December 3, 2013
Anyone who’s heard me speak at a conference over the last couple of years stands a fair chance of having listened to me talk about the fall of the Berlin Wall. Now, considering I typically talk about agile commerce, digital transformation, and occasionally mobile retail strategies, that might sound odd, but I talk about the fall of the Wall as an icon for revolution and for change.
And change is exactly what’s happening east of the old Iron Curtain now.
Russia is one of the world's fastest-growing and most fascinating eCommerce markets, so it is a natural expansion target for both Eastern and Western firms alike. International giants like Amazon and eBay have made initial forays, and there are rumours about much more significant market-entry strategies. But as one Russian eCommerce executive told us, “You can make a lot of money here — but you can also lose a lot!” If you want to be one of the ones making (not losing) a lot, here are a few things to keep front of mind:
Russians love gadgets. Russian consumers are highly mobile, with a high proportion of the population owning two or even three mobile phones, yet unlike in Western countries, Apple’s presence is minor. Android devices rule, and social networking or media streaming are the most popular mobile activities. Russian retailers report low mCommerce revenues (at the moment).
Russia demands deep localization. Language and local content are an important aspect of any eCommerce globalization strategy, but Russia demands a little more attention than many countries. An entire ecosystem of search, payment, social networks, and fulfilment firms service the Russian market, demanding a higher degree of localization than is needed in many other countries. While familiar names like Google and Facebook exist, they don’t dominate. If you are looking to sell in Russia, start learning names like Yandex (search), VK.com (social), and Qiwi (payments).
Fulfillment is the Achilles’ heel of Russian eCommerce. Both retailer and consumer trust in Russia Post, Russia’s state-run postal service, is low — so much so in fact that 2013 has seen the start of sweeping changes. However, eCommerce operators in Russia haven’t allowed such challenges to block their growth plans. Major operators such as Otto and Ozon have developed their own delivery networks and now offer these services to other retailers as a B2B service.
Russia offers a vast yet complex opportunity for global retailers to capitalize on. In Trends In Russia’s eCommerce Market, we examine the factors that are driving eCommerce growth in Russia and look at the potential market-entry strategies and competitive context that eBusiness executives should apprise themselves of as they build their Russia strategy.