On Wednesday, the Wall Street Journal said Russia's underdeveloped market in e-commerce had attracted major players like China's Alibaba Group Holding Limited and US's eBay Inc and Amazon.com Inc.
According to Michael DeSimone, an e-commerce strategist who also runs the platform Borderfree and wrote to International Business Times in an email today, "Demand is concentrated in the main cities of Moscow and St. Petersburg, but there is growing demand in Russia's millennial cities [1 million+ people]."
DeSimone earlier pointed out several key points that potential investors should look out for in the Russian market. In a presentation he gave in July, DeSimone said Russia is one of Borderfree's five top markets for its retail clients in the US. Borderfree's platform allows DeSimone's company's clients sell their products abroad. With key cities including Novosibirsk, with 1.5 million people, and Yekaterinburg, with a population of 1.4 million, DeSimone argued that Russia was definitely an emerging market in terms of his company's yearly growth and sales.
Fashion e-retailer Modnique, a small boutique e-commerce site out of California, will launch its website tailored for foreign markets including Russia next week. The company is seeking to capitalize the growth it incurred from the Russian market after Russia and the Ukraine contributed to the e-retailer's over 100% increase in revenue and site visits just for its latest quarter.
Modnique chief executive Einaras Gravrock told IBTimes today, "We recognized earlier this year that we had a very big opportunity in Russia. Traffic and sales from that region started mushrooming very quickly, despite us having no real, specialized supply chain over in Russia, no translations, no local payments."
Although Web market researcher e-marketer projected sales in the e-commerce market in Russia would be at USD17.5 billion for this year, IBTimes noted that both major and minor investors would need to surpass a couple of hurdles first. Potential investors need to overcome the low penetration of Internet in the market, which is only 50% in adults. Another was the unfamiliarity of native sites among foreign companies in Russia. Yandex is the most popular search engine in Russia at more than 40% adoption of Russian browsers as opposed to Google Inc. Social media channels Vkontakte and Odnoklassniki dominated over Twitter Inc, Pinterest and other more familiar sites.
DeSimone also pointed out credit card and online payments as another issue, as Russians are naturally suspicious of such methods. Gravrock said that cash-on-delivery payments in Russia might be less predominant in 2020.
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