shipment providers are very selective when delivering to Russia
and certain other countries. Does SPSR have any selection criteria when working with
online retailers?
We prefer to work on an exclusive basis via partners like WN Direct in the UK or Borderfree in
the US, who handle the first-mile operations, even though we still maintain direct contracts
with online retailers as well.
We welcome collaboration with everyone under two conditions: transparent processes and a
rigorous approach to business.
– Do you believe that cross-border e-commerce could suffer from the current
international turmoil?
I don’t think there’s any direct impact. Over the last few months people have actually bought
more than we forecast. A potential concern, however, is the ruble’s fall [editor’s note: by up to
25% in one year]. This could affect demand, though we haven’t noticed any consequences
yet.
(May 2014)
Interview | Alex Vasiliev (SPSR)
28
CROSS-BORDER SALES TO RUSSIA
29.
30. Interview | Guzel Galeeva (Alibabab.com)
Alibaba project manager Guzel Galeeva:
Why we launched a social network for
Russian cross-border shoppers
In May 2014, China’s Alibaba Group launched the iTao project for Russian e-shoppers. The
service is a mixture of social networks Pinterest and Instagram, with users able to share
photos of their purchases and discuss them. CPU talked with representatives of service in
Russia and learned about future plans iTao. In an interview given to Russian tech publication
Siliconrus.com, project manager Guzel Galeeva explains the present strategy and future
direction of the project.1
– What is the vision of the project, aside from its likeness to Pinterest and Instagram?
iTao is a social network for shopaholics, in the best sense of the word. It is a platform where
people can share photograps of goods purchased in various online stores, especially from
foreign retailers. Not everyone is ready to purchase something online, especially from
overseas. On iTao users share successful and unsuccessful shopping experiences, post
product information (size, quality, and so on), as well as share tips with each other.
1. http://siliconrus.com/2014/07/itao/
30
CROSS-BORDER SALES TO RUSSIA
31. – How do you plan to develop the platform further?
The future for the site is to create an innovative network of live communications using a
mature network of buyers across online stores worldwide. Visitors will have the opportunity to
subscribe to their favorite authors, by products by photos, discuss the intricacies of buying
abroad and even resell goods that did not fit. Furthermore, friends will be able to organize
interest groups, as well as improve the photographing skills of end-users.
– What are some of the key benefits that make you think the project will take off on the
Russian market?
The main one is maintaining communication through our mobile application, which we will
begin to market and launch in August 2014. The most important advantage though is the
huge user base of Alibaba Group.
– Do you have any competitors on the market?
There are no direct competitors on the Russian Internet. Of course, in terms of content
someone might can compare iTao with Pin.me, while Kakao Talk is similar to us in the field of
mobile apps. Perhaps, smaller sites that mimic the idea of our site are opening up regularly
too. We did not want to take the path of banal imitation, but to deliver to the demands of
Russian-speaking users. We noticed that they are already using social networks to publish
their "khvastov" (Russian variation on the phrase "bragging rights") and exchange
information, and decided to give them a more convenient platform to do so.
– What are your goals for the end of 2014?
We are very modest and at the end of the year we want to attract one million visitors a day to
this new platform.
(May 2014)
Interview | Guzel Galeeva (Alibabab.com)
A D V E R T I S E M E N T
31
CROSS-BORDER SALES TO RUSSIA
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33. Expert analysis | S. Manduro and N. Vedrenne:
Russian consumers are not all fraudsters
Russian consumers are not all fraudsters
By Steven Mandurano, Global Lead Marketing Communications & PR,
and Nicolas Vedrenne, Managing Director, Merchant Risk Council
Europe
Russian consumers are known to be unique in their purchasing patterns, especially online.
Considering that Russian payments and fraud processes are geared specifically towards the
Russian consumer, there are many risks that an outsider must understand.
Many Russian consumers prefer the usage of localized payments, such as making an online
payment in-person at a local cash-in kiosk, or through cash-on-delivery (COD) options. The
Russian market is full of exuberance and Russian consumers are willing to spend. However,
the Russian people, on a whole, are skeptical of Western companies and extremely private
with their online credentials. These actions present e-commerce professionals with a number
of issues when dealing with fraudulent behavior.
“The Russian market is full of endless possibility. However, the main priority for any non-
Russian company looking to penetrate the market is the ability to localize,” said Nicolas
Vedrenne, MRC Managing Director of Europe. “Do not go at it alone; be sure to have an ally
who is already established within the Russian market. They will be able to introduce you to
the right connections and show you the ins and outs of Russian commerce,” he adds.
In the USA or the majority of European countries, it is easy to call a customer and ask if
certain purchases were made; solving many suspicious acts right there on the spot. However,
do not attempt to contact a Russian consumer, especially if the person in the call center does
not speak the language, to ask for any credentials on purchases made online. Russian fraud
trends, although similar to those appearing within Europe and the Americas, need a little more
attention.
Although Russia saw a 35% increase in fraud attacks in 2012 from 2011, according to FICO,
the fraud pressure rate is not listed as specifically higher than in other key markets. Card risks
are limited for the merchant as 3DS is the accepted norm and expectation for online shoppers
in Russia. Fraud issues have previously emerged where a customer’s credentials have
conflicting information.
No matter where in the world a company stands, there will always be payment refusals. In
spite of widespread opinon, the Russian market is not that different than any other market
when it comes to the card payments main indicators (risk, decline rate etc.).
Foreign merchants testing the Russian market should turn on 3DSecure, which will give them
a liability shift. The abandon rate with 3DSecure is 10%. This is significant, but not the highest
compared with some other countries.
1. In France for example, cross border transactions suffer a high decline rate: when French card issuing banks
see a cross-border transaction, they prefer to decline it.
33
CROSS-BORDER SALES TO RUSSIA
34. Expert analysis | S. Manduro and N. Vedrenne:
Russian consumers are not all fraudsters
After the initial test period, some merchants switch 3DSecure off. “We used to have 3DS on
for all Russian payments but when we turned this off we experienced an increase in the
success rate (approved transactions divided by total attempts) of about 10%, which for us is
quite significant,” commented an MRC merchant. “Also, Russian transactions have an above-average
success rate for us and perform well overall (with a global acquiring option). We
have very high success rates on initial payments. However, recurring payment success rates
can be significantly lower in comparison.”2
With its events and publications, MRC is a platform for industry players to discuss
globalization and the best ways to partake in Russian e-commerce, among other topics. It is
vital to not go at it alone; collaboration is the main way to succeed within the Russian market.
2. Usually, the rate of returning customers using the same card is high. Strangely, this is not the case in Russia.
There are several potential explanations for this (which most often merchants cannot see). It could be because
of shorter expiration dates, frequent change of limits by banks or low limits, consumers changing often of credit
card or banks, consumers having a very irregular source of incomes and therefore with a lot of variations in their
account balance, consumers "burning" their card limit every month, etc.
A D V E R T I S E M E N T
34
CROSS-BORDER SALES TO RUSSIA
35. CROSS-BORDER
SALES TO RUSSIA
CASE STUDIES
To receive the full version of EWDN’s report on cross-border
sales to Russia (8 chapters, 150 pages) or inquire
about other EWDN reports, please contact us at:
report@ewdn.com
35
36. Case study | eBay
eBay: Cross-border leader sees Russia as
priority market but feels threatened by
troubled international relations
Since it launched its first Russian version in 2010, eBay has asserted itself as a dominant
player on the Russian cross-border e-commerce scene, with only one player – China’s
Aliexpress – matching its sales volumes with an approximate 40% market share for each of
the two giants.
In a market almost doubling each year, the platform generated no less than $400 million in
sales to Russia in 2012.1 By late 2013, the company was sending 90,000 of parcels into
Russia daily, eclipsing all other western retailers, as it reached the mark of one million active
buyersi the country.2 Some press sources have cited eBay as among the six largest Internet
retailers in Russia, with average monthly turnover of around $63 million as of early 2014.
Success is explained by eBay’s trustful brand, wide product range, low-cost offerings
(especially by a growing number of Chinese retailers),3 continued site localization efforts, and
close ties with Russia-focused mail forwarders.
Yet there is still a feeling eBay is only beginning to unlock the potential of the Russian cross-border
market. Company revenues exceeded $16 billion in 2013, of which around half
originated outside of the USA. According to the Russian office of research firm IDC, Russia
amounts to no more than 5% of eBay’s global audience and is not among the leading
revenue-generating markets for the marketplace.4
§ Growing focus on new services and local logistical partnerships
Having decided to localize, eBay has been busy throughout 2014 developing new services for
Russian consumers – an approach stemming from eBay’s strategic drive to increase
presence in emerging markets.5
After rolling out a Russia-based social network for eBay users, called "eBay Social," in July
2014 the company offered to provide local users with cash bonuses for recommending
products on the network to members of the community.6
1. The company has not disclosed its 2013 figures.
2. Defined as making at least one purchase in the previous 365 days
3. These could represent up to a third of eBay trade to Russia, according to Head of NAMO Alexander Ivanov
4. http://www.kommersant.ru/doc/2530206
5. As stated in eBay’s Q2 2014 report: “The growth of Internet users is accelerating in some countries and
regions where we do not have a significant presence (e.g., Brazil/Latin America, Russia, China and certain other
countries in which we do not have a meaningful (or, in some cases, any) domestic business). If we are unable to
establish our businesses and drive adoption of our services in such markets, our future growth would be
negatively impacted. New users in such markets exhibit different behaviors than those from our more developed
markets; including fewer interactions, lower levels of engagement, lower conversion and/or lower values of each
interaction or conversion.”
6. http://lenta.ru/news/2014/07/18/ebay/
36
CROSS-BORDER SALES TO RUSSIA
37. Case study | eBay
The strategy is focused on taking advantage of Russia’s strong social media scene, following
the social media marketing operations of Chinese marketplace AliExpress – in particular, the
iTao social content platform launched by AliExpress’ parent company Alibaba in May 2014
(see interview below).
Another service introduced by eBay in the summer of 2014 was titled "Collections." This
software tool helps classify goods by categories, giving consumers the opportunity to create a
selection of products united by one idea or theme that is then available on their eBay
homepage.7 Having already been launched in Western markets in 2013, the implementation
of the service in Russia demonstrates the growing desire by eBay to integrate Russian
consumers with its global offerings.
On the logistics side, the online marketplace signed a memorandum of cooperation with the
Russian Post in July 2014 in a bid to reduce the time of delivery of goods to Russia from the
company's major markets.8 With the national postal operator responsible for nearly 95% of e-
Bay’s shipment to Russia – and long delivery times one of the biggest complaints of Russian
cross-border consumers – the partnership is an important step in improving service quality.
The first joint project, christened ePaket, was set to be launch in August 2014, with customers
able to send a parcel through eBay at an accelerated rate. The company will provide the
operator with the necessary parcel information and the Russian Post’s database will be
integrated with other systems used by eBay, such as Bitrix and CNS, with which the company
has also signed partnership agreements.
§ Ruble devaluation and Ukraine crisis providing obstacles to operations
There is certainly plenty of motivation for eBay’s continued activity in Russia. Domestic e-commerce
is expanding at a yearly average rate of 30%, while cross-border volume has
almost doubled every year.
However, the lucrative Russian market also offers significant challenges for the US giant.
The ruble has lost up to one fifth of its value compared to the US dollar from early 2013 to
early 2014, making foreign purchases for Russian consumers increasingly more expensive.9
eBay has responded with a campaign to offset the ruble’s fall, offering its Russian customers
to return to the exchange rate of September 2013, which was more favorable to them.
An issue that might be more difficult to circumvent is the political and regulatory fallout of the
Ukraine crisis. The political standoff between the US and Russian governments has led to
sanctions and measures that threaten to undermine the international payment processing
capabilities of Russian consumers.
7. http://oborot.ru/news/14559/10
8. http://www.ewdn.com/2014/07/25/ebay-and-russian-post-agree-to-accelerate-cross-border-deliveries-to-russia/
9. eBay’s 2Q 2014 report cites currency fluctuations as significant threat to its business model: “Our cross-border
trade is also subject to, and may be impacted by, currency exchange rate fluctuations. To the extent the U.S. dollar
strengthens against the Euro, the British pound, the Australian dollar or other currencies, cross-border trade related
to purchases of dollar-denominated goods (or goods from those Asia-Pacific countries whose currencies tend to
follow the dollar) by non-U.S. purchasers will likely decrease, and that decrease will likely not be offset by a
corresponding increase in cross-border trade involving purchases by U.S. buyers of goods denominated in other
currencies. Even if cross-border trade is not reduced, if more sellers who accept PayPal begin to offer their goods or
services in multiple currencies, and to arrange for withdrawal of balances to local bank accounts in multiple
countries, this could reduce PayPal’s revenues from foreign exchange fees.”
37
CROSS-BORDER SALES TO RUSSIA
38. Case study | eBay
With US payment operators Visa and MasterCard under pressure to suspend services to
some Russian banks, President Vladimir Putin has signed a law obliging international bank
card processing operators to pay a large security deposit to continue operations in the
country. As of summer 2014, while Visa and MasterCard where still in discussion with the
Russian authorities, the future of their activities in Russia still seemed uncertain.
eBay harbors significant concerns that further international sanctions against Russia over its
policy in Ukraine could result in major legal changes for international payment systems
operating in Russia, which would have a sizable impact on eBay’s cross-border sales.
The company, nevertheless, is reaffirming its strong commitment to Russia. "We said three
years ago that the Russian marketplace is eBay's top priority in emerging markets. It was true
then and it is true now," eBay Deputy Head Wendy Jones told a news conference10 following
the release of eBay’s quarterly report.
Something drastic would have to occur for eBay to re-evaluate its cross-border presence in
Russia, where the company is investing in a sustainable relationship with consumers.
10. http://www.themoscowtimes.com/business/article/russia-still-top-priority-for-ebay-in-emerging-markets/503916.html
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CROSS-BORDER SALES TO RUSSIA
63. Case study | Shoes of Prey
Shoes of Prey:
Tailor-made Australian shoes
for stylish Russians
Shoes of Prey, the world’s first online designer of women's shoes, provides shoe-designing
bliss to customers with the most vivid imagination. The site's artisans use a suite of divine
raw materials, including the softest leathers, snakeskin, fishskin, Italian silk and more in an
array of candy store colours to design unique, made-to-order pairs of shoes that they will
ship anywhere in the world.
The company launched in Australia in October 2009 with a mere $50,000 in capital; but in
June, 2012, it raised $3 million from US venture capitalist Bill Tai, Silicon Valley blogger/
investor Michael Arrington's Crunch Fund and Mike Cannon-Brookes, co-founder of the
Australian-based global enterprise software powerhouse Atlassian. The company initially
addressed only English-speaking markets. Later, they expanded by offering localized sites in
Japan, Russia, and the Netherlands.
40
CROSS-BORDER SALES TO RUSSIA
64. Case study | Shoes of Prey
§ How Shoes of Prey localized in Russia
In February 2010, Shoes of Prey was featured as the Site of the Day on Rambler.ru, a major
Russian Internet portal. That generated a lot of traffic from Russia but very few conversions.
At that time, Shoes of Prey offered only an English language website and accepted only
payments by bank cards or via PayPal (which is still the case in all markets other than
Russia).
This level of interest demonstrated the potential of the Russian market as well as the need
for a local presence, says Leighton Peter Prabhu, head of Interstice Consulting Russia,
which organized the company's localization.
The Russian version of the website launched in October 2010, with local online payment
solutions enabled in the spring of 2011.
Shoes of Prey also has a local team and office. Moscow-based customers can visit the office
and try on shoes, see finished examples, and examine all the materials. This unique localized
service – Shoes of Prey does not offer it in other countries of the world – has made our
business in Russia a lot more personal and consultative with customers, Prabhu notes. We
often meet with them individually, which is rare even in our Sydney head office.
Localizing the business did not cost a significant amount, according to Prabhu. There are few
hard assets in Russia, mainly staff, office expenses plus event expenses. All supplier relations
and fulfillment are handled by Sydney, and their technology team takes care of all Russian
website hosting and functionality – we merely provide the translated text and multimedia
content. Marketing expenses have been rather moderate since our online campaigns are very
targeted and a large part of our promotion strategy takes the form of PR.
However, the company understands the challenges of the Russian market. Speaking to
EWDN, Prabhu said “Increasingly, the company's overriding priority is to significantly grow
sales by focusing on developed markets in the USA and Europe, which have shown higher
volume potential compared to Russia.”
The company understood that, while the profit margins for Russian sales have always
outpaced other international markets, the overall sales volume was not as strong. Partly, this
is due to the fact that the company does not have suitable products for much of the year (they
do not offer boots or other cold-weather footwear). Additionally, this has to do with Russia
being an emerging market, with the reality that average incomes are still not on par with the
USA and Europe.
The company ceased support for a full Russian-language website and separate Russian blog.
The site is now offered to Russian customers is in English, except for a lengthy but solitary
Russian-language FAQ page. This was done primarily due to the need to re-prioritize limited
technical resources (the site does not have a user-accessible content management system
and all content updates require developer resources). The site is currently available in
English, Spanish, German, Japanese and French.
41
CROSS-BORDER SALES TO RUSSIA
65. Case study | Shoes of Prey
Since the online designer is quite visual, the decision to stop a full Russian site did not have
an immense impact on conversions. In fact, it was an opportunity to emphasize the
opportunity for Russian customers to interact more personally with the Russian team, through
telephone, Skype and in-person consultations. In the summer 2012, the Moscow office of
Shoes of Prey moved into a larger and more comfortable showroom space and this has had a
positive impact on conversions.
However, as a result of Shoes of Prey Australia's focus on developed markets, the paid
marketing budget for Russia has been eliminated. The focus is now on earned media and
other BTL marketing initiatives. Shoes of Prey Russia continues to be regularly featured in
leading Russian media, including television.
The company is also building partnership relationships with local communities and
companies. Some recent new partners include the International Women's Club in Moscow
and the Expat in Russia Club. The firm runs events, such as the arranging shoe design
master-classes to familiarise potential customers with online designer technology (in early
2014), cooperation with fashion designers such as the Jesofa design studio for the Estet
fashion week in Moscow in April 2014, and supporting charity events.
§ Organizing cross-border operations
• Delivery: Currently, there is no price differential to Russia; the pricing for shoes is
the same in Russia as in other countries. Shipping costs though depend on the
country. International delivery to Russia is more expensive and takes longer, so
Shoes of Prey started by managing expectations, especially for customers in the
regions. In general, the company ships by DHL from its overseas workshop to
Moscow, then uses a Russian courier within the country. This combination was
chosen because DHL takes just a couple of days to deliver to Moscow, compared to
as long as a couple of weeks with EMS, the subsidiary of the Russian Post
specializing in international delivery. There are exceptions, however: if a customer
lives in Vladivostok, EMS would handle the parcel from the workshop to the
customer directly, without the involvement of the Shoes of Prey Moscow office, as
the internal courier expense is prohibitive.
• Payments: Initially, most customers were paying by cash. Generally, the site’s
Russian customers have bank cards; the issue was more a lack of trust in divulging
bank card data to a new company. Now that we are more established, we see a
trend where more of our Russian clients are paying online with bank cards, says
Prabhu. The evolution of payment methods continues, with recent experience
showing roughly 80% of customers choosing to pay online via credit cards.”
• Returns: Shoes of Prey offers the same return policies in Russia as internationally:
100% satisfaction, or we remake the shoes or refund the money. This guarantee is
valid for 365 days, as long as the shoes are unworn. The retailer's return rate in
Russia is lower than its global return rate, because many Russian customers come
into the Moscow office to make certain of their size and to see the quality of the final
product.
42
CROSS-BORDER SALES TO RUSSIA
66.
67. CROSS-BORDER E-COMMERCE THROUGHOUT EUROPE:
The freshest figures and facts
by the leading market experts
To receive your free copy,
please contact editor@thepaypers.com or go to
http://www.thepaypers.com/cross-border-ecommerce
68. CROSS-BORDER
SALES TO RUSSIA
A B O U T T H E
FULL VERSION
To receive the full version of EWDN’s report on cross-border
sales to Russia (8 chapters, 150 pages) or inquire
about other EWDN reports, please contact us at:
report@ewdn.com
45
69. About the full version
8 C H A P T E R S
150 PAGES
15 CASE STUDIES
I N T E R V I E W S
50 PARTICIPATING
C O M PA N I E S
Intended for practical use by online
retailers and service providers, this
research study – the first of its kind – sheds
full light on cross-border sales to Russia.
Based on interviews with 50 top market
players and experts, this study provides
fascinating data and insights about:
• The latest market evolutions: How the market skyrocketed in
2013, why some Western e-merchants are recording slower
growth in 2014, and what to expect next;
• Russian consumers’ preferences and fears, how to inspire their
trust and turn them into loyal consumers;
• Why and how international online stores and PSPs should
integrate localized payment methods;
• How to optimize shipments to Russia and get through the
Russian customs seamlessly;
• How to fight fraud, and how to increase payment acceptance
rates when working with Russian card holders;
• How to comply with the Russian legislation – from forbidden
goods, to IP protection requirements, to personal data collection,
storage and use.
THIS REPORT IS MOST USEFUL WHEN:
èPreparing or beginning operations on the Russian e-commerce market
èDeveloping and optimizing an existing business
èPreparing or fine-tuning a business plan
èDefining a fulfillment strategy or optimizing an existing fulfillment approach
èPreparing marketing campaigns and optimizing related costs
è Choosing and managing payment solutions and providers
è Adapting to Russian legal requirements (including legislation on personal data,
marketing practices, and consumer rights)
è Analyzing the market, setting benchmarks and international comparisons
46
CROSS-BORDER SALES TO RUSSIA
70. About the full version
Contents
of the full version of this research study
Introduction: Cross-border sales throughout Europe
By E-Commerce Facts Chief Editor Janine Nöthlichs
Part 1: The domestic e-commerce scene
§ Europe’s largest Internet market
§ The Russian online retail market: Key facts, figures and trends
§ Segment analysis
§ Market growth forecasts
§ International comparisons
Part 2: Figures and trends
§ Market size – Exclusive data from the Russian Post, key market players and shipment companies
§ Analysis by inbound parcels; product categories; average order value; countries of origin; region of
destination in Russia.
§ Market forecast: Pessimistic and optimistic growth outlook
Special insight: Is market growth coming to an end?
- Why some Western e-merchants have recorded slower growth in 2014, and what to expect next
Case studies:
- Chinese giants make their move into Russia
- E-merchant interviews about Chinese cross-border B2B
Part 3: Cross-border consumers
§ Where do they live?
§ The capitals vs. the regions
§ Who are they?
§ Why do they buy abroad?
Interviews: Four Russian e-shoppers share their experience with Western and Chinese sites
Part 4: Merchants
§ How many players?
§ Foreign vs. Russian players
§ Main exporting regions: USA, China and Europe
§ Notable cross-border players
Case studies:
- How AliExpress became the number one e-commerce site in Russia
- Affordable fashions from the UK – ASOS comes to Russia
- eBay – cross-border leader sees Russia as important market but with some caution
- iMall.eu – bringing European luxury to Russia effortlessly
- Sendmebox, a next-gen cross-border marketplace
- Shopotam – from selling notebooks on eBay to an international mail-forwarding network
Special research project in partnership with Gemius:
Exclusive data on the Russian audience of top international online retailers: Traffic, socio-dem and
revenue indicators from 2012 to mid-2014
47
CROSS-BORDER SALES TO RUSSIA
71. CROSS-BORDER SALES TO RUSSIA
Part 5: Customs clearance and shipment
§ Customs clearance: A detailed analysis of existing processes and expected changes
§ Customs taxes: From duty free e-commerce to the new taxation rules
§ Delivery: issues, providers, options
§ Recommendations for foreign online retailers
Interviews:
- Aarnio Heli, Itella Senior E-Commerce Development Manager
- Stuart Hill, wnDirect Managing Director and Co-Founder
- Michael Poetschke, Arvato Russia General Manager
- Alexander Stsekotin, Omniva International Post Coordinator
- Alex Vasiliev, SPSR International Development Director
Part 6: Payments
§ The Russian payment scene
§ Bank cards
§ Electronic currencies
§ Cash payments
§ Payment refusal and security issues
§ PSP and aggregators
Special insights:
- How international online retailers and PSPs have integrated Russian local payment instruments
- Exclusive data on the use of local and international payment methods in cross-border transactions
- New approaches to cross-border payments: Purchase on credit; Recurring payment; Cash-on-delivery.
- Virtual payment cards: A new generation of payment method in Russia
Interview: Elena Orlova, PayU Russia General Manager
Expert analysis:
- “Russian consumers are not all fraudsters,” by Stephan Manduro and Nicolas Vedrenne of the
Merchant Risk Council
- Fighting against fraud – A few facts and recomendations, by the PayU expert team
Part 7: Cross-border marketing
§ The challenges of site localization
§ Russian online marketing specifics
§ Marketing channels: SEO; contextual advertising; advertising and affiliate networks; marketplaces and
other offer aggregators; social networks; cash-back platforms; mobile marketing; offline marketing, email
marketing and CRM
Case study: Shoes of Prey – Tailor-made Australian shoes for Stylish Russians
Interview: Guzel Galeeva, Project Manager of Alibaba’s iTao social network
Part 8: Legal aspects of cross-border sales
§ Forbidden goods
§ Legal restrictions in cross-border payments
§ Intellectual property issues affecting cross border sales
§ Cross-border personal data management: the current rules, the potential legislation changes, and
how to get prepared for them
This section was prepared in partnership with Ernst Young Russia and Borenius-Attorney at Law
10 Dos and Don'ts for foreign e-retailers selling to Russia
This section was prepared by market entry consultant Leighton Peter Prabhu
48
About the full version
72.
73. CROSS-BORDER
E - C O M M E R C E
KEY INDUSTRY
E V E N T S
RECOMMENDED BY
50
74. KEY INDUSTRY EVENTS
The Club E-Commerce Cross Border Conference
Barcelona, Oct. 22-24, 2014
http://crossborder.clubecommerce.com
Swiss E-Commerce Conference
Trafo Baden, Switzerland, Nov. 27-28, 2014
http://e-commerceconference.ch
Chinese Cross-Border E-Commerce
Conference and Exhibition
Shanghai, Nov. 27, 2014
http://www.crossborder-e-commerce.com
E-Commerce Omni-Channel: Supply Chain
Fulfilment Congress 2015
London, Jan. 28-29, 2015
http://www.ecommerce-supply-chain.com
Global E-Commerce Summit
Barcelona, June 8-9-10, 2015
http://www.e-commercesummit.com
eTail E-Commerce Retail Events
Denmark, Germany, France, Singapore, UK,
North America, Latin America, Asia
www.wbresearch.com
51
75. • INTERNET • E-COMMERCE • MOBILE • SOFTWARE INNOVATION
Digital Russia
in English
Daily news • Analysis
International consulting
www.ewdn.com
East-West Digital News is the first international
information and consulting company dedicated to
Russian digital industries. Get in touch with us at
c o n t a c t @ e w d n . c o m
• STARTUPS INCUBATORS • INVESTMENT ACTIVITY • LEGAL ENVIRONMENT • EVENTS •
• STARTUPS INCUBATORS • INVESTMENT ACTIVITY • LEGAL ENVIRONMENT • EVENT S
INTERNET • E-COMMERCE • MOBILE • SOFTWARE INNOVATION