Why Russia Is the New Ecommerce Frontier

  • Roman Tazetdinov, Head of Geo Expansion at Worldline

  • 20.07.2021 11:45 am
  • Ecommerce

Russia is the largest country in the world.  Covering one-eighth of the Earth's inhabited area, its size makes it impossible to ignore – particularly for international ecommerce businesses looking for the next big growth opportunity.

For many consumer brands, Russia’s 21 republics, are virgin territory.  As such they represent a tempting prospect for several reasons.   

Firstly, Russian ecommerce is booming.  The Covid-19 crisis has caused demand for online goods to skyrocket.  Annual online sales in Russia are expected to grow by more than 40% in 2020 and by 10-15% per year over the next five years.  This makes it a very attractive proposition for global brands with a strong online presence whose growth is stalling in mature and highly-competitive western markets.  

Secondly, Russians are spending more of their leisure time online. Two thirds are connected to the Russian internet, also known as RuNet. There are 99 million social media users and 228.6 million mobile connections.  All of which provides brands with a direct route to potential buyers.  

In addition, the country is on an economic up-swing and is fast becoming a consumer-driven society. Approximately 49% of Russian consumers prefer foreign products over local products and they are generally very loyal.

There’s more to doing ecommerce in Russia than simply setting up a local language website.  

To succeed in the Russian e-commerce space, international brands need to understand – and be able to navigate - its unique payment infrastructure, legislation and technology.  This includes:

  • Payment options

When making a purchasing decision, 75% of Russian buyers want payment convenience.  While major credit card transactions with the larger brands still dominate, the government is seeking to support local alternative payment methods.  Among the strongest challenger is Russia’s Mir card.  It is mandated that merchants with annual transaction turnover of more than RUB30 million ($0.5 million) accept Mir cards. This requirement will drop to RUB20 million in July 2021.

  • Mobile and faster payments
    The Russian Central Bank is clamping down on anonymous payments causing local eWallets including YooMoney, Qiwi and WebMoney to lose market share. It is also striving to unite retail banks behind a real-time banking payment method called “System of Fast Payments” (SFP).  

  • Data regulations
    Russia’s GDPR equivalent is Law № 152 – FZ.  It allows foreign companies to “migrate” personal data of Russian customers on servers abroad, only if the data has already been registered on servers located in Russia.  

There are many more local requirements which add to set-up complexity and make it difficult for international brands to go it alone.  Using an international acquirer with specific experience in high growth markets like Russia can help smooth the path, reduce time and effort, and ensure long-term success.

With the right expertise and payment support, there is no reason why international online businesses selling consumer goods, travel and more, can’t cross the frontier and immerse themselves in this rich and vibrant market.

 

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