With over 80 million people using the internet monthly, Russia has the largest online audience in Europe, and long-term growth prospects are promising.

Approximately 60 percent of Russian internet users shopped online in 2017, according to the Association of Internet Trade Industries (AKIT). The Russian e-commerce market is USD26 billion, as international players seize opportunities amid crisis. Online retail sales exceeded USD26 billion in 2016, up more than 20 percent year-on-year, even as the Russian economy contracted. Cross-border e-commerce is the fastest growing segment (+26 percent by value, +80 percent by number of parcels and small packages), exceeding USD4 billion in physical goods alone. Real-estate infrastructure has become dramatically cheaper and more accessible, and key players are taking advantage of the opportunity to build out warehousing and fulfilment facilities. Although demand still exceeds supply on the fulfilment service market, delivery conditions across Russia have improved.

This growth has been driven in large part by Chinese companies – most notably Alibaba’s B2C marketplace Aliexpress.ru – but key Western players, including Amazon, Asos, Next, and Yoox, are also well-represented.

Domestic e-commerce (B2C)

According to Yandex’s “Report on e-commerce in Russia,” in 2016, the domestic online retail market exceeded USD22 billion (including USD12 billion for physical goods and USD10 billon for online travel), growing by more than 20 percent year-on-year, despite facing economic headwinds. Some Western-funded companies (like KupiVip, Lamoda, and Ozon) recorded impressive growth in 2016, while others (Oktogo and Wikimart) were on the verge of bankruptcy.

B2B e-commerce

According to the Moscow Times, 68 percent of Russian corporations used electronic trading platforms for procurement purposes in 2015.

The majority of this business was associated with construction goods and services, with more than one-fifth of all purchases made in 2014 falling into this category. Machinery and specialized products for the mining and oilfield industries was another significant source of revenue, making up 18.6 percent of all online B2B purchases seen on the B2B-Center.

As B2B online shopping becomes more prevalent in Russia, the industry has become tightly regulated. Transactions made through B2B e-commerce platforms are legally binding due to the large financial value of these purchases. Procurement procedures, especially for state-run entities, face strict legal requirements.

E-commerce services

Russia’s vast landmass presents logistical challenges for e-commerce outside of major metropolitan areas. However, delivery options have improved significantly over the past few years. Russian Post’s reform initiatives were a catalyst for the emergence of higher-quality service and shorter delivery time to large and mid-sized cities across the country.

Meanwhile, purely online enterprises such as KupiVIP, Lamoda, Ozon, and Ulmart have deployed their own warehousing and delivery processing facilities across the country. Others, like multi-channel (online and offline) retailers Otto and Svyaznoy, have developed existing logistics systems to serve the growing needs of their e-commerce branches.

Popular e-commerce sites

AKIT data shows that foreign online stores accounted for 36 percent of all online purchases by Russian citizens, amounting to 374.3 billion rubles in 2017. This marked an uptick from 2016, when purchases from international online retailers amounted to 33 percent and 304 billion rubles. Online purchases from foreign suppliers accounted for almost 60 percent of the market’s growth.

In 2017, 90 percent of Russian internet purchases from foreign sellers were conducted with Chinese e-commerce retailers. In monetary terms, these purchases account for 53 percent of the market. The Aliexpress website had the largest audience: 20 million people in 2017. The average purchase total from Aliexpress by Russian shoppers was 980 rubles (approx. USD16).

The most popular B2C Russian online stores are wildberries.ru, citilink.ru, mvideo.ru, technopoint.ru, eldorado.ru, lamoda.ru, ozon.ru,
svyaznoy.ru, kupivip.ru, ulmart.ru.

Online payments

Cash-on-delivery (COD) is the preferred medium of exchange for physical goods and will likely remain so for some time; however, the use of electronic payments is slowly increasing.

In addition to bank cards, several new solutions are appearing on the market and some of them are intended to create a universal payment mechanism. Large segments of the electronic payment market are led by domestic players, from payment terminal operators to mobile carriers, and electronic currency companies.

Mobile e-commerce

There are more than 8.5 million mobile shoppers, and this is expected to increase dramatically, as mobile internet and smartphone devices grow in popularity across Russia.

Digital marketing

The amount and frequency of searches for a product or service should be analyzed prior to launching a campaign in Russia. Complementing Google Trends, Yandex can support search-engine optimization efforts.

Major buying holidays

Foreign retailers should consider adapting their marketing campaigns, promotions, and products for the Russian New Year, Men’s Day, and International Women’s Day. These three holidays drive a significant portion of Russian online shopping and vary from Western holidays.

Over the past few years, some Russians started participating in Black Friday weekend sales to kick off the winter holiday shopping season – but the vast majority of Russian shoppers make their purchases throughout December for the Russian gift-giving day on January 1. Indeed, many last-minute shoppers are still making purchases in late December in Russia, when Westerners have already returned/exchanged gifts. A third of Russian holiday shoppers turn to the internet for gift ideas and to make these purchases; 14 percent of shoppers search online, but then conduct purchases in stores.

Russia recognizes men on February 23, which is the country’s unofficial “Men’s Day” (officially, “Day of Defenders of the Fatherland”), and celebrates International Women’s Day on March 8. During the weeks leading up to these holidays, Russians search for a number of gifts in the cosmetic and electronics categories to recognize their friends and family members. Combined, these three holidays represent a critically-important retail period that is largely unique to the Russian market.

Beyond these holidays, the Russian people also utilize internet searches for Valentine’s Day gifts, wedding gifts, and birthdays.

Social media

The number of social networks users in Russia has almost doubled over the last six years, from 35 percent to 59 percent of the Russian population 18+. More than 90 percent of Russian internet users access social networks.

The most popular social network is VKontakte. In December 2017, 65 percent of Russian users visited it. It is followed by “Odnoklassniki” which attracted 63 percent of Russian users. Traffic and use rankings also include Instagram (23 percent) and Facebook (20 percent). This is followed by My World (nine percent), Twitter (seven percent), LiveJournal (three percent), and other networks (one percent).