Russia's online retail revenues to grow by a quarter this year

By bne IntelliNews October 6, 2014

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Russian online  retail revenues will grow by more than a quarter (28%) this year to RUB700bn, according a report from the Internet Commerce Companies Association (AKIT), reports PRIME. 

Russia's internet is the most dynamic part of the economy by far and currently the only part growing strongly. Russians have taken to the internet like fish to salt water as the internet has solved one of Russia's historically most difficult problems: the fact that the country is so enormous. Perhaps it is unsurprising that already the biggest users of e-commerce services are those people who live in remote regions such as Siberia.

Unencumbered by distance, the internet allows retailers based anywhere in the country to reach everybody else – the 143m people in Russia and some 300m Russian-speaking people – at the click of a mouse button. Russia already leads the rest of Europe in terms of the absolute number of people online, some 70m at the last count. 

The bugbear in the system is the state of the postal system. While Pochta Rossiya works, it does not work very well. However, the postal system is currently being reformed and as it gets better the e-commerce will only grow with it. Sales of online retailers are expected to rise to over RUB1 trillion by 2015 from RUB544bn in 2013, AKIT said. 

User penetration by Russian e-commerce businesses has grown dramatically but still lags the developed world. Some 50% of Russians buy things online, compared to an average of 60% in the EU, 70% in the US and more than 80% in the UK.

Russia's 40,000 e-commerce companies are already coining it, led by Yandex.Market. However one of the quirks of the Russian e-commerce business is that the internet proceeded the widespread use of credit cards and therefore cash payments for goods continue to dominate the business. Cash payment still account for 69% of all purchases made with an average bill size of $75.

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