December 17, 2013
Russians are heading across borders to do their shopping – virtually. According to a recent study by the research group GfK, over 40% of survey respondents said they started shopping at foreign online stores in the last 2-3 years. And the market is rapidly growing. According to Morgan Stanley, Russia’s e-commerce sector will grow 35% pa to 2015.
The pattern of internet penetration also indicates that Russia’s e-commerce market is at a tipping point. While only about 47% of Russians have internet access, they have more internet users than any other European country. And with a good adoption rate (4% CAGR), by 2015 there will be 87 million users, versus 53 million in 2012.
So what makes a Russian consumer click? Just what you’d expect really. Russian e-shoppers aren’t so different than their counterparts in Western Europe or the U.S., except for an apparent 5-10 year lag. Top shopping categories include clothing, cosmetics, consumer electronics, and children’s goods. Building materials and furniture see slower growth, but still decorators love to buy striking items that are lacking in small, urban craft shops.
But businesses looking to break into the Russian e-commerce market need to know a few of its peculiarities. Russian shoppers distinguish themselves from their American counterparts by their patience. Perhaps, they’ve come to terms with their postal service. Everyone is delighted by one-week delivery, but is also quite content to wait a month. Could somebody disrupt it?
They’re more particular, however, when it comes to payments. While most Americans would have trouble imagining how they could pay online without a credit or debit card, Russians make the majority of their online payments without one. That’s because Russia’s economy is still cash-obsessed. Even those who have bank cards tend to withdraw their entire salaries in cash. Mostly online purchases are paid by cash on delivery, but online merchants who don’t want to risk rejected orders should offer the option of cash prepay through payment kiosks. After a customer completes her order, she receives a unique payment code, goes to the nearest payment kiosk (they’re all over the country and Russians are used to using them for topping up their mobile phones), types in the code and deposits cash straight into the kiosk. Another way Russians have started to pay? E-money and one of the popular services in the market is Yandex.Money. Online shops contending for a chunk of the Russian market should have all of these options if they’re gunning for 100% conversion.
Although GfK’s study revealed that the vast majority of customers prefer to pay for an order upon receiving it, most Russians are perfectly comfortable paying up front—if they trust your brand. Developing a good reputation in Russia starts with local advertising and SMM. Businesses who work in Russia can attest to its unique marketing environment—Russians use Yandex more than Google, including for initiating a product search, and instead of sneaking Facebook from their bosses, they sit on VKontakte all day long.
If an online merchant is still daunted by the idea of entering such a foreign market, he’ll be happy to know that Russians aren’t insistent on things like free returns. GfK’s research shows that even when customers aren’t satisfied with their purchase, only half of shoppers return their order and ask for their money back. The other half will throw it out, resell it, or give it to someone else as a gift.
What about the nearly half of respondents who said they don’t shop at foreign stores at all? 40% admitted that it’s because of a language barrier that they stick to Russian stores only. Online businesses: time to hire a translator!
And here is some more food for thought. Some Chinese stores even use machine translation, which, when coupled with pictures, gives shoppers a passable idea of the items they’re buying. And it works!