E-commerce in Russia
2006-06-12
The number of home computer and internet users is growing in Russia. Most are also accustomed with on-line shops. Yet, the e-commerce market is still at its nascency.
ICT, understood as fixed-line and mobile telephony, computers and internet, is gaining in popularity among Russian consumers. We estimate that the number of PCs per 100 inhabitants was 18 at the end of 2005. This is an approximately 8% increase on the 2003 figure. The number of internet users also increased over the two years. At the end of 2005, internet penetration stood at some 21%, compared to 11% in 2003.
* aged 18+
** during the last six months
Source: Romir Monitoring, 2006
The rising PC and internet penetration supports better prospects for future growth of the domestic e-commerce market. Notably, the percentage of internet users who buy in on-line shops is constantly rising. According to a survey conduced in May 2006 by Romir Monitoring, a research company, around 87% of adult internet users in Russia visited on-line shop websites over the six months ended on the survey date. Though this figure did not change from the beginning of 2005, noteworthy is the increase in the percentage of users who chose to shop on-line. At the beginning of 2005, 42% of Russians visiting on-line shops did so; meanwhile, in May 2006, the group had grown in size to 49%.
Despite an increase in the total number of internet shoppers, the percentage of those who buy goods frequently or on a regular basis – so crucial for on-line retailers – continues to be low. According to Romir, around 60% of internet buyers in Russia make on-line purchases less than once a month. Every fifth respondent e-shops on a monthly basis and 16% of Russian internet users disclose that they shop on-line about two to three times a month. There has been an improvement in the latter category, which bodes well for the future. The share of those doing e-shopping most frequently (two to three times a month) grew by five percentage points in comparison with January 2005.
From among other findings of the Romir survey, we learn that in Russia e-shopping remains an activity primarily reserved for those with high income. Yet, according to Romir this is gradually changing. Another feature of the Russian e-commerce market is that most of the on-line trade participants reside in either Moscow or St Petersburg. Consequently, most market players do not deliver goods to addresses outside the two cities.
Note: Respondents could provide more than one answer.
Source: Romir Monitoring, 2006
Not surprisingly, over the past year problems with delivery continued to be cited as one of the top three reasons for not buying goods on-line. Russian consumer who have decided not to buy in internet shops also complain about the lack of information about the products offered by e-shops. In the latest edition of the Romir survey, the latter factor was mentioned as a key reason for not buying online by every second respondent. Other obstacles to online shopping include unfamiliarity with this type of retail format, problems with payment and price disparity (cited by respondents who believe that e-retailers charge higher prices than those in the traditional distribution channel). On a positive note, the latter three categories have been steadily losing in pertinence since the beginning of 2005.
The abovementioned improvements in internet and on-line shopping statistics do not necessarily mean that Russia is in an e-commerce boom. Nevertheless, they do signal that the online market is developing and gaining in importance as a distribution channel. This, in turn, may prove a good opportunity for providers of on-line distribution solutions, internet content, hosting and web management services.
Pawel Olszynka
Methodology note:
The Romir Minitoring survey was conducted among Russians aged 18+. In each edition of the survey, a total of 1,537 internet users were canvassed. The sample is representative for the whole internet user population in Russia (according to Romir in Q1 2006 it comprised of 22% of the adult population of Russia).
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