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Winter Olympics Buzz: Which Companies Are Cashing in via Ecommerce?

Russia is currently in the spotlight hosting the Winter Olympics, with all the associated negative press for its government.

But whatever the irregularities of Vladimir Putin, Russia has the third highest economic growth rate in the world.

Although online sales in Russia account for just 2% retail sales, this is estimated to rise to 5%, or $46bn, by 2015 according to Morgan Stanley.

And Russian internet users are in thrall to overseas brands. In 2013 the top 25 brands searched for on Yandex, the top Russian search engine with 61% share, were all overseas fashion brands.

So what are international ecommerce outlets waiting for? Shouldn’t everyone be importing into Russia?

One new hurdle to expansion into Russia is increased complexity in shipping since new import laws were implemented in December 2013.

What do you need to know about Russia, who’s already taking advantage and how can you follow suit?

I heard wnDirect’s Jonathan Matchett talk about ecommerce distribution into Russia at MetaPack’s Delivery Conference earlier this month.

Here are the key takeaways.

The market

There are certainly lots of Russians online. With 70m already online in 2013, by the end of 2014 the country is predicted to have 80m internet users. This will equate to 56% of the population.

Who is there already?

ASOS has been selling into Russia since December 2012, as has Net-A-Porter.

eBay and AliExpress (part of Alibaba) have Russian sites and Amazon ships most products to Russia. Amazon’s platform will even translate a brand’s British store automatically.

Ozon, Russia’s own marketplace, is the current market leader, reporting $492m in revenue in 2012.

Here is Ozon CEO, Maelle Gavet, on consumer trends in Russia.

Delivery

Shipping and payment are cited as the most common hurdles to market entry. Cash on delivery is a common payment method, which can result in high returns rates.

In Russia there’s the perception of unreliable end-carrier postal service but in actuality the fulfilment levels are relatively high.

However, many carriers into Russia, including DHL and FedEx, have pulled out due to changes to import laws.

The documentation needed for ecommerce imports has increased dramatically and includes proof of value and credit card ownership. Credit card documentation in particular, having to be presented at customs, has caused problems for carriers.

Search

Getting to grips with Yandex is one of the other difficulties for importing retailers.

Russia has more internet users than any other European nation and 61% of them search on Yandex. 6% of internet users have already bought online from a foreign retailer.

Social can also influence search, with around 40m Russian users using social media sites every month. Having a social strategy can be a valuable boost to getting a foothold in the ecommerce market.

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