15 Jan 2018
Surge in Cross-Border E-Commerce Boosts Post of Russia
National mail carrier turns to technology and adept marketing in bid to retain its commanding fulfilment role.
Following a massive 19% surge during the first 10 months of 2017, the level of online shopping across Russia is now expected to plateau, according to joint research by the Post of Russia, the country's national mail carrier, and the Russian Association of Internet Trade Companies (AKIT). One of the most telling trends identified by the research, however, was that the percentage share of cross-border purchases of all the country's online retail transactions was 37% at the end of October 2017, up from 33% a year earlier.
Overall, this has seen the number of inward-bound parcels crossing the Russian border increase by more than 40%, taking the total to 214 million for the first three quarters of 2017. In line with this upward trend, the final number for the year is expected to be around the 320 million mark.
What is even more remarkable is that the Post of Russia now handles 67% of all the country's e-commerce traffic, with its share expanding in terms of both domestic and cross-border deliveries. Indeed, its dominance has reached such a level that many of the leading overseas e-commerce businesses have been obliged to establish partnership arrangements with the carrier in order to remain competitive.
One of the most recent of those partnerships saw a range of Japanese goods showcased in Moscow's largest and oldest post office. As part of the deal struck with Japan Post, itself a national carrier, early December saw the Myasnitskaya Street collecting, sorting and dispatching facility decked out with a selection of Japan's most popular cosmetics, stationery and personal-care items. Prior to arriving in the capital, the range had been pre-tested among Russian consumers at a smaller, pilot installation in Voronezh, a mid-level city some 500km to the south of Moscow.
The Moscow display, however, was far grander than its regional counterpart. In addition to the pre-trialled items, it also featured a wide selection of Japan's kitchen utensils, foodstuffs and beverages, as well as a range of souvenirs deemed to be uniquely Japanese in character, including several calligraphy products. The showcase was curated by a number of Russian-speaking Japanese sales assistants, all of whom provided insights into the selection on offer, while also gathering data on the preferences of Russian consumers, which seemed to be one of the primary purposes of the presentation. Such was its success, though, that a number of other countries are said to be considering mounting similar events.
A clear contender here would be China, which currently accounts for 90% of all of Russia's inward-bound cross-border e-commerce, with the Post of Russia being, again, its principal delivery channel. In truth, though, e-commerce operators from pretty much every country are eyeing up the opportunities in the Russian market, largely drawn by its vast size, its lack of regulation and its duty-free allowances, which tend to be far higher than those of its EU neighbours.
In light of all this growing international interest, as well as its increasingly significant domestic role, the Post of Russia has been obliged to reinvent itself of late. In recent years, it has substantially upgraded its own online services, cut its guaranteed delivery times and opened a number of new service points across the country. In particular, it has been keen to shake off its Soviet-era legacy, a time when it was characterised by lengthy, slow-moving queues and unhelpful, jobsworth babushkas lurking behind every service window.
By comparison, the 21st century Post of Russia is preoccupied with introducing the latest fintech innovations, including online post offices, while striking deals with overseas operators in order to offer a seamless delivery service. It is also selling its services in a far more professional manner, including the use of high-profile broadcast and online advertising campaigns. All in all, any Hong Kong business looking to drive its online sales in Russia could do far worse than partner with the country's national mail carrier, as both a fulfilment service and a promotional channel.
Leonid Orlov, Moscow Consultant