New opportunities in cross-border e-commerce: Do you really understand the Russian market?

Competition in the cross-border market is becoming increasingly fierce. In the European and American markets, Amazon has firmly occupied the leading position and has continuously added various projects to squeeze the profit margins of sellers. The price war in the Southeast Asian market is in full swing, and the platform is losing money to gain publicity. Looking around the major cross-border markets around the world, Russia has become the most attractive blue ocean market.

Russia becomes the next stop for going overseas

Russia is the fourth largest e-commerce market in Europe, with a population of over 140 million and an Internet penetration rate of over 76%, showing strong market potential. Among them, young consumers are very receptive to online shopping. According to data, 71% of Russians have made at least one online purchase on an e-commerce platform. With the increasing popularity of the Internet and mobile terminal devices, as well as the change in consumer purchasing concepts, this data is expected to increase further.

According to the latest data, the Russian e-commerce industry showed strong growth momentum from January to May 2024, with its turnover increasing by a significant 43.4% year-on-year. During this period, the average income of sellers on a single e-commerce platform reached 235,000 rubles, a year-on-year surge of 136%.

Due to well-known reasons, many Western brands have withdrawn from the Russian market, resulting in a large number of gaps in the market. Russia's light industrial products are single in variety and it is difficult to meet the growing and diversified needs of domestic consumers, so many commodities need to rely on imports to meet the market.

According to Data Insight, Russia's online sales of imported goods reached 313 billion rubles in 2023, of which Chinese goods accounted for 90% of the market share; in terms of the number of orders, it reached 174 million pieces, of which Chinese goods accounted for as much as 98%.

In 2023, the trade volume between China and Russia achieved a strong growth of 26.3%, reaching a record high of US$240.11 billion. In 2024, this growth momentum continued. From January to June, the trade volume between China and Russia increased by 1.8% year-on-year, reaching a total of US$116.87 billion.

In 2023, the sales of Russia's retail e-commerce market soared to US$92 billion, ranking first in the global e-commerce market. Statista predicts that by 2024, Russia's e-commerce market revenue will exceed US$33.7 billion, and is expected to increase to US$56.7 billion in 2029, continuing to grow strongly.

Data shows that from 2022 to the first half of 2024, sales of Chinese-made electronic products and home appliances in the Russian market experienced explosive growth, and market demand directly doubled. This significant trend highlights the strong competitiveness of Chinese products in the Russian market.

Currently, China has become Russia's largest trading partner, which provides an excellent starting point for sellers seeking to expand their business. However, although the policies and platforms for entering Russia are favorable, sellers still face problems such as fiscal and taxation systems and payment cycles.

The difference between domestic and cross-border markets in Russia

In the Russian e-commerce market, the two leading companies, Ozon and Wildberries, have become platforms that Chinese sellers are eager to enter. However, while pursuing market opportunities, these sellers generally encounter similar challenges and difficulties. There are two types of stores on the platform, namely cross-border stores and local stores, and there are great differences between the two.

The impact of two types of stores on sellers:

There are many restrictions on the categories that cross-border stores can sell. For example, some liquids, electronic products (pure batteries), powders, etc. are not supported on cross-border stores. And cross-border stores are easily affected by policy marketing. For example, on June 26 this year, Ozon issued a notice stating that from that day on, it would impose sales restrictions on Chinese cross-border store sellers in the three categories of electronic products, cars and motorcycles, and DIY tools. Sales were not announced until August 26.

Whether it is Ozon or Wildberries, cross-border sellers are basically not allowed to use overseas warehouses for delivery, and merchants are required to be either cross-border stores or local stores. However, the self-delivery model (FBS) of cross-border stores has a long time limit, and returns can only be returned to China or picked up by yourself, or they will face destruction. Local stores can use overseas warehouses or official warehouse delivery models to improve delivery advantages.

Ozon charges 1% more commission to cross-border stores. In terms of traffic support, local stores have 5-8 times more local traffic than cross-border stores.

Faced with the many barriers to cross-border stores, more sellers will choose to open local stores, but opening a local store does not mean there is no risk.

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