Russian Trade Is Booming Again. Online.
Incredibly, it’s now easier than ever to reach Russian consumers. They shop online. Finland figured out the logistics.
Only three years ago, Russia was considered as one of the leading emerging economies, the BRIC countries. Now it’s a shadow of that promise. The economic sanctions imposed by the European Union and the United States have reshaped international business profoundly but not in a way you might suspect.
The brick-and-mortar expansion that followed the collapse of the Soviet Union has become a relic of the past as quickly as it peaked. Russians have also, for sure, lost much of their purchasing power due to a weakened currency. But they still shop, and online retail is booming. It is growing by a whopping 20 – 30 percent every year.
In fact, Russia currently boasts the largest absolute number of internet users in Europe, a total of 103 million, which is over 70 percent of the population.
And according to Data Insight, cross-border shopping is the fastest growing segment of the Russian e-commerce market.
Foreign retailers’ online sales of physical goods to Russia have exploded in the last three years. While the Russians received 40 million packages at USD 1.3 billion in 2013, last year they already ordered 135 million packages and small parcels at USD 3.4 billion from abroad.
Initially, the biggest hurdle for growth was logistics. It, however, started to sort itself out as soon as Finland’s state-owned postal operator Itella took the lead. Benefitting from Finland’s 1,200-mile border and long trade traditions with Russia, it has tapped into the huge potential by providing a complete e-commerce solution for foreign businesses selling goods to Russia.
So far, an estimated 80 percent of the USD 3.4 billion has been captured by Chinese retailers like Alibaba and JD.com. This year, Europeans and Americans have swiftly started to follow suite.
Ranja Pasivirta, Business Manager at Posti, says that the growing trade volumes that have followed with Chinese retailers, also benefit the Finnish and international retailers in the form of lower delivery times and costs.
Posti is not alone in this endeavor. Flying Lynx, for example, works with Posti and offers various services ranging from online-store customization in Russian to logistics and customs management.
Marko Kangaskolkka, Managing Director of Flying Lynx, encourages, in an interview with the Finnish business daily Kauppalehti, companies to explore the huge potential of ecommerce market in Russia.
Russians are, naturally, looking for access to goods that are not available for purchase domestically. But, according to industry experts, they buy the same things online as their European and American counterparts: clothes, accessories, and footwear. They make up over half of all cross-border purchases.
Cosmetics, beauty and health products come second, while toys, electronics, and household goods are also in high demand.
All in all, the Russians want higher quality and range of products, unique and exclusive products, quicker delivery – and the best price, just like the rest of us. The ball is now in your court.
Come find out how your business can benefit from the largely untapped online Russian market. What are the practicalities that you need to know about and what could the many success stories teach you? Join us at Unlocking the Online Russian Market on October 11 to learn more.