About this study
This site presents key excerpts from a 200-page research, which highlights the main facts, numbers and trends of Russian e-commerce in an international perspective.
This research is published by East-West Digital News (EWDN), a news and research agency covering Eastern Europe’s tech markets, with contributions from market leaders Alibaba, Lamoda, Leroy Merlin, Ozon, Mail.Ru Group, VK, Yandex Market, Yandex Money and 30 other companies.
Finnish legal firm Borenius, international VC database CrunchBase, Russian research agencies Data Insight and Dsight.ru, as well as Netherlands-based ECommerce Foundation also supported this six-month research effort.
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Key findings
The domestic scene
- Russian e-commerce is entering an accelerated development cycle. A range of major online retailers see their sales volumes grow annually between 50% and 150%. Online sales of physical goods are expected to reach some $22 billion in 2019 and jump to $50 billion or more by 2023. These numbers should be at least doubled if counting online sales of digital goods and services.
- There is no predominant player on this fragmented market. While existing leaders such as Wildberries, Citilink, Ozon and Lamoda are in the running for leadership, the emergence of giant e-commerce joint ventures could change the game. These are the Yandex Market Group of companies, backed by Sberbank, and the Alibaba-Mail.ru Group alliance. The future market leader could be valued at some $10 billion.
- These moves reflect renewed investor interest. In 2018, VC/PE/JV investment in Russian ecommerce exceeded $755 million – the highest level ever reached in this industry. However, this accounts for less than 1% of the global e-commerce investment market.
Cross-border
- Even though Chinese sellers still dominate the market, the cross-border scene is becoming more diverse. Western online retailers see their sales to Russia resume — after their setback in 2014-2016 — while new players from Turkey and other countries are entering the market.
- With $5 billion to $7 billion expected in 2019 (physical goods only), the market is still tiny, but it is growing fast. It could exceed $15 billion by 2023.
- Electronic appliances, apparel and footwear are the most important categories in sales volume. However, international players can find their niche in a variety of other segments.
- The majority of cross-border purchases are tax-free. There is no major obstacle for international players to succeed — be it in logistics, payments, customs or marketing. Market entry is made easier by new marketplaces and a variety of strong local service providers.
- Foreign e-commerce and e-payment companies should pay particular attention to Russia’s personal data laws, which are distinct from the EU’s GDPR and may require substantial adjustments in data collection, processing and storage.
Key data
Domestic e-commerce
E-commerce penetration among Russians aged 16-55
2014-2018 data by Yandex Market / GfK; 2019-2023 forecast by EWDN
Question asked: “Have you shopped online in the past six months?”
Current and expected share of e-commerce in total retail:
Russia compared with other countries
Cross-border e-commerce
Domestic vs cross-border e-commerce
in Russia (2018)
In market volume (bln USD)
Source: Data Insight
Domestic vs cross-border e-commerce
in Russia (2018)
In number of orders (millions)
Source: Data Insight
Value of cross-border e-commerce shipments (2018)
based on a total of 306 million transactions
involving foreign online stores
Source: AITC/AKIT and J’son & Partners
Split by product category
E-commerce sales value split
by product category (2018)
In the Domestic segment
Source: AITC/AKIT and Sberbank
E-commerce sales value split
by product category (2018)
In the cross-border segment
Source: AITC/AKIT and Sberbank
Investment
Global e-commerce investment in 2018
Sources: CrunchBase (global), Dsight.ru (Russia)