FOCUS: Proactive online shopping may boost e-commerce by 30% in 2023
By Yekaterina Yezhova
MOSCOW, Jan 16 (PRIME) -- Driven by local sales, Russia’s e-commerce market could advance by almost a third in 2023, the trend set a year earlier, thanks to the people’s habit of online shopping for staples and the marketplaces’ well-branched logistics, experts and sellers said.
“Should there be no dramatic alterations and foreign exchange fluctuations, the 2023 growth could reach 25–30%. This indicator has already settled as a trend, which means the market could expand to 6.3–6.6 trillion rubles as of the end of 2023, or 16% of total retail sales from 11.6% at present,” Russian Online Retail Association (AKIT) President Artyom Sokolov told PRIME.
“The rise may be higher if controlled online sales of alcohol are permitted because the category is an impetus of demand for farm products sold on the Internet.”
The country’s online market advanced by 30% on the year to 4.5 trillion rubles in January–November with an expected total 2022 volume seen at 5.172 trillion rubles.
“While the exact figures will be known in early February, it’s clear that the outlook is absolutely feasible given the year’s overall trend and the hot season before the New Year holidays,” Sokolov said.
The 2022 growth relied entirely on the local market, which accounted for 96.3% of all online purchases – it increased by 37.2% to 4.3 trillion rubles in January–November. The cross-border market has been shrinking steadily since February and declined to 3.7%, or 166 billion rubles, from 13% of the total volume of online sales throughout 2022, according to AKIT.
“While there is a clear fall in demand in offline retail, partially because of the closure of international brands’ chains, online retail maintains its robust growth,” Fyodor Smyk, corporate development director at marketplace Ozon, told PRIME.
“The key contribution to the increase is made by the largest marketplaces, their core advantages are a wide assortment and logistics infrastructure that makes purchases possible across the country. The assortment is provided both by Russian businessmen and a wider flow from abroad, for example, Ozon works with more than 10,000 sellers from China.
“Clients look for items of certain categories on marketplaces more often than in search browsers, the trend which appeared abroad long ago and seen unobtainable in Russia three to four years ago,” Smyk said.
“Online retail sees a rising number of regular purchases, including staples – it raises the frequency of shopping. For example, at Ozon, it rose by 53% to almost 12 orders annually on average per user and, consequently, it cut the average check. The people make not only large purchases on marketplaces, but also small ones, more often, and the total online consumption mounts.”
Smyk also said that businessmen’s interest in online platforms has risen because the country mutes certain social networks that were used by small sellers.
“Thanks to blocking of some social networks and discontinuation of monetization on some platforms, like YouTube, attention to the marketplaces as advertising floors has soared. For example, on Ozon, not only its sellers started placing advertisements on the marketplace, but also such brands as Tinkoff, VK, MTS, Haval, and others. As a result, our advertising revenue almost tripled to 15 billion rubles in January–September 2022,” Smyk said.
Marketplace Wildberries continued to develop the platform for consumers and entrepreneurs in 2022.
“We tried to support both businessmen and consumers. In January–November 2022, we provided 203 billion rubles of additional discounts at our own expense, up 25% on the year,” a Wildberries spokesperson told PRIME.
The company improved operations of its regional logistics and availability of warehouses for businessmen. Wildberries invested 20.8 billion rubles in construction of logistics centers and opening of pick-up points across the country in January–September 2022.
“A dramatic rise of logistics costs was one of the key challenges we, like all the other market players, faced in 2022. It stems from an increase of costs of all its elements, from warehouse equipment and commercial transport, which becomes less affordable, to materials and components for building of logistics facilities, their cost has rocketed by 40–50% since 2020,” the spokesperson said.
“In 2023, we will focus on further expansion of the online platform for Russian business to push forward the entrepreneurship in the country. We will continue to improve our own logistics infrastructure and business processes by creating new jobs for the e-commerce and services for the customers and entrepreneurs.”
AKIT’s head Sokolov sees the 2023 year’s challenges in parallel imports.
“Its legalization in Russia differs noticeably from other countries. In our case, we do not speak about full establishment of the international principle of exhaustion of the exclusive right to a trademark, this regime applies only to the goods picked by the Industry and Trade Ministry. The list of the parallel import goods is regularly updated and is subject to dynamic changes depending on the market situation,” he added.
(67.5744 rubles – U.S. $1)