Insight from around the World: Russia
RAY FOWLER , HEAD OF BUSINESS SOLUTIONS INTEGRATION, MVIDEO.RU
Who would have thought that after London and Paris, Moscow would be cited as the third most attractive city for international retailers. In 2011 Berghaus , Diesel , DKNY Jeans , Victoria’s Secret , La Senza and Jimmy Choo arrived. In addition, it is expected that some 300,000m² of new retail facilities will open in Moscow in 2012 and we have seen launches of Hamleys and are expecting Debenhams , Krispy Kreme and Abercrombie & Fitch .
There are a multitude of challenges for any ecommerce proposition including poor supply chains, lack of trust and importantly it’s still a cash economy with less than 5% of the population owning a credit or bank card. This is why Illinois, USA, has the fastest growing Russian ecommerce site; Bay.ru. How can this be possible? Through the huge demand from customers for foreign brands, two brothers set up a middleman operation by founding bay.ru which pools together item sold on Amazon, eBay etc as catalogues. These orders get consolidated in their Illinois warehouse before shipping. Because Russia is still a largely cash economy, BayRu uses 500,000 payment points across Russia in stores, train stations and bank branches where consumers can pay cash. This March the site turned profitable. Other successful sites are ozon.ru which is a play on Amazon.
Recently a look-a-like Argos, called ‘Enter’ launched into the market. Enter follows the same model as Argos – including ring and reserve - just re-painted and trading in roubles. Customers have to wait between 3-5 days for delivery of products and that is quick. These are typical examples of how our rules on ecommerce have to be adopted.
Do not assume that the model that you have in Europe and the UK can be introduced here. The huge challenges are: supply chain, cash on delivery and a high degree of returns. However, the opportunities are massive as the infrastructure and bandwidths increase, opening ecommerce to the masses.