Russia’s B2C Ecommerce Market Growing Despite Economic Turmoil
A new report reveals that online retail in Russia continues to grow at double-digit rates despite the overall economic downturn.
The strong online retail growth reflects untapped potential, according to market research firm yStats.com.
Russia is one of the largest business-to-consumer (B2C) ecommerce markets in the world. In 2014, it ranked ninth worldwide, fourth in Europe and second among the BRIC countries in terms of online retail sales, according to yStats.com’s findings. Despite the economic crisis, Russia is predicted to see B2C ecommerce sales grow at double-digit rates and maintain its global rankings for the foreseeable future. Though overall retail sales are in a decline and consumer confidence is at an all-time low, the B2C ecommerce market in Russia still has room for growth due to its untapped potential.
Though Russia’s online audience is the largest in Europe, internet penetration was only at two-thirds of the adult population as of mid-2015, yStats.com’s report shows. Online shopper penetration has even more room for development, as only about a quarter of internet users made purchases online last year.
While internet user penetration tends to be higher in the central and northwestern regions of Russia, which include the country’s two largest cities, and lower in its other regions, Russia’s Far East and the Ural regions come close to matching the central areas in online shopper penetration.
B2C commerce share of total retail sales amounted to a small one-digit percentage share in 2014, also indicating potential for future growth.
The growth trend is supported by evidence from the top online retailers in Russia, such as mass merchants Ozon and Ulmart, clothing merchants KupiVip and Lamoda, electronics and appliances stores M.Video, Eldorado, and Svyaznoy, who reported sales increases in 2014 and expect further increases in 2015. There have also been some noticeable market exits in late 2014 and 2015, including the closure of the online marketplace and auction Molotok.ru, children’s goods store Mamagazin.ru, and electronics merchant Utinet.ru.
According to yStats.com’s report, a growing share of B2C ecommerce sales in Russia are due to cross-border shopping, especially from China, with both AliExpress and JD.com operating Russian versions of their websites to tap the growing demand.