Overview of the prevalence and reliability of express delivery firms within the country.

According to a J’son & Partners Consulting study, Russia’s express delivery market grew five percent to 54.6 billion rubles (approximately USD850 million) in 2015 (latest available edition), representing 0.5 percent of the global express delivery market. The 38 largest Russian cities with more than 500,000 residents account for 70 percent of the total volume of express delivery services, with more than 60 percent of the market coming from B2C (business-to-consumer) transactions. The size of the B2B (business-to-business) express delivery segment, which is especially important for healthcare products, has not changed since 2015.

More anecdotally, leading market players estimated the overall share of express delivery at 10-20 percent of sales for 2018. The Russian express delivery market is characterized by price dumping, frequent market disruptions, and a highly competitive nature. Companies are seeking to increase operational efficiency and monetization, which is leading to the introduction of fees for previously free services.

In 2018, DataInsight, a Russian research agency specializing in e-commerce, published the most recent trends on express delivery in Russia. Express delivery is used for up to 11 percent of all internet orders. Food and medical supplies are shipped more quickly, whereas books and CDs take the longest to deliver. The report stated that 41 percent of those surveyed had the need for urgent delivery at least once over the past three months. The most important delivery quality factors for users are cost (58 percent of users), speed (55 percent of users), punctuality (39 percent), and frequency of deliveries (20 percent). The main incentive to start using express delivery is to cut costs. The report also stated that 72 percent of those surveyed are ready to pay for urgent delivery, but only 40 percent are ready to pay more than 300 rubles.

According to the East West Digital News (EWDN) industry report (the latest statistics available), the Russian B2C e-commerce market was approximately USD16.3 billion (physical goods) in 2016, including an estimated USD4.3 billion for cross-border sales, mainly from China. Cash-on-delivery and partial returns are widespread practices in Russia, leading to increased delivery costs. A person can receive goods that weigh less than 31 kilos and a de minimis value of up to 750 euros per month without having to pay сustoms duties. Parcels of larger weight and value need to be cleared via сustoms and, since January 1, 2017, Russian Customs has required passport data for individuals receiving parcels from abroad, which significantly increases delivery time.

PickPoint is the leader in this segment, with 80 percent of the market, followed by QIWI Post and LogiBox. The express delivery sector is growing proportionately with e-commerce, and experts suggest that the express delivery market will grow five percent annually over the near term. In 2015, AliExpress and eBay signed contracts with Russian express delivery companies. Furthermore, Amazon has started shipping a limited number of product categories to Russia.

The Russian express delivery market remains highly segmented, with each of the largest players holding less than five percent of the market. Industry insiders suggest that over the next ten years consolidation will leave only five or six large companies, including DHL, Armadillo, and UPS. The Russian Postal Service controls more than 90 percent of the cross-border B2C shipping market but has a much smaller share of domestic operations. According to the Russian Association of Express Delivery Companies, DHL is the leading foreign operator in the market. FedEx and UPS are also very active, but the total share of the four largest global companies is still less than the share held collectively by Russian firms, including EMS Russian Post, Armadillo, Garantpost, PonyExpress, CityExpress, and SPSR.

The Russian Post recently said it will boost its e-commerce infrastructure in 34 Russian cities and open express delivery channels from China, speeding up deliveries from two-three weeks to one week, and in 18 to 24 months to up to three days.

Since December 2017, under Federal Customs Service directive No. 1861, Russian Customs has required additional recipient data, including Taxpayer ID Number (TIN) and price confirmation of imported goods, to help сustoms track whether the products exceed the weight and value limits above which сustoms duties must be assessed.