fabernovel russian e-commerce
TRANSCRIPT
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E-commerce in Russia:Situation and perspectives
Presented by Adrien Henni – March 16, 2011
In association with
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Contents
2
• Main market trends
• Shoppers
• Merchants
• Emerging models
• Payments
• About faberNovel
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Main market trends / Internet usage in Russia
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Sources 2006-2010: FOM and Rambler (numbers at the end of each year)Forecasts 2011-2014 by FaberNovel based on recognised market trends
Number of monthly users 18+ in Russia(Monthly users in millions, with the percentage of the corresponding population)
2006 2007 2008 2009 2010 2011 2012 2013 2014
22M26M
32M
39M
45M
52M
57M
63M
70M
0
10
20
30
40
50
60
70
80
19%
23%
28%
46%
39%
50%
56%
62%
34%
2006 2007 2008 2009 2010 2011 2012 2013 2014
• 45 m 18+ Russianusers in H2 2010
• 70 m forecast in2014: Strong growthfuelled mainly byregional users aswell as by certainpopulation categories(e.g., young users,40+ women)
• At least 20 madditional Russian-speaking users from
other countries (e.g.,USSR, W. Europe,Israel, USA)
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Main market trends / Russian e-commerce market size
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*Varying estimates for market size and yearly growth (+30% to +60% in 2009; some important sites witnessed +100%)
Russia 45 million $5 to 10 billion
France 43 million $42 billion
USA 248 million $150 billion
Nb of Internet users (2010) B2C e-commerce (2010)*
• Russia still lags behind advanced countries:
• But with 40% yearly growth*, Russia could reach the current WestEuropean levels in 5 years.
• Traditional obstacles eased progressively:- More sites, a better offer, more attractive commercial approaches- More site professionalism, more user trust- Country-specific payment and logistics issues remain, but
improvements are brought and new solutions offered regularly
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Main market trends / Regional contrasts
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• Moscow & St. Petersburg; “millionniki”;low-density areas = 3 completely differentsituations:
- Different purchasingcapacities and habits
- Different expectations
regarding both productsand services
- Different payment,logistics, anddelivery issues
• Some sites strongly differentiate delivery
tariffs; others subsidize delivery to certainareas; some just do not serve regions, atleast first stage
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Main market trends / Regional contrasts
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Source: FOM, March 2010
Cosmetics and perfumes
Phones and relatedaccessories
Books
Electronics and householdappliances
Monthly online spending
3,000 rublesor less
From 3,000 to10,000 rubles
More than10,000 rubles
Average monthlyspending
Cities 1 m +
Other citiesor areas
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Main market trends / Regional contrasts
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Tickets to events
PCs and related equipment
Medicine
Transport tickets
Source: FOM, March 2010
Groceries
Cosmetics and perfumes
Phones and relatedaccessories
Books
Electronics and householdappliances
Types of purchases in %
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Contents
8
• Main market trends
• Shoppers
• Merchants
• Emerging models
• Payments
• About faberNovel
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Shoppers / How many are they?
Ever made an online purchase(PWC, Apr. 2009)
80% 36 million people/ 45 m users end 2010
At least 1 purchase for the last 3 months(PWC, Apr. 2009)
74% 33 million people/ 45 m users end 2010
At least 1 purchase for the last month(FOM, Aug. 2010)
15% 7 million people/ 45 m users end 201)
• According to some surveys, the overwhelming majority of Russian Internetusers have purchased something online at least once in their life (includingvirtual goods, using any means of payment).
• However, really active purchasers, those who buy items through e-commerce sites on a regular basis, represent a more modest proportion:perhaps 15% of Russian Internet users (7 million people) on a monthly
basis.
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Shoppers / Who are they?
Males
Under 34 years
Higher education
Revenues higher than average
Cities of 1 million + inhabitants
AmongInternetusers
Amongonline
shoppers
Choose, butdon’t buy
online
Source: FOM, March 2010
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Shoppers / What do they buy?
Source: FOM, March 2010
Most demanded goods by Russian online shoppers
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Contents
• Main market trends
• Shoppers
• Merchants
• Emerging models
• Payments
• About faberNovel
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Pure players
Certain segments dominatedby strong players; othersunder professionalization
and consolidation
Offline players
Depending on the sector,some big retailers have builtthriving online activities;others just starting or still
absent
Distance selling
Fast-growing shareof online sales
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Merchants / Typologies
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Merchants / From amateur to state-of-the-art websites
Early 2010: the children’s goods segment wasdominated by such sites as follows:
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Merchants / From amateur to state-of-the-art websites
Early 2011: several new sites match international standards
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Online stores
Ozon.ru: Absolute leader,
founded 1998
Amazon.com: No Russianversion, but many orderscome from Russia directly or
indirectly
Classifieds
Slando (2.6M ads),Avito (2.5M), and IRR.ru:
the market’s giants
eBay: Russian versionlaunched only in March 2010(15,000 classifieds in 6
months)
Private shopping
clubs
KupiVIP: Absolute leader,founded in late 2008
Big Western players stillabsent
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Merchants / The weakness of international pure players
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Merchants / Leading segments
Clothes and shoes 14,000 1.4 billion
Group buying 10,000 ± 200 million
Household appliances 10,000 3.2 billion
Grocery 8,000 ± 650 millionComputers & related equipment 8,000 2.8 billion
Children’s goods 7,000 900 million
Furniture 1,500 900 million
Source: InSales, early 2011
Approx. nb of daily orders Monthly turnover (in rub.)
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Contents
• Main market trends
• Shoppers
• Merchants
• Emerging models
• Payments
• About faberNovel
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Emerging models / Private shopping clubs
KupiVip.ru
• Launched late 2008• Inspired by Vente-privee.com• Absolute leader, over 3mregistered users
Ostrovok.ru• Launched late 2010
• Inspired by VoyagePrive.com
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Emerging models / Group buying
Groupon.ru
• Darberry.ru, copycat of Groupon.com, launched
early 2010• Acquired by Groupon.com
in Aug. 2010• Now the market leader,
claims 80% market share
KupiBonus.ru• One of the challengers,launched mid 2010• Specializes in health and beauty
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Emerging models / “Scandinavian auctions”
Gagen.ru
• Based on alowest-unique-bidauction principle,this system mixese-commerce withmoney and
chance games.• The site gainedstrong popularityin 2010.
• Lucky users canpurchase itemswith a discount of
up to a 99%.discount.
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Emerging models / Social commerce
Emegamall. This provider organizes
merchants’ sales at different onlinemarketplaces and on socialnetworks
“Cool Discount”
(Klassnye skidki), thesocial commerce
project of Odnoklassniki
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Contents
• Main market trends
• Shoppers
• Merchants
• Emerging models
• Payments
• About faberNovel
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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Payments / Payment means used in e-commerce
Source: Rumetrika, July 2010
C a s h o n
d e l i v e r y
P a i d a t t h
e P o s t
o f f f i c e u p o n
r e c
e p t i o n
B a n k i n
g c a r d
B a n k t r
a n s f e r
E l e c
t r o n i c
c u r r e n c i e s
S M S
• Banking cards areused, on average, for 20% of onlinepurchases but arewidely used in certainsegments or products(e.g., train or planetickets)
• Cash on deliveryrepresents the mainpayment means for such leading e-commerce sites asKupiVIP.ru and Ozon.ru
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Payments / Remaining issues
At first glance, Russia counts plenty of payment means. Still, many
problems are left unresolved:• Users still lack trust. This is why banking cards are little used for
online payments and C.O.D. is widely used in e-commerce. The lack of trust can also affect SMS payments due to a number of swindling offers.
• Alternative solutions for online payments complicate user experience. Using electronic currencies requires several, sometimesuneasy, steps. Offline terminals are user friendly but interrupt the onlinebuying experience.
• Users and/or merchants are often charged with significant fees.
Fees are unreasonably high with telephone-based payment means;they can be significant with offline terminals and electronic currencies.
• Pre-authorized, recurring payments are possible only infragmented cases and are still used very rarely. This complicates the
business model of several industries.• Merchants have to aggregate a great number of payment solutions,
leading to complex processes or to the necessity of paying for additionalaggregation services.
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Contents
• Main market trends
• Shoppers
• Merchants
• Emerging models
• Payments
• About faberNovel
E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
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• Founded in 2003, faberNovel is an innovation agency specializing inInternet, mobile and other innovative projects. The company builds onemerging technologies, methodologies and practices to create advancedproducts and high value-added services. It has offices in Paris, SanFrancisco, Moscow and Ho Chi Minh City.
• In Russia, faberNovel offers strategic and operational assistance to
companies seeking to seize opportunities in Russia’s fast-growing Internetand mobile markets:
- Strategy consulting & market analysis,
- Digital services and product setup or localization, including cultural, marketing, paymentand other e-commerce related issues
- Commercial and / or technological partnerships with Western and Russian players,
- Advice on M&A, JV and fund raising.
• faberNovel’s international team combines the necessary talents andpassion to turn their clients’ ideas into successful projects!
27E-commerce in Russia: Situation and perspectives – A report by faberNovel, March 2011
About Fabernovel
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faberNovel France17, rue du faubourg du Temple, 75010 Paris
faberNovel Inc., USA1436A Howard Street, San Francisco, 94103 CA USA
faberNovel Russia
3rd Monetchikovskiy per. 17, stroenie 2, Moscow 115054 – Tel. : +7 909 639 80 82
www.fabernovel.com
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This presentation was prepared in association with East-West Digital News,the first comprehensive English-language online resource dedicated
to Russian IT industries.
Site contents: Daily news – Expert analysis – Market data – In-depth studies –Industry events… and a variety of professional business tools designed to
improve business communication between Russian and international market
participants at all levels.
www.ewdn.com