I find the development of the Internet in Russia very interesting to monitor. The market is huge and continues to grow, however the numbers of Internet users do not grow in the same pace as e-commerce. People surf, people are mobile, but do people buy online?
Recently I heard and read a lot of stats about Russian Internet audience. The most general numbers you can find in this presentation, given by Preston Carey of Yandex at SMX Advanced London, which I attended last week. You can see than Internet penetration in Russia is still only 43%. Hard to imagine, right? But don’t get discouraged yet. 43% of the population is approx. 46 million people, which is double the population of Scandinavia, for example.
Another research, presented by Yandex, says that Russian Internet audience grew by 18% in 2010. Most of the growth (5.8 million users) came from the “regions”, which is the Russian definition of everything outside Moscow and St. Petersburg. This can be probably explained by the fact that the prices on fast Internet connection in the “regions” dropped by 30-60%.
E-commerce is growing as well, however, in my opinion, not as fast. You can see the trend: more and more Russian Internet giants are creating their own ad serving platforms. In addition to good old Yandex.Direct, Google Adwords and Begun, Russian internet audience is going to be exposed to targeted ads in all major social networks: vKontakte, Odnoklassniki.ru and MoiMir. The simplest economic principle: if there is demand, the supply will eventually match it.
What I find interesting is the industry data. According to another Russian research agency, the most successful verticals in Russian e-commerce, based on traffic and conversion, are mobile phones, computers & spare parts, and home & kitchen appliances.
The leaders in conversion were Fifty.ru (2,95%), Techhome.ru (2,85%) and Toool.ru (2,53%). I think it is worth looking into the best practices, because, from what I’ve seen, Western best practices do not always work for the Russian Internet audience.
The largest online store in Russia Ozon.ru (sort of Amazon of the Russian Internet) in their presentation at SPBRIF (Internet conference in St. Petersburg) reported the following numbers: 1 000 000 products, 1 000 employees, and 4 billion Russian Rubles (approx. $143 000 000) in sales per year.
Ozon.ru claims to have 14 652 000 visitors per month. Surprisingly, the giant of Russian e-commerce has only 0.93% conversion. Another curious fact is something Geno Prussakov, the guru of affiliate industry, twitted from SPBRIF. Apparently 80% of Ozon’s orders are paid for by cash on delivery.
The bottom line of this: preparing to open up an online business in Russia, do not base calculations on volumes. The volumes are there, but buyers might not be just yet. Investigate local payment options, analyze the strongest players in the vertical, and conduct a thorough market research before investing, as Russia is a big, but a very difficult market.