Russia scores 4 out of 5 possible carts on the BFI index, and is an essential component of any global ecommerce strategy. In 2013, Russia was Borderfree’s 5th largest cross-border market and leading emerging market. Its 71 million online users, just 50% of the population, represent the largest internet base in Europe. B2C ecommerce sales of $14.5 billion are expected to grow dramatically over the next few years; today they comprise just 2.2% of total retail sales.
Russian online consumers are highly educated and technologically savvy; their social media engagement rates exceed global averages. Personal consumption levels lead the BRIC countries, with 60% of pre-tax income spent on shopping (the highest in Europe) – with disposable income levels supported by low housing payments, socialized healthcare and a flat personal income tax of 13%. Top selling online categories are consumer electronics, apparel & accessories, and auto parts.
Cross-border sales account for an estimated 10-15% of total ecommerce sales in Russia, as many consumers find the product selection and prices to be better abroad. Additionally, a history of fraud by domestic sellers gives recognized and reliable foreign brands a leg up in capturing consumer trust and wallet. Import tax and duty de minimus thresholds of 1,000 EUR per private individual per month are globally competitive (but highly regulated and currently under government review).
Several logistical challenges persist in selling into Russia. English proficiency is very low; only 5% of Russians speak English. Payments and marketing have a local flavor, with nearly 70% of online purchases being paid for via cash upon delivery, and search results on Yandex favoring local companies and translated websites. Lastly, 9 time zones, 6.6 million square miles and a notoriously unreliable and slow postal service means use of courier services are a must!
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