Russian e-commerce market tops $26 billion
as international players seize opportunities amid crisis
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Online retail sales exceeded $26 billion in 2016, up more than 20% year-on-year, even as the
Russian economy contracted;
Cross-border is the fastest growing segment (+26% by value, +80% by number of parcels and
small packages), exceeding $4 billion for physical goods alone;
Real-estate infrastructure has become dramatically cheaper and more accessible, and key
players are taking advantage to build out warehousing and fulfilment facilities;
Although demand still exceeds supply on the fulfilment service market, delivery conditions
across this huge country have improved;
March 1 2016, Moscow – Russia’s e-commerce market continued to grow at double-digit rates last
year even as offline retail was severely affected by the economic crisis, a report published today
reveals. Online sales in 2016 exceeded $26 billion, growing more than 20% year-on-year, including
$16 billion for physical goods and $10 billon for online travel.
The cross-border segment is the fastest growing, up 26% by value and 80% by number of parcels
and small packages, and exceeded USD 4 billion for physical goods alone. This growth has been
driven in large part by Chinese companies – most notably Alibaba’s B2C marketplace Aliexpress.ru –
but key western players including Amazon, Asos, Next and Yoox are also in the game.
The report released today by East-West Digital News (EWDN) in partnership with EY and Arvato
Russia analyses the current market trends and the challenges and opportunities for e-retailers in the
Russian market. Th ereport also highlights the specific market of e-commerce warehousing and
fulfilment, providing a full set of market data, interviews and case studies with key Russian and
international retail companies. The report is available as a free download.
“Russia remains a land of opportunity for e-retailers, despite the economic headwinds that have faced
the country in recent years”, said Adrien Henni, Editor-in-Chief of EWDN. “Challenging market
conditions have shaken up the e-commerce sector, and the companies that emerge leaner and
stronger are well placed to dominate the industry for years to come. In the medium-to-long
term, Russia is set to become one of the largest online retail markets in Europe.”
Due to the crisis, the real-estate infrastructure that companies need to serve Russian consumers has
become dramatically cheaper and more accessible. International and local retailers are taking
advantage of these opportunities to launch huge projects to build, expand or upgrade
warehousing and fulfilment facilities across the country.
Even though half of e-commerce companies now have their own infrastructure, demand still exceeds
supply on the fulfilment services market. However, while service performance of many providers
leaves to be desired, delivery conditions across the world’s largest country have improved
considerably over the past years, with the delivery service industry now entering a phase of
consolidation.
The report has been researched and written in collaboration with leading market experts, international
e-commerce companies and their service providers. More details on the report can be found below.
Download link
(for inclusion in your articles)
The special report on e-commerce warehousing and fulfilment is available here:
http://ewdn.com/files/wp_fulfillment_arvato.pdf
Media contacts
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General enquiries:
Peter Morley [email protected]
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Russian e-commerce market :
Adrien Henni, EWDN Chief editor [email protected]
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Russian fulfilment service market:
Olga Borinos, Arvato Russia PR manager [email protected]
KEY FACTS & NUMBERS ON THE RUSSIAN E-COMMERCE MARKET
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In 2016, the domestic online retail market exceeded $22 billion (including $12 billion for
physical goods and $10 billon for online travel), growing by more than 20% year-on-year
despite the crisis. Some western-funded companies (like KupiVip, Lamoda, and Ozon)
recorded impressive growth in 2016, while others (Oktogo and Wikimart) are on the verge of
bankruptcy.
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The cross-border e-commerce market is growing even faster (+26% in value, +80% in
number of parcels and small packages), exceeding $4 billion for physical goods only. Since
2014, this growth has been driven essentially by Chinese companies, first and foremost
Alibaba’s B2C marketplace Aliexpress.ru. Key western players, however, are also in the game
(e.g. Amazon, Asos, Next, Yoox)
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Since 2014, due to the crisis, the real-estate infrastructure has become dramatically
cheaper and more accessible. Leveraging these opportunities, key players in the retail
industry are engaged in huge projects to build, expand or upgrade their warehousing and
fulfilment facilities.
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Even though half of e-commerce companies have their own infrastructure, demand still
exceeds offer on the fulfilment service market. In spite of improvements over the past
years, the service performance of many providers leaves to be desired.
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Delivery conditions across this huge country have improved considerably over the past
years. The delivery service industry is entering a phase of consolidation with a series of
mergers and acqusitions over the past months. The most recent one, in January, was the
acquisiting of SPSR Express by DPD, a property of France’s GeoPost.
The Russian domestic online retail market
Physical goods 2011-2016, in billion rubles
These numbers concern only physical goods. They do not include cross-border orders, deliveries of ready meals as well as corporate,
C2C, MLM and group purchases – Source: Data Insight via EWDN report
Download the report: http://ewdn.com/files/wp_fulfillment_arvato.pdf
SPECIAL INSIGHTS ON WAREHOUSING AND FULFILMENT:
HOW INTERNATIONAL PLAYERSSEIZE OPPORTUNITIES IN CRISIS TIMES
EWDN’s special report on e-commerce warehousing and fulfilment provides a full set of market data,
interviews and case studies with key Russian and international retail companies. Among the cases
provided are the following:
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Eric Poulet, Director of Supply Chain at Leroy Merlin Vostok, unveils the group’s brand
new 100,000 sq.m. warehouse on the outskirts of Moscow, and says: “We are still investing
more than €440 million in Russia each year. We need to develop further logistic and support
capacities to support 20 new stores every year."
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Olga Evteeva, Site Manager at Next Russia, says how the UK fashion site has seduced
Russian consumers and switched from cross-border logistics to local fulfilment: “To be able to
conquer Russia you need to conquer the Russian customs.”
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Chris Van Riet, a businessman from Texas who heads Radius, a major warehousing
solution provider in Russia, analyzes the opportunities of the Russian market in crisis times:
"There is a dramatic shift in a region with a structural shortage of industrial space. USDdenominated rents have fallen by nearly 60% in late 2016 – even below levels recorded during
the 2008 financial crisis."
In the field of fulfilment, as revealed by a survey by Arvato Russia, a growing number of online stores
and distance selling companies are moving to outsourcing. However, the fulfilment service market still
remains far from maturity, with a lack of capacities for large-scale operations and service quality
issues with many providers.
EY legal experts Anastasia Kuznetsova and Igor Nevzorov identify the risks related to fulfilment
outsourcing contracts, and provide advice on how to address them efficiently.
Leroy Merlin has just launched a giant warehouse on the outskirts of Moscow to support its multichannel business in Russia.
(Photo credit: Leroy Merlin)
Download the report: http://ewdn.com/files/wp_fulfillment_arvato.pdf