Online shoppers overwhelm Russian Post

By bne IntelliNews April 25, 2013

bne -

E-commerce in Russia may be booming, bringing windfalls for companies involved in the sector, but it's not been so lucky for the head of Russian Post (Pochta Rossii), who was sacked April 19 after 500 tonnes of parcels piled up at the border, leading to months of delays.

Alexander Kiselyov protested it was not his fault and that the service was simply overwhelmed by the volume of goods Russians were buying overseas in online shops. Russia is famously expensive, and with seven out of ten Russians now online and credit cards ownership widespread, shoppers have turned to virtual stores in droves, mostly Chinese stores where goods are much cheaper than at home.

Russian Post estimated that last year it received and delivered about 15m

parcels from abroad, double the amount from 2011, and the number of parcels looks set to double again this year. The majority of parcels weigh less than 2kg, and mainly contain gadgets and clothes, according to Russian Post. About 70% of these parcels are orders from international online retailers, of which 40% come from China.

VTB Bank reports that a check of online stores found the average bill in

Chinese online shops averaged RUB2,700 ($87), compared with the Russian

average of RUB3,500 ($113) for the same goods. Parcels coming into Russia

worth less than €1,000 are not subject to customs duties.

The most popular site is Taobao, which launched a Russian version in the spring 2010 and became one of the largest Russian online retailers, with $35mn turnover by 2012 - a year-on-year increase of 130%.

Analysts say Chinese turnover is growing so fast that it threatens to

undermine the Russian online retailers' business.

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