FOCUS: Restored demand, mobile hegemony bolster e-trade 26% in 2017 - Consumer Goods & Retail - PRIME Business News Agency - All News Politics Economy Business Wire Financial Wire Oil Gas Chemical Industry Power Industry Metals Mining Pulp Paper Agro Commodities Transport Automobile Construction Real Estate Telecommunications Engineering Hi-Tech Consumer Goods Retail Calendar Our Features Interviews Opinions Press Releases

FOCUS: Restored demand, mobile hegemony bolster e-trade 26% in 2017

By Yekaterina Yezhova

MOSCOW, Feb 26 (PRIME) -- The Russian e-commerce market jumped 26% in 2017 to 1.725 trillion rubles thanks to a post-crisis rebound in consumer demand and expansion of purchases via mobile devices, experts said. The industry has even more growth potential in 2018 thanks to dominating cross-border trade and expansion of payment means.

The market comprises several segments: online retail, which expanded 28% in 2017 to 901 billion rubles; online travel, which grew 24% to 620 billion rubles; and services in the Internet, which rose 19% to 204 billion rubles. We think online payments increased 19% to 817 billion rubles, Sergei Plugotarenko, director of the Russian Association for Electronic Communications (RAEC), told PRIME.

The market dynamics allow us to speak about resumption of consumer demand and a continued trend of buyers switching to online from offline.

Consumer behavior

People have become more confident about online payments, Plugotarenko said, adding that customers prefer using mobile devices when making purchases rather than desktops. People are now more attentive about their choices and estimations.

A choice in favor of foreign online stores is an important feature of the consumer behavior. The growth of e-commerce is mostly secured by an increase in the number of cross-border transactions. At that, the share of internal e-commerce in the total volume shrinks. More than half of cross-border volume is presented by China, the RAEC head said.

The Association of Internet Trade Companies (AITC) said an average check in cross-border trade stopped falling in 2017, which translated into higher cross-border payments despite a smaller rise in transactions than in 2016. The local market also grew, but less than its foreign counterparts, the associations PR Director Yulia Galeyeva said.

Plugotarenko said that the main trend of 2017 is resumption of consumer demand after a lengthy period of crisis-provoked saving.

Another important trend is a growth of purchases from mobile devices. The number of users of the mobile Internet in the country exceeded the number of desktop users for the first time in 2017, and a growth of purchases via phones is a reflection of a general trend of switching to mobile, he said.

Among other trends, we can earmark forays of big offline players into online. For example, X5 Retail Group kicked off an online store on the basis of its grocery chain Perekrestok.

Customer preferences

In the distribution of goods categories, leading positions were kept in 2017 by household appliances and electronics, accounting for 32% of all online purchases, followed by clothes and footwear. General merchandise, homeware and do-it-yourself enjoyed a steady high demand, Plugotarenko said.

In the segment of household appliances and electronics, phones and smartphones, as well as small appliances accounted for the bulk of online purchases. The share of photo equipment declined, the RAEC head said.

Large electronics retailers M.Video and Eldorado, both parts of Mikhail Gutseriyevs Safmar Group, said in a research note that online sales of electronics and household appliances rose 12% in 2017 to 233 billion rubles. The share of online purchases amounted to 19% of the total market.

Online is a driver of electronics sales. The top five most popular brands in the Internet were Apple, Samsung, LG, Bosch, and ASUS. The biggest online growth was shown by manufacturers of smartphones and laptops, such as Xiaomi, Honor, Dell, and Acer, the sellers said.

Online sales of smartphones and accessories to them, large appliances and computers accounted for 76% of all Internet sales, M.Video and Eldorado said.

Outlook for 2018

The countrys e-commerce has been growing over the recent years by higher rates than the worlds average.

Certainly, there is low base effect: a share of online retail in the total volume of retail in Russia is rather low, about 4%. For comparison, online sales stand at 12% in developed countries, according to experts. This is why, growth potential remains. Factors of a further increase are a rise of cross-border trade, an increase in the number of payment means, better quality and wider geography of delivery, resumption of consumer capacity, and development of marketplaces, Plugotarenko said.

Among barriers we can name a ban on online sale of some goods, like medications or alcoholic beverages, as well as legal restrictions on online commerce in jewelry. It is also necessary to point out the fact that the notion of remote trade and online trade in the Russian law is rather vague. There are unsettled issues of responsibility of the seller to the buyer.

AKIT expects the government to make decisions in 2018 to help the local market rise in line with cross-border trade.

The number of international postal items will also grow, and in view of interest to expensive purchases, we could see higher demand for express carriers. According to our outlook, the number of international postal items will rise 2830% in 2018, Galeyeva told PRIME.

(56.7608 rubles U.S. $1)

End

26.02.2018 10:51
 
 
Share |
To report an error select text and press Ctrl+Enter
 
 
Central Bank Official Rate
1W 1M 1Y
USD
EUR 77.3832 -0.3012 26 sep
USD 65.8244 -0.3350 26 sep
Stock Market Indices
1D 1W 1M 1Y
MICEX
rtsi 1169.04 +0.52 18:50 25 sep
micex 2444.22 +0.58 18:50 25 sep
Stock Quotes in RUR
1D 1W 1M 1Y
GAZP
gazp 160.65 +1.04 18:32 25 sep
lkoh 4886.50 +2.23 18:32 25 sep
rosn 458.85 +2.64 18:32 25 sep
sber 195.95 -1.41 18:32 25 sep
MICEX Ruble Trading
1D 1W 1M 1Y
USDTD
EURTD 77.5600 -0.8850 14:59 25 sep
USDTD 65.7650 -0.7025 17:44 25 sep