The Russian market continues to heat up, is this an opportunity for Chinese sellers?

Russia's e-commerce market has been at a formal turning point since the Russo-Ukrainian war, and is full of challenges and opportunities. The Russian market, which has European consumption levels, is also facing a series of problems such as consumption downgrade due to economic pressure and the economic downturn caused by the war. However, with its huge market size, strong internal drive for consumption, and huge natural advantages such as energy and minerals, the Russian market has not collapsed under the pressure of Europe and the United States, but has shown a growth trend.

A blue ocean market where Chinese sellers can make money quietly!

In recent years, with the overall economic situation not being good, the risk of recession rising, and external demand growth slowing down, Chinese cross-border e-commerce sellers in various countries have been complaining about the harsh policies. Only this market not only does not exclude but also "opens a back door" for Chinese sellers' trade, encouraging Chinese products to enter its country.

It is the new fortune-making opportunity for cross-border sellers in 2024 - the Russian market.

Why was the Russian market suddenly discovered?

When talking to most people about the Russian market, people tend to ignore this nearby market because of its vast territory and sparse population. For domestic e-commerce, it is not even a suitable market environment compared to emerging markets such as Southeast Asia and Latin America.

Especially the outbreak of war caused many brands to withdraw.

In February 2022, the outbreak of the Russian-Ukrainian war led to the EU's economic sanctions against Russia, and European and American brands withdrew from the Russian market. In just two months, about 1,000 Western brands withdrew from the Russian market. Among them were British online fashion and cosmetics retailer Asos, famous British luxury retailer Matches Fashion, global fashion shopping platform Farfetch, famous American e-commerce platform iHerb, and American luxury website Yoox. And other well-known large e-commerce platforms.

The withdrawal of European and American brands has undoubtedly created a huge blue ocean in the Russian market, and this will also be a great opportunity for domestic sellers to enter the Russian market.

Danger and opportunity have always been two sides of the same coin, and the areas that are ignored by most people are generally where money can be made.

In 2022, Russia will achieve the fastest growth rate among the countries with the greatest potential for e-commerce markets in the world. According to Data Insight research, the sales growth rate of Russia's online retail market is 38%, and the order growth rate is 65%. In 2022, the total value of Russia's online retail market will reach 5.7 trillion rubles (84 billion U.S. dollars), and the total order volume will reach 28 billion.

From the perspective of consumer groups, as of January 2022, the scale of Internet users in Russia has reached 130 million, accounting for nearly 90% of the total population, and according to Russia's forecast, this proportion will increase to 97% by 2030.

Despite the economic turmoil caused by war and sanctions, Russia's e-commerce sales have continued to grow year on year, and the number of online shoppers has increased by 60% in three years.

Under the dual dilemma of war and brand withdrawal, the gap in the Russian market has brought a favorable situation to Chinese sellers. Domestic sellers have seized the opportunity and started to get involved in the Russian market.

In 2023, China's exports to Russia have been growing rapidly, and cross-border e-commerce with Russia has been booming. The first batch of Chinese sellers who entered the Russian market have been making a fortune in silence.

The potential behind the booming Russian market

The Federal Tax Service (FTS) of Russia ) platform data shows that in March 2023, Russia's e-commerce sales were 1.117 trillion rubles, up 22.7% from February. The number of orders increased by 14.9% to 1.2 billion, with an average order price of 923 rubles, while the average order in February was 864 rubles.

In addition, the economic and trade relations between China and Russia continue to grow, showing that there is great potential for trade between the two countries. Data from the first quarter of 2023 showed that China-Russia bilateral trade volume increased by 39% year-on-year to US$54 billion; in April, China's exports to Russia hit a record high, up 153% year-on-year to US$9.6 billion, and Russia's exports to China reached US$9.6 billion, and the bilateral trade volume between the two countries has increased significantly. Moreover, due to Western sanctions, Russia cannot use the US dollar to settle international trade, making the RMB a more important currency in Russia's foreign trade settlement. This is a great advantage for Chinese sellers.

It is reported that in the past five years, the compound annual growth rate of the market has reached 30%, and the penetration rate of online channels has also increased, which shows that Russian consumers are gradually getting used to and accepting online shopping. This upward trend also provides more opportunities for Chinese sellers.

Compared with the emerging blue ocean market, the Russian market also has an advantage in logistics services. Its logistics facilities are relatively complete, with OZON For example, according to its public reports, as of September 30, 2022, OZON's branded pickup network (including pickup points and parcel lockers) has 23,000 locations, covering more than 50% of Russia's population.

Russian consumers also have significant characteristics. According to the latest data from Statista, among Russian e-commerce users, consumers aged 25-44 account for the majority, accounting for 52.8%, and middle- and high-income users account for two-thirds. They also pursue cost-effectiveness, desire personalization, and have high brand loyalty. Russian consumers' emphasis on cost-effectiveness has brought Chinese sellers one step closer to entering the Russian market.

As a result, another market with huge potential is slowly emerging before the eyes of sellers.

Russia, the start of a new blue ocean market

The current mainstream e-commerce platforms in Russia are: Wildberries , Ozon, Yandex, AliExpress, Joom and Ulmart, etc. Among them, Wildberries, Ozon and AliExpress are the largest.

According to the current data analysis of the platform, many general goods sold on Wildberries and Ozon have higher gross profit margins. Although sales volume is not as good as that of major sites such as Amazon in Europe and the United States, fortunately there is very little competition, and the overall input-output ratio is still quite good.

Ozon has long shown its attention to the Chinese market. Its recent announcements of logistics cooperation with China are in preparation for the upcoming launch of the FBP model on the platform.

Yandex, a search engine native to Russia, is the website with the largest number of users in Russia, accounting for more than 70% of the search market share and is known as the "Russian Google".

According to relevant data, Yandex is one of the top ten search engines in the world, with 3.2 billion visits per month. Its users are mainly distributed in Russian-speaking countries, and there are also corresponding users in countries such as the United States and Germany.

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Compared with mature European and American markets, the Russian market is still an emerging market with relatively less competition and more potential to be tapped ; compared with emerging markets such as Southeast Asia, the withdrawal of European companies from the Russian market has opened a window of opportunity for Chinese sellers. At the same time, Russia is also actively improving customs clearance efficiency, and the future e-commerce ecosystem will be more sound.