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E-Commerce Slows in Russia, but Mainland Players Grow Market Share

Russia reports slowest online sales growth for five years, but overseas transactions soar by 75%.

Photo: Ozon.ru: Keeping watch on worldwide pricing.
Ozon.ru: Keeping watch on worldwide pricing.
Photo: Ozon.ru: Keeping watch on worldwide pricing.
Ozon.ru: Keeping watch on worldwide pricing.

The growth of e-commerce in Russia has slumped to its lowest level for five years. According to newly released figures for 2015, the country's level of online sales grew by just 3% last year, after inflation had been factored in (16% excluding inflation), compared to 8% in 2014. With Russian e-commerce dominated by imported goods, the recent currency devaluation has inevitably had a huge impact on the sector.

Last year, the value of the average e-store receipt grew by 8% to RUR 4,050 (roughly €50 at the current exchange rate), while the total number of orders grew by 8%, reaching 160 million. These figures relate to actual consumer goods purchased and exclude cooked food deliveries, theatre, air and railway tickets, as well as wholesale purchases.

Overall, the focus of Russia's e-commerce activity has shifted from consumer electronics and household electrical appliances to less expensive garments, footwear and mass-market goods. While, previously, luxury and premium-branded were the items most commonly purchased online, they have now been supplanted by sporting goods, children's items and pet products.

Strikingly, the number of online purchases that Russians made with overseas e-stores soared by 75% last year. This has seen external e-commerce suppliers now account for 34% of the Russian e-commerce market, compared to just 24% in 2014.

This is seen as a direct consequence of the massive inroads a number of foreign players – notably AliExpress and JD.com – have made into the Russian market. This growth has been partially facilitated by the willingness of Russia's partners in the Eurasian Economic Union to maximise market access for many foreign e-commerce businesses.

Despite this increased competition, Russia's domestic e-commerce leader, Ozon.ru, maintained 30% sales growth last year. It is thought to have extended its market share by diversifying its product range. It has also sought to see off its Chinese competitors by reassessing the variety of products it offers, its pricing and its delivery terms. This saw the company expand its product range to more than one million, while also monitoring the global costs of 200,000 of its most popular items and adjusting its own prices accordingly.

Another trend that has grown as many Russians retrench is the increasing role discount and money-off coupons now play in the e-commerce sector. Some 70% of Russian e-shoppers now actively seek out such items once they have settled on a purchase as way of mitigating the cost.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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