Russia
In recent years, the trend of Chinese e-commerce companies going global has been on the rise, with AliExpress(阿里巴巴), SHEIN(希音), and other Chinese e-commerce giants growing into world-class enterprises. According to the "China Cross-Border E-Commerce Trade Annual Report" released by the China Customs in June 2023, the scale of China's cross-border e-commerce imports and exports broke through 2 trillion yuan for the first time in 2022, a year-on-year increase of 7.1%.
In the fiercely competitive global e-commerce market, Russia's e-commerce market is emerging and becoming a new high-potential destination for e-commerce globalization. According to data from the Association of Internet Trade Companies (AKIT) in Russia, the scale of Russia's e-commerce market has grown from 260 billion rubles in 2010 to 4.986 trillion rubles in 2022, with a compound annual growth rate of about 27.91%, outperforming the global average of 14.28%. In 2022, Russia's e-commerce market ranked first globally with a growth rate of 27.2%.
Under the dual drive of policy and market, the potential of the Russian e-commerce market has opened up growth space for Chinese e-commerce companies. Although Russia's e-commerce market is still in its early stages, the bilateral relations and economic and trade cooperation between China and Russia, as well as the withdrawal of Western brands, further provide Chinese companies with a "first-mover" advantage, making it one of the most important markets in the future.
On August 14, EqualOcean released the "2023 Russia E-commerce Market Research Report", which systematically introduces and analyzes the macro social and economic background of Russia, the current development of the Russian e-commerce market, and its future development trends and opportunities. The report will answer the concerns of e-commerce companies that are going global and are laying out in Russia, shortening the psychological distance of entrepreneurs to the Russian e-commerce market.
There are opportunities to enter the Russian market.
Calculated by purchasing power parity, Russia, as the sixth largest economy in the world, has a solid economic foundation. The Central Bank of Russia and the International Monetary Fund predict that the economy will maintain positive growth in the next five years. Per capita GDP and residents' wages are expected to maintain a growth trend in the coming years. Accordingly, consumer spending expectations and purchasing power will gradually increase.
With Russia's policy looking eastward, Russia is strengthening cooperation with economies such as China, India, and Middle Eastern countries. The development of e-commerce cooperation between China and Russia will be boosted by policy. In the joint statement issued by China and Russia in March 2023, it was pointed out that both sides will support the development of e-commerce and deepen cooperation in the digital economy. This will be conducive to promoting the digital development of business flow, logistics, and capital flow between the two countries. As predicted by Huang Xiao, President of Ozon China, the active cooperation between China and Russia in policy will prioritize the promotion of cross-border business flow between the two countries. More Chinese goods and sellers will enter e-commerce platforms for sale, promoting the construction of cross-border logistics and payment systems through cross-border business flow.
The e-commerce industry is growing rapidly, and the competitive landscape is still changing. It is estimated that by 2027, the number of users will reach 75.4 million, and the user penetration rate will reach 52.9%. By 2023, the revenue of Russia's e-commerce market is expected to reach 36 billion US dollars, and the annual growth rate of revenue (CAGR 2023-2027) is 12.78%. Currently, the market growth is mainly driven by the top five platforms, and compared to the Amazon-dominated US market and the tri-polar dominance of Alibaba(阿里巴巴), JD.com(京东), and Pinduoduo(拼多多) in China, there is space for new entrants.
Although there are many opportunities in the Russian e-commerce market in 2023, challenges and opportunities coexist, and there are unstable factors in the development of the Russian e-commerce market. Chinese entrepreneurs should conduct risk assessments and seize the opportunity to enter platforms and tracks with better development prospects.
The first difficulty in entering the Russian e-commerce market comes from the risks brought about by changes in the macro-political and economic environment. During the Russia-Ukraine conflict, the implementation, maintenance, and expansion of international embargoes, economic, trade, or other sanctions on Russia may have adverse effects on business operations, financial conditions, and operating performance in Russia. The fluctuation of the ruble exchange rate, the Russian legal system, and the continuous development of Russian legislation, including the legal framework for managing the e-commerce and fintech industries, data protection, and related internet services, bring an uncertain environment for investment, business activities, and corporate operations.
At the same time, in terms of compliance, Chinese entrepreneurs may have a lack of understanding. Due to a lack of systematic and in-depth understanding of the Russian e-commerce market, Chinese entrepreneurs may not be familiar with Russian digital economy, e-commerce market-related laws and regulations, brand intellectual property protection in the Russian market, certification of import and export product sales qualifications, etc., which also brings certain risks to entering the Russian e-commerce market.
In addition, cross-border logistics are settled in US dollars, and costs are greatly affected by exchange rate fluctuations, so cost forecasting is necessary. Domestic logistics channels in Russia are mainly e-commerce platforms, and the autonomy of the process is relatively weak due to platform quotations, warehousing, and pickup point infrastructure limitations for sellers in the stores.
There is a structural vacancy in advertising and marketing services under the information war. In 2023, there are still functional deficiencies in Russian local social media in terms of social media marketing, intelligent advertising recommendations, live streaming, and UGC production and dissemination. Affected by the Russia-Ukraine conflict, the use of many international social media platforms such as Instagram, Twitter, and Tiktok in Russia is restricted. At the same time, social media does not provide sales channels for large e-commerce platforms. Live streaming features on the top ten Russian e-commerce platforms in terms of sales have not yet scaled up, and the recruitment of video marketing-related talents has also become a difficulty.
EqualOcean has carried out countermeasure analysis in many aspects such as macro policies, category selection, and platform cooperation in the report, providing practical references for Chinese entrepreneurs.For more information, please click here to download the full version of EqualOcean's "2023 Russia E-commerce Market Research Report".
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