Russian eCommerce demonstrated astonishing growth in 2011 increasing its turnover by 29% ending up at 310 billion Russian rubles (around 10 billion US dollars), according to Data Insight latest report. While it is a well-known fact that Moscow region has the best buying ability in the country, most of the growth in 2011 came from other regions in Russia.

In the regions supply is not catching up with fast growing demand: a lot of products are impossible to buy there, or are imported by small local businesses and therefore cost more that in large chain stores in Moscow. In search for better assortment and better deals the population starts moving online. Interestingly, the most active online shoppers (outside Moscow) live in the most remote places like Sakhalin, Magadan, Kamchatka and Yakutia (see map below for reference):

Moscow region is responsible for 45% of all online sales in Russia, followed by Saint Petersburg (11%) and Ekaterinburg (4%). All in all, 45% on all eCommerce sales in 2011 came from regions outside Moscow.

Top eCommerce categories in Russian regions

According to Data Insight, the most popular items purchased by non-Moscow residents via Internet are airplane and train tickets, apparel, computers and electronics, as well as books and products for children:

The largest online retailer Ozon.ru reports a different breakdown though: 30% – Books, 30% – Electronics, the rest is divided among multiple categories, where some of the popular ones are household appliances, products for children and products for pets (source: interview with Maelle Gavet, CEO of Ozon.ru; in Russian). This could be, however, because Ozon.ru, just like its American “big brother” Amazon, was initially a book store.

Hurdles and opportunities in Russian eCommerce

Russia has a reputation of a difficult place for doing business, due to bureaucracy and corruption among other things. However, a lot of online businesses run by Russians and by foreigners succeed and prosper. A lot of business owners, in fact, say that Internet is one of the “cleanest” areas of business in the country, one of the being Oskar Hartmann, German entrepreneur and CEO and founder of KupiVIP.ru in his interview to Forbes (in Russian).

The most difficult part of running an eCommerce store in Russia is logistics. The country is huge: some places don’t have paved road connections, some places are isolated by ice and snow for months. Russian Post, although able to deliver packages to any village or town in the country, is slow and not always reliable (from my personal experience at least). Ozon.ru has created its own delivery network with couriers driving around with packages in larger cities. It works perfectly for Ozon, but how many businesses can afford creating one?

Another problem, as I see it, is processing payments. Apart from limited usage of credit cards and unusual online payment options, Russians prefer to pay in cash. For Ozon.ru ‘cash on delivery’ stands for 80% of all received payments, followed by credit card payments (10%) and 18 different electronic payment solutions, such as Yandex.Money and WebMoney (10%). The situation is different only in travel industry, where 60% of customers choose credit card payments. Obviously, handling cash on delivery is not as easy as processing credit cards and PayPal directly on a website.

The prospects of the Russian market, however, I believe are great. While being the largest online market in Europe, only 7% of Internet users shop online, and eCommerce today makes up for only 1% of Russian retail market. Data Insight predict another 25% jump in Russian eCommerce turnover in 2012.

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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In 2010 Russia became the fastest growing market in Europe in terms of online advertising revenues, and continued strong growth throughout 2011. According to the Russian Association of Advertising Agencies (AKAR), the market reached 1,4 billion USD, which is a 56% increase comparing to 2010.

According to AdScore (in Russian), Yandex holds the largest share of Russian contextual advertising market, followed by Google Russia and Begun:

Russian Contextual Advertising Market

Although Yandex has lost some of it’s market share in 2011, it is still by far the largest player of Russian online advertising market. The company reported $622.2 million in revenues by the end of last year.

Yandex Direct is said to have 270 000 active advertisers in 2011. The average spend per advertiser per month is 2500 Russian Rubles (approx. 85 USD). In 2010 the number was higher (3000 Rubles/ 100 USD per month), and decreased due to the fact that more and more small business with low marketing budgets start advertising online.

According to AdScore, vKontakte PPC platform is showing very fast growth in Russia. Advertising budgets of Deal-of-the-Day type of sites (Groupon and alikes) as well as local services providers are quickly shifting towards social networks from search and traditional media.

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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Yesterday morning Russian Internet press reported that Yandex and Skype signed an agreement and will begin promoting each others’ services in Russia.

Skype will offer everyone who downloads their PC client to install a browser extension Yandex Bar. Yandex Bar, in exchange, will display Skype account balance and provide an easy way to top up Skype account via Yandex Money. This looks like a good way for Yandex to attract more users and possibly regain the market share that they lost to Google last year. In 2011 Skype showed 40% increase in Russian user base ending the year with 22,4 million registered accounts.

So what does Skype get in return? From what I read today it is very unclear: Skype will be promoted on Yandex sites and properties (which is of course a lot of traffic), but it is not specified how.

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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During 2011 Yandex lost 4% of searches in Russia to Google.ru, reports Vedomosti (in Russian). I heard mentions of this fact throughout last year, but here is how it looks in absolute numbers.

According to LiveInternet statistics, in December last year search market in Russia was divided between Yandex, Google.ru and other smaller search engines as shown below:

In December 2010 Yandex held 64,1% of the search market, and Google – 21,5%. Quite a big change in one year, isn’t it?

Analysts say that Google’s market share most likely increases not due to the search engine traffic itself, but because of other platform Google owns or has partnerships with. Presumably, the majority of growth  can be explained by wide use of Android devices (where search is powered by Google), social network Google+ as well as popularity of Chrome browser, which Google has been advertising on TV in Russia since half a year!

I have to mention, however, than Yandex also works with various partners and web browsers. Facebook search in Russia is, for example, powered by Yandex. Same goes for Windows Phone 7 and Firefox, among others. Needless to say that Aport and Rambler use Yandex’s search engine, and that Bing’s ads in Russia are in reality Yandex Direct.

Just like I predicted earlier, Yandex now announced a strong focus on mobile technologies in 2012, and not only on advertising. They acquired a mobile development company SPB Software, and, I suspect, is going to work on a response to Android – their own mobile OS.

A spokesman of Yandex told Vedomosti that the company expects 58-60% growth in revenue in 2012 and not focusing on increasing their market share, but rather creating new and useful products. The next big release, for example, is supposed to be a new search platform, which better understands interests and preferences of Internet users (read: personalized search).

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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Yesterday I read something, as I thought at first, totally ridiculous, but it seems to be happening for real. In Belarus from today it is forbidden to provide any kind of services or sell any kind of goods on the Internet from a website with any other top level domain than .BY.

Cnews.ru reports that according to the new law companies and individuals will be administratively punished for doing business with foreign sites. Even Internet cafes providing access to forbidden sites will be forced to pay fines. The fine for violating this law will be up to 30 “units”, which is currently 1,05 million Belarusian rubles, which is approximately 120 USD.

Interestingly, Belarusian citizens will not be charged for accessing foreign websites. I guess the government believes that the people of Belarus will abide the law and stop using beloved vkontakte.ru, Twitter and Facebook right away? What about watching YouTube videos? Nope! Send an email from @mil.ru? Nope! Seriously, how is this possible in 21st century?!

Belarusian Internet in numbers

Belarus is not a big country. It’s population is only 9 million people (compare with the Ukraine – 46 mln, Russia – 142 mln). Belarusian Internet (so-called ByNet) can be described with the number*s below:

3 500 000: Internet users

43 000: registered .BY domains (on 28.12.2011)

Up to 94%: percentage of traffic, generated by Belarusian users, routed to Russian web resources

$6 100 000: value of Belarusian online advertising market in 2010

18 000: registered Twitter accounts belong to users from Belarus

80 000: Belarusian blogs in LiveJournal

18,3%: of Belarusian population have access to broadband Internet

150-200 000 000: cases of law violation will have to be registered daily, because this is how much traffic is routed from Belarus to foreign websites every day.

Combining this with very low buying ability, is the market attractive enough to even bother creating Twitter.by or LiveJournal.by? Or will Belarusians be limited to browsing their 43 000 .by domains?

So what happens now?

The purpose of the law if, I suppose, is to attract more money into the country. Instead of buying products from abroad, Belarusians are now supposed to buy from the same Russian or European companies, but only those with physical offices inside the country. By this, money stays in the country -> Good for the economy. Will it work? I am not an economist and I won’t judge.

The officials of Belarus, after massive press pick up of these news, clarified: they do not restrict access to foreign resources for Belarusian citizens. Nether they forbid the citizens sell their goods and services on foreign resources. The restrictions apply to businesses operating on Belarusian territory via foreign sites. And that means what? Will an affiliate selling leads to Amazon.com be punished? Will ISP selling Internet access to this affiliate be punished?

These news gave me a strange feeling. We used to be one country, and now, at the same time as Russia becomes the largest Internet market in Europe and takes pride for it, this kind of laws emerge in Belarus. Of course, the access is not restricted for citizens, but where is a guarantee that mail.ru and Odnoklassniki, Facebook and Twitter won’t pull out from the country?

* Data sources for statistics: InterFax Belarus, MobWiki.ru

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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The latest gossip in Russian Internet circles is that the next step for Yandex after their NASDAQ IPO, successful launch in Turkey and recent partnership with Czech leading search engine Seznam is to launch in Poland. Rumors say that Yandex has already hired a business developer in Poland, with a very impressive track record including companies like Dell and Apple.

Polish Internet audience is estimated to be around 40 million people, where Google holds 97% market share. Entering a market with such strong Google presence might sounds like a strange idea, especially given 2 facts from the recent past:

1. Yandex already made an attempt to enter Polish market back in 2001, but pulled off due to the crisis in .com industry as well as uncertain state of Polish economy.

2. The announcement of international expansion plans Yandex made in summer was very much about entering markets where Google does not have a strong dominant position. The first of these markets was Turkey. Yandex also mentioned Vietnam, Indonesia and Egypt.

So why Poland?

The rumors about Yandex planning an acquisition of Onet.pl (one of the biggest portals in Poland) were circulating in the tech press since summer 2011 (see, for example, Bloomberg report from July). Purchasing of the other major portal Wp.pl also gets mentioned here and there.

Both portals have look and feel of Yahoo!, i.e. publish a lot of categorized content and at the same time have search. Onet.pl search box is currently powered by Google; wp.pl has its own search engine.

In case of this purchase, Yandex will actually claim a big chunk of Polish market right away:

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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In September 2011 Yandex processed over 3 billion search queries, reports comScore. This allowed Yandex to climb 2 positions up passing South Korean NHN Corporation (Naver) and eBay.

The leader is, obviously, Google with 118 billion queries (globally), followed by Chinese Baidu with 11 billion queries.

Yandex has been showing exceptionally fast growth in both traffic and revenues over the last years. Earlier this year the company raised $1,4 billion in a NASDAQ IPO, and a few months later reported astonishing 93% jump in net income comparing to Q3 of 2010. The company’s value is around $8 billion, which makes it one of the top 25 leading online buisnesses in the world:

Source: http://kpcb.com

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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Mail.ru, the 3rd largest search engine in Russia after Yandex and Google.ru, with 7% market share, announced their plans to invest into developing their search technology. The company plans to double the amount of specialists developing their search engine.

In the past search on Mail.ru was powered by Yandex, but replaced by Google’s technology in 2010. At the same time, a part of queries in Mail.ru is processed by their own algorithm. According to Mail.ru CTO Vladimir Gabrielyan, this makes sence: Google’s engine is used for general queries, while Mail.ru can focus on improving, for example, local search.

Currently, the main services for Mail.ru are more social than anything else: messengers, online games, email, social networks. Mail.ru Group, listed on London Stock Exchange, owns Mail.ru portal, instant messenger ICQ and social network Odnoklassniki.ru. The Group also owns parts of companies like vKontakte (39,9%), Zynga (1,4%), Groupon (21,35%), Facebook (2,4%).

Will be interesting to follow this development. While Google and Yandex are fighting for Russian market, does Mail.ru has a chance to increase their share?

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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Mobile has been a hot topic in the Western Internet marketing circles for the last few years, and although it is still in a very immature state, there is a lot of room to play. ComScore reported that in the US 7% of digital traffic comes from mobile devices, and this percentage will only increase.

Mobile Internet in Russia

In Russia the situation is rather different. TNS Gallup Web-Index in their report showed that only 1% of Russian population uses mobile Internet. This is astonishingly low number! According to the same report:

55% of all mobile Internet users in Russia, and 42% in Moscow, surf with old-school feature phones.

Only 3% of Russians (7% of Moscow’s population) use tablets.

25% of mobile Internet users admitted that the only purpose of connecting to the Internet from their phones is reading/ sending emails.

There are also more optimistic assessments, where mobile web users’ figures reach 15-20 million.

Mobile Advertizing in Russia

These low numbers of Russian mobile Internet users probably explain the lack of platforms for Mobile advertizing. Even Yandex, known for their innovative and insightful nature as a company, does not prioritize mobile just yet. I bet, however, they are looking into that direction, as I’ve seen a number of job listings in Yandex Mobile Portal repeatedly appearing online.

One of the largest mobile operator MTS predicts strong growth in mobile ad spendings during the coming years. According to their “realistic” forecast, the value of Russian mobile advertizing market will reach 2,85 billion Russian rubles (6,62 million Euro) by 2013, which is still not much comparing to 687 billion Euro online spend in 2010.

Mobile Search Advertizing in Russia

Generally search in Russia is dominated by Yandex (65% market share). Currently there is no possibility to target mobile devices with any kind of Yandex ads.

Google provides the possibilities to target mobile devices in Russia, just like everywhere else. I am very doubtful about volumes they can deliver at this point though.

However, as I mentioned in one of my earlier posts, Yandex recently released search engine for mobile apps. There is no advertizing program there yet, but the rumors say that it might happen already next year.

SMS/ MMS marketing in Russia

While Western world is buzzing about search and in-app ads, the most common form of Russian mobile advertizing is SMS and MMS. All major mobile operators (e.g. MTS, Beeline, TELE2) offer this possibility, with targeting options. Average cost of one SMS varies between 1,5 – 3 RUR (3-7 Euro cents).

In-app advertizing in Russia

In-app advertizing is pretty much non-existent. There are several pioneering companies working in this direction.

To conclude, at the moment mobile marketing in Russia is limited to SMS / MMS campaigns, and will probably not explode as it has in the West for another 2-3 years. Russian market, however, is very big, and mobile marketing spend increases slowly, but steadily. Ilya Segalovich, Yandex CTO, said in one of his recent interviews that Yandex “will have to join the mobile race”. And if Yandex does, mobile will be big.

I believe in early adoption. The ones who begin to focus on Russian mobile marketing today will be much ahead of the others, when the time comes.

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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IAB Europe reported that expenditures on online advertizing in Europe in 2010 grew by 15,4% (from 15,3 billion Euro in 2009 to 17,7 billion Euro in 2010). The largest contributors to this grows became developing Eastern and Central European economies. Russia tops the ranking with incredible 37% increase in Internet advertizing spend, followed by Turkey, Romania and Slovenia:

The biggest market for online advertizing is the United Kingdom with total yearly spend of 4,77 billion Euro, followed by Germany (3,63 billion) and France (1,88 billion). Russia is still far behind, but is catching up quickly.

Russian Online Advertizing Market in numbers (2010):

- 687 billion Euro in expenditures

- 7th largest internet advertizing market in Europe

- 11,8% of all advertizing budgets are spent online

- 236 billion Euro was spent on Display/ banner advertizing

- 354 billion Euro was spent on contextual / search advertizing

Anna

Anna is a blogger and online marketing professional specializing in SEO and SEM for Russian search engines. To see more of Anna's posts, follow her on Twitter, Google+ or LinkedIn.

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