Yandex.Money CEO Ivan Glazachev:
“Russian e-commerce is far from saturation and foreign brands have every chance to succeed”
With its PSP offer Yandex.Checkout, your company has been active in Russia’s cross-border e-commerce market practically since the very beginning. How do you see the current developments and future prospects?
The market is currently dominated by Chinese players. Do Western players have a chance?
Asian companies are firmly established on the Russian soil, but now Western brands are making their coming back. They have understood there are in Russia many solvent consumers eager to buy a variety of quality goods online. Chinese marketplaces and AliExpress in particular have enhanced confidence of Russian customers in buying abroad. It was an important and positive shift in local consumer habits, which now benefits to both Asian and Western e-merchants.
Currently, we are witnessing an unprecedented demand for digital goods and content from Western (US & EU) providers. Electronic Arts, Blizzard, Nintendo, Sony PlayStation, Steam, Xbox Live (Microsoft) have gained a very strong traction in Russia and neighboring countries — to such an extent that they have adapted integrated payment systems to the needs of consumers from this region. Western marketplaces (Amazon and eBay), fashion and luxury brands (Farfetch and ASOS) also found a solid audience. However, these successes are far from matching that of AliExpress.
Where do foreign players come from geographically?
According to a Knight Frank survey, over the past decade most retail brands came from Italy (19%) and the USA (17%). Great Britain (9%), France (9%) and Germany (5%) are following. The top categories were footwear and apparel (45%), food and restaurants (17%), accessorizes (8%), cosmetics (7%), and goods for kids (6%).
How do foreign brands and online merchants succeed on the Russian market?
Russian e-commerce is far from saturation, and foreign brands have every chance to succeed. With the right technologies, e-merchants can precisely reach their target audience and meet its demand.
Another key to success, as shown by the experience of many brands, is to cooperate with local agencies and services providers. For example, Yandex.Checkout provides its foreign partners with expert advice on the market, helps them localize and promote their products in Russia and neighboring countries.
A lot depends on a merchant’s own efforts as well. We highly recommend to develop a strong customer experience and keep control of every aspect of client service — including the last mile, which is critical to introduce a product to consumers.
How specific is the Russian market in terms of payments?
The payment landscape of Russia is diverse with two main fields: bank cards and alternative payment methods. The latter include direct debit, P2P transfers and e-wallets. We at Yandex.Checkout see that bank cards, direct debit and e-wallets are the most popular methods for cross-border payments.
We strongly recommend foreign merchants to integrate the largest possible set of payment options. Some already do it. For example, as Turkish online platforms are in great demand to Russian customers, Turkish Isbank partnered with Yandex.Checkout to provide more than 10,000 of its business customers with access to specific Russian payment means.
Do you believe foreign e-merchants should offer a COD option in order to increase their sales?
Cash-on-delivery may be useful for merchants offering expensive tangible goods. Customers prefer to have a close look to such products before confirming the purchase. In other cases, the COD option doesn’t increase sales volumes and conversion rates very significantly. Many foreign retailers have already withdrawn the COD option from their websites.
According to Yandex.Checkout data, a considerable number of merchants achieve a conversion rate of 95% or more after their customers click the ‘submit’ button. We also see that cashless payments are embracing more and more industries and have already become convenient to Russian customers. The COD practice slowly decreases and I believe this trend will continue or accelerate in the future. Merchants should focus on increasing conversion rates and controlling product quality rather than create for themselves COD headaches.
Is Yandex.Checkout’s offer to international e-merchants different from other PSPs?
Yandex.Checkout is more than a PSP: we aim to become a back-end business partner for each merchant, allowing it to focus on brand development. Yandex.Checkout partners with major companies in Russia and the former Soviet Union, the EU, the USA, China, South Korea, Turkey and other countries — in total, 106,000 merchants around the globe. With our payment solution, merchants offer Russian consumers all popular payment methods.
Through machine learning and AI, our platform provides a remarkable level of personalization. Merchants can adjust the individual package of payment options in their profile, and find tools to increase sales through individualized offers and deals.
Yandex.Checkout also offers its clients multipurpose fraud protection tailored to Russia’s specifics. It detects both behavioral and payment fraud, scam attempts and abnormal patterns while reducing merchants’ financial risks and maintaining payment conversion. This antifraud mechanism is also based on AI and machine learning. It increases conversion rates while lowering chargeback risks and losses related to stolen cards.
Yandex.Checkout facilitates fund disbursement to customers: prizes, cashback, micro-loans, etc. Mass payouts can be made to holders of e-wallets, bank cards, mobile phones or bank accounts. Other features are payment installments and online purchase on-credit. It is a fully online process with pre-scoring and scoring completed during purchasing. The customer pays later but the merchant gets the money now.
Last but not least, Yandex.Checkout is also about marketing. Our clients can reach out to the vast audience of Yandex. Money account holders — these are 46 million online customers.
Do you have an offer for B2B payments?
In 2018, we introduced in Russia a major online B2B service in cooperation with Sberbank. These fast B2B payments reduce the duration of the payment transfer: from 1–3 days to 1–3 minutes. Businesses get an instant online notification about the completed transaction. This solution has every chance to revolutionize Russia’s B2B payment experience getting it close to B2C scenario that is rather developed now.
Interview conducted in June 2019
¹ According to market analysts, cross-border purchases of physical goods accounted for around $5 billion (see Part I, Section 1.2). The remaining part of the cited $9.7 billion seems to correspond essentially to purchases of digital goods and services.
CEO Yandex.Money
Ivan Glazachev has been working in the industry of merchant acquiring and payments for more than 15 years. Before joining Yandex.Money as a CEO he spent 10 years at Russian Standard Bank as a board member and executive director, where he was responsible for acquiring and transactional businesses. With his active participation, Russian Standard Bank became Russia’s third largest acquirer in Russia and launched one of the largest white label card-to-card money transfer platform. The bank also relaunched its mobile and online banking solution. Mr. Glazachev holds an MBA in investment and corporate finance from Toronto’s Schulich School of Business at York University as well as a bachelor’s degree in international economics from Moscow State University of Commerce.