23 Oct 2017
Post-Millennial Russian Consumers Going Overboard for Hoverboards
Personal electronic transportation devices are the must-have accessories for Russian teenagers and their grandparents.
With their popularity rising and their cost falling, personal electric transportation devices are becoming the must-have style accessories across Russia, with demand now spilling out well beyond the hyper-trendy enclaves of Moscow and St Petersburg. While it is still unlikely that you will see an elderly Russian lady hoverboarding her way through Gorky Park, one of the capital's most extensive public gardens, her contemporaries in the more rural areas may well be spotted mounted on electric tricycles as they head off to the nearest convenience store.
At present, hoverboards are the market leaders in Russia's personal electric transportation sector, with entry models priced at about US$120, while imported high-end US boards can go for as much as $400. Although the boards debuted on the Russian market back in 2014, demand only really took off in the summer of 2016, a development spurred by their appearance on a number of nationally broadcast reality and comedy shows. A further trigger came when Oleg Gazmanov – the Russian Bruce Springsteen, best known for Born in the USSR, his 2005 hit – used them during a concert tour.
As a sign of the popularity of these self-balancing scooters, while Yandex – the Russian search engine seen as the country's equivalent to Google – recorded just 54,000 enquiries referencing hoverboards in August 2015. By September 2016, that figure had risen to two million, before settling down at a steady 1.1 million monthly searches from July 2017 onwards. Typically, the majority of the boards have been purchased online, although a number of hypermarket chains have latterly been offering them at discounted rates in line with their bulk-buying clout.
E-tailers peak hoverboard sales came over the summer of 2016, with many online outlets recording markups of up to 50% per unit. In face of increased competition, the typical margin is now said to have dropped to about 25%, a development that has seen many e-commerce outlets switch to focusing on such items as electric scooters and bikes, products said to offer higher levels of profit.
Despite the wide availability of a range of electronic personal transportation devices, the Russian market is said to be far from saturated. In particular, there are real opportunities among the country's least predictable consumer group – the so-called "silver age" spenders. Typically reasonably well-off, many of these pensioners have rented out their city-centre apartments and retired to their more rurally located dachas. Often former military officers or government officials, they have proved to be wholly receptive to adopting such safe and easy-to-master means of personal transportation.
The grey rouble aside, the majority of Russia's hoverboard traders maintain there are two peak periods for sales of such items. The first runs from April to August and covers the summer holiday period, while the second arrives in December as parents look for novel Christmas gifts for their children.
For consumers, though, the best times to buy are October and November. This is when many retailers are looking to offload the previous year's models and build up their cash reserves in order to pre-pay for many of the updated versions, which are largely coming from Guangdong-based manufacturers. This is also the best time for regional representatives to approach retailers with details of their new ranges.
Despite some evidence that demand for hoverboards has already peaked in Russia, there are a number of reasons to assume that sales will stabilise at a reasonably high level. Firstly, there was a substantial and sustained surge in the immediately post-millennium birth rate, a development that ensures that the number of teenage consumers is still growing.
Secondly, many of those now in their teens were born into relatively affluent middle-class families, giving them a reasonably high level of disposable income. Finally, there is the upgrade to much of Russia's urban infrastructure, a transformation that has seen many roads and pavements becoming far more hoverboard-friendly than they were a generation back.
Those Hong Kong companies interested in supplying the Russian market with hoverboards or other personal electronic vehicles are advised to focus on building links with many of the country's specialist e-tailers. It is also worth monitoring a number of the Russian social-media networks, most notably VK and Odnoklassniki, as well as Instagram and Facebook. Such networks are now the principal channels for targeting a new generation of Russian consumers, many of whom view television and print media as quaint, if not wholly obsolete.
Leonid Orlov, Moscow Consultant