With Europe’s fifth strongest economy, high online penetration,1 and a population of more than 145 million people,2 Russia is a tempting proposition for many businesses looking to expand abroad. In this guide, we’ll run you through the basics of doing business in Russia, and help you decide whether it’s the right export market for you. Let’s start by looking at Russia’s economy and population spread, transport infrastructure, and Ecommerce levels.
In 2019, the country’s GDP was $1.64 trillion, placing it 11th place after the USA ($21.44 trillion), Germany ($3.86 trillion) and Italy ($1.99 trillion).1 A large and varied country, its central and western regions are home to some sizable cities, including Nizhny Novgorod, St. Petersburg and the capital, Moscow — while the eastern parts tend to be more rural. Therefore, to successfully operate in the Russian market as a whole, it’s important you focus your marketing efforts on localising, especially if you enter the market directly.
Russia has one of the largest transport infrastructures in the world. Its network of roads, railways and airways covers some 7,000KM, with major cities like Moscow having the most extensive networks. In fact, Russia has the third largest rail network in the world, behind the USA and China.1
Russian consumers love shopping online — and the Ecommerce market is now growing ten-times faster than the real economy and traditional retail. In the first half of 2019, Ecommerce sales expanded by 26% year-on-year, to 725 billion rubles (about $10 billion). Much of this growth can be attributed to Russia’s largest online retailers, such as Wildberries, which almost doubled its orders to 61 million during the same period — capturing almost one in three of the country’s online purchases. Overall, online sales account for around 4.5% of the country’s total retail sales, making Russia one of the ten largest Ecommerce markets in the world.1
4 Know your customer
Shopper trends and tastes vary all over the world, especially in Russia. Before diving in, here are six things you need to know about setting up your operations, creating your proposition, and delivering great customer service.
Don’t be afraid to sell online: 42% of Russians have bought something online in the past six months, and in Moscow that figure’s even higher at 60%. The number of online shoppers making more than 15 purchases a year also increased by 25% in 2019, and the trend of ‘bundling’ products from three or four different retail categories also grew.
Think pick-up, not drop off: 86% of Russians prefer pick-up points and parcel offices rather than courier delivery.
Be proud to be foreign: Russian consumers tend to choose foreign products over domestic ones — especially in categories such as kids’ clothes and toys, health and wellness products, and luxury goods.
Ship free: When it comes to creating your online promotional activities, bear in mind Russians rank free shipping and product discounts the highest.
Ship fast: Russians are quite demanding, even when ordering from local online stores. But they are prepared to wait longer for their cross-border orders to arrive.
Offer great value: 64% of Russians say lower prices is the main reason for buying from abroad, instead of via domestic players.3
5 Transport and delivery
After securing a sale, you’ll need to ensure the product reaches shoppers quickly, in one piece, and for a fair price. In Russia, cross-border delivery typically follows these six steps:
Step 1: The customer selects their last mile delivery option, including their preferred choice from a list of trusted and well-known couriers.
Step 2: The order proceeds to the logistics operator to arrange the delivery.
Step 3: The online retailer delivers the order to the nearest consolidation warehouse.
Step 4: The logistics company delivers the order to the customer’s country – by airplane /cargo / truck.
Step 5: The logistics company provides the order data to customs. This includes the customer’s personal information and data, including their name, address, contact number, and passport details.
Step 6: The logistics company then arranges for delivery to the shopper’s home address, the parcel locker, or pick-up point. Generally, Russian shoppers prefer pick-up points over courier delivery, especially when ordering from abroad. The main reason for this is most residents in larger cities don’t spend much time at home, and can’t wait in for a courier.
6 B2C shipping method
B2C shipping is also popular in Russia. This is when parcels are sent direct to shoppers via a cross-border logistics operator which then manages their transition through customs on the customer’s behalf. As before, the customer must provide details, and logistics operators are obliged to comply with GDPR rules to ensure data protection.
After passing through customs, the parcel is then shipped to the customer’s city and delivery is arranged via their selected last mile method — such as a pick-up point, parcel locker, or through home delivery.
This option may be preferable to some exporters, as the B2C logistics operator usually interacts with end users on your behalf. As such, any questions around the delivery method, timeframes, etc can be handled without the need for you to get involved.
7 Ready to do business in Russia?
With a buoyant Ecommerce market, qualified labour force,1 and high demand for foreign products and brands,2 Russia could be a lucrative new market for your business. Use the data and insights in this guide to start your journey, and head over to the Market Finder website for more free resources and tips for doing business there. You’ll also be able to access the breakdown of the World Bank’s Doing Business Index, which compares the ease of doing business in Russia with other countries — based on parameters such as arranging credit, trading across borders, getting electricity and more.