Jonathan Matchett, operations director of international logistics specialist wnDirect will be speaking at IRX 2014. We caught up with him ahead of his appearance.
Internet Retailing: At IRX 2014, you’ll be speaking about exporting to Russia. Why Russia?
Jonathan Matchett, operations director, wnDirect: We’re talking about Russia because it is booming as an ecommerce destination. Customers want to buy from UK and US retailers but recent changes in legislation means it’s become quite difficult for many carriers and retailers to ship to Russia.
The Russian market grew for us in 2013 and continues to grow this year, both in volume and the number of different retailers who want to ship there. Online sales to Russia are expected to reach $26bn by 2015. Within the sector we’re in, international ecommerce, it represents about 15% of that, or $5bn.
We doubled the volumes that we were shipping in the last six to nine months and more widely-published data supports that, showing cross-border trade into Russia doubling over the last 12 month period. That trends looks to continue in the year ahead.
IR: What kind of products do Russian shoppers want to buy, and is there interest in British goods in particular?
JM: There’s a huge demand for what I’d say are quality branded products. Not just clothing but also branded footwear, even branded car parts. Among eBay sellers, where merchandise is really quite varied, most of the products we’re shipping for retailers to Russia are branded. Some of that is recognisably British brands. For example we’re shipping for the Cambridge Satchel Company, a British brand, but we also ship for established brands such as Next, River Island, Tesco – all recognisable, quality brands.
It’s also not just luxury – people tend to associate Russia with high end luxury brands. We see those, but there’s also a much wider market for quality branded British products.
IR: What’s the biggest opportunity for UK retailers?
JM: It does continue to be in apparel. Even though shipping costs are relatively high compared to other destinations there’s such a demand. There is British retail in Russia but the goods are only really available in big cities and where they are available they’re expensive. It’s only international ecommerce that really gives UK retail brands full reach across Russia.
IR: Who is buying over the internet in Russia?
JM: It’s a wide range of consumers. We see that with the service we offer. For example it’s whether consumers are likely to be at home or not. So we’re shipping a lot of childrenswear and babywear, typically to mums at home, which results in a high first-time delivery success rate. We also send a lot of apparel, for a younger fashion demographic, for whom we can call ahead to arrange a convenient delivery date. We’re shipping for retailers to a wide range of consumers – not just a niche luxury market but markets with mass appeal.
There are expected to be 80m active users in Russia by the end of this year. That’s still a lower take-up than the US and UK but it’s growing quickly. It’s a huge population to reach out to who want that same quality and choice of goods and only cross-border choice really offers that choice.
IR: What’s the biggest challenge?
JM: The biggest challenge is clearing customs. The rules changed on January 20 so that all parcels are now treated as overs. That means customers are required to submit passport information and their full Cyrillic name to allow the parcel to clear customs. Many carriers had to stop shipping to Russia as they were unable to collect that ID information. At wnDirect we have an ID and duty management application that makes it very easy for the end customer to follow a link and submit their ID online before we ship their parcel from the UK to Russia. That change was made in January and we’re fully expecting Russian authorities to make more changes in 2014. For example they might apply duty requirements for B2C parcels. There are some options under discussions – there could be 10% duty on all parcels, or 30% on parcels with a value of €150 or more, but that’s not yet known. The biggest challenge is clearing customs, but other than that, Russia has long, cold winters, huge distances and traffic in the big cities.
IR: Do you think the ongoing Ukraine situation will make a difference to online retailers shipping from the UK?
JM: It’s something we’re monitoring closely. wnDirect look at the conditions whether they’re weather or political conditions in all the markets we’re shipping to. The very worst case is that things could continue to escalate and ultimately retailers are unable to trade into Russia. We very much hope that doesn’t happen but it’s a situation that we and everyone else is looking at closely.
Jonathan Matchett will be speaking in the sponsor’s keynote slot in the Operations and Logistics conference at IRX 2014.
His presentation, The Russian ecommerce market by the carrier that’s still shipping: Revealing the key innovations and opportunities for delivery to the profitable Russian marketplace, will take place at 1.05pm on Thursday March 27.
