FOCUS: Russia’s e-commerce grow on wider smartphone use, Chinese stores in ’15

By Yekaterina Yezhova

MOSCOW, Dec 14 (PRIME) -- Russia’s online retail market added at least 10% to the growth of previous years in 2015 despite economic turbulence, the ruble’s tailspin and high inflation with a larger number of people preferring cheap Chinese e-stores. Buyers now place more orders via smartphones, while analysts see personal data safety and a poor quality of goods as barriers for further progress.

“Every time during a crisis, classic retail sags, unlike electronic sales. This year will be no exception. The number of orders will grow 10% as of the end of 2015, excluding cross-border trade,” Alexei Nikushin, an analyst at the Russian Association for Electronic Communications (RAEC), told Russian Connection.

“Compound annual growth rate (CAGR) of the online market reached 40% in 2010–2014. We expect CAGR at 8.9% in 2014–2018 in the new economic realities. The market accommodates more than 40,000 Internet stores, but research company J’son & Partners Consulting expects their number to shrink by 5% in 2015 due to the difficult economic situation.”

Research company GfK Rus released dynamics of online and offline sales in 2015 vs 2014 in some categories in monetary terms:

	Online sales, %	Offline sales, %
Household appliances, electronics	+3.3	-12.8
Fast moving consumer goods (FMCG)	+54.5	+14.3

In 2014, the online trade market soared 31% on the year to 713 billion rubles, including 464 billion rubles spent on material goods and 249 billion rubles spent on non-material goods, according to the Association of Internet Trade Companies (AITC).

GfK Rus mentioned top five goods categories by share in the total volume of online orders in 2015:

Category	Domestic e-stores, %	Foreign e-stores, %
Clothes, adult footwear	10	9
Children’s goods	7	4
Cosmetics, perfume	7	3
Phones, smartphones, tablets	5	4
Small appliances	8	1

An average value of an online order at a local e-store slipped 0.7% in 2015 to 6,520 rubles, and an average value of an order at a Chinese e-store went up 0.5% to 2,439 rubles. An average value of an order placed at an English-speaking e-store jumped 19% to 6,104 rubles, according to GfK Rus.

“Transboundary orders accounted for 29.3% of all online purchases in 2014. They will grow 25% by the end of 2015, amounting to 260.75 billion rubles,” Nikushin at the RAEC said.

The AITC’s Executive Director Artyom Sokolov said that “in 2016 we could see major online players to shift infrastructure abroad thanks to a jump in cross-border trade, which accounted for 35% of e-commerce in 2015”.

“The main change in the geography of online retail commerce over the recent years is a dramatic growth of popularity of Chinese e-stores,” GfK Rus’s General Director Alexander Demidov said at a news conference.

Over the last 12 months, 51% of respondents polled by GfK Rus used services of Chinese e-stores at least once, as compared to 39% in 2014, and 23% of respondents bought on English-speaking Web sites in 2015, down from 26% a year earlier.

In 2015, every tenth purchase in the country was made via a mobile device. Of the total, 4.8% of respondents bought online with smartphones in 2015 as compared to 2.1% in 2014, and 5.2% of people using tablets in 2015 against 3.3% a year earlier.

“Almost a third of online buyers made purchases via smartphones at least once over the last 12 months,” GfK Rus said. People opt for e-stores mostly thanks to lower prices, time saving and a wide range of goods, which are not present in offline stores.

“Consumer confidence is the most important factor in the development of online commerce. It involves safe payments via banking cards, reliable delivery, quality of goods and possibility of a dialogue with the seller. The more effective will be the way of tackling these matters, the more prospects e-commerce will have,” GfK Rus head Demidov said.

The main barriers for online purchases are still security of personal data, inability to see goods “alive”, costs of delivery and a difficult process of returning goods, Demidov said.

(69.1755 rubles – U.S. $1)

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