Russia's domestic e-commerce market up by 19% in 2018

Russia's domestic e-commerce market up by 19% in 2018
Russia e-commerce market in 2018 could reach RUB1.5 trillion ($22.8bn)
By bne IntelliNews December 18, 2018

Russia's e-commerce market in 2018 could reach RUB1.5 trillion ($22.8bn), according to the estimates by Data Insight cited by Vedomosti daily on December 17. Sales in Russian online stores are expected to increase by 19% to RUB1.15 trillion and in foreign by 29% to RUB348bn. 

"Data Insight’s forecasts imply a gradual slowdown in the growth of the Russian domestic e-commerce market (after the 20-21% y/y rise in 2017), although it still remains robust," VTB Capital commented on December 18.

The market dynamics are attributed to the result of the 18% y/y and 34% y/y increases in the number of orders in Russian and foreign online shops, respectively, and the slight decline in the average ticket on the market (by 2% y/y and 4% y/y, respectively). The estimates di not account for growing markets of online services, food delivery, ticketing, online gaming, and accommodation booking.

According to research conducted by the global market research company Nielsen, 90% of Russians have made at least one online purchase in the last ten years as a result of a growing consumer trust in online stores.

However, Data Insight still estimates that in 2018, the number of orders through foreign online shops is going to be slightly above that in domestic shops (300mn vs. 290mn). However, the average bill at the latter is more than three times that in foreign shops (RUB 3,970 vs RUB 1,161). 

According to the Russian Association for Electronic Communications, almost two thirds of the domestic e-commerce increase was delivered by growth at Wildberries and Ozon (might increase 70-80% in 2018). This week Wildberries said is planning to earn RUB120bn ($1.8bn) in 2018, a surge of 74% year-on-year. Ozon.ru plans to grow 70-80% to RUB70bn in revenues this year.

Together with accelerating development of existing online players, major alliances are being formed among IT companies, credit institutions and retailers (both global and local). Most notable Sberbank and Yandex.Market joint venture and strategic partnership of internet major Mail.ru, its shareholder mobile operator MegaFon, the sovereign Russian Direct Investment Fund (RDIF) with Chinese e-commerce major Alibaba and its AliExpress and Tmall platforms.

"We think domestic market growth might be spurred if there is a significant development in logistics and fulfillment, while the cross-border market will continue to attract customers due to the assortment and low prices," VTB commented.

Russian Post recently said it will boost e-commerce infrastructure in 34 Russian cities and open express delivery channels from China, speeding up deliveries from two-three weeks to one week, and in 18-24 months to up to three days. 

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