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Russian E-tailers Step Up Exports Throughout the Former Soviet Bloc

While traditionally seen as an e-commerce destination, Russia is now well on the way to online exporting success.

Photo: Belarus: A key beneficiary of Russia’s export-oriented e-commerce activities. (Shutterstock.com)
Belarus: A key beneficiary of Russia's export-oriented e-commerce activities.
Photo: Belarus: A key beneficiary of Russia’s export-oriented e-commerce activities. (Shutterstock.com)
Belarus: A key beneficiary of Russia's export-oriented e-commerce activities.

Any review of Russia's e-commerce sector usually focuses on market capacity and import potential. Quite unexpectedly, however, Russian e-tailers have recently boosted their exports significantly, with volumes growing 24% year-on-year and the value of total exports reaching 750 million euros as of late 2019, according to numbers released by Data Insight and eBay.

Among these exports, the best-sellers are garments and footwear, while the core market is the Commonwealth of Independent States (CIS), a body consisting of many of the countries that formerly constituted the Soviet Union. In a sign of the changing dynamics in the sector, while the average receipt has dropped to 45 euros, the overall number of purchases has grown by 50%.

Marketplaces have emerged as the principal sales channels for e-tail exports from Russia, accounting for almost 80% of sales. Understandably, many of the market leaders, including Wildberries, LaModa and Ozon.Ru have looked to capitalise on this by expanding their network of collection points / showrooms into Belarus, Kazakhstan and Armenia. Such a move has allowed them to leverage duty-free trade within the Eurasian Customs Union, which has made the expansion worthwhile despite the purchasing power of the typical Belarusian or Armenian being well below that of the average Russian, while the Kazakhstan market is less than a 10th of the size of their domestic territory.

Although Belarus is a small country and home to just seven million people, it is still Russia's prime e-commerce export destination. It commands a 21.8% share, with the US in second place at 20.4% and Kazakhstan a distant third at 12.9%. Russia's CIS-bound e-exports have grown by 5% and now account for 43% of the total.

As to why the US accounts for such a high proportion, this is largely because it is now home to a sizeable population of former Soviet citizens and their children. This, understandably, has led to growing demand for books, ornamentation, confectionary and a range of traditional food and beverages from the Old Country.

Overall, though, garments and footwear top the best-sellers list, with a share of 39% (up from 36% last year), followed by collectible items at 15% and electronics at 12%. Such demand has seen the number of Russian vendors on eBay exceed 30,000 as of the end of last year, while also providing a boost for such domestically based outward-bound channels as the Russian Export Centre and the Post of Russia.

For their part, Hong Kong-based manufacturers and distributors are likely to find increased commercial opportunities as Russia's e-commerce sector penetrates further into neighbouring markets. This could be in terms of redeploying infrastructure relating to their existing marketplaces or co-operating with well-established Russian e-tailers to offer their sales channels to third parties. Such co-operation will be further facilitated by the fact that Russia's e-commerce sector remains largely unregulated and surprisingly unbureaucratic, while also providing most overseas players with VAT-free access.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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