COVID-19 has already driven approximately 10 million more Russian consumers to online purchases and has accelerated the race towards becoming the country's version of Amazon.com Inc. the potential of dominating the world's biggest country's e-commerce is still pretty open.
Russia's current number one retailer
Russia's own largest online retailer known as Wildberries currently controls about 13% of the whole market. This number is even after the company has doubled in sales during the first nine months of 2020. By contrast, Amazon already accounts for just about half of the entire U.S. market.
Russia reportedly has more internet users in comparison to Amazon's very own No.2 market which is Germany. The entrenched consumer habits and logistical challenges still have stymied the whole e-commerce industry within the country, this has discouraged certain foreign companies just like Amazon from expanding their business there.
Just how big Russia's e-commerce industry could be
Just after President Vladimir Putin gave the order that stores should close for just shy of two months during the very first wave of COVID-19 back during the spring, this left consumers with almost no choice but to start transitioning into e-commerce. According to Data insight's report to Bloomberg, the internet sales are currently projected to surge a total of 44% this 2020 up to 2.5 trillion rubles or $32 billion.
In Russia, online purchases still only account for just 10% of the total retail sales in 2020 which is up by 4% in comparison to last year, according to information from an industry lobby group known as AKIT. This is quite significant when measured by the total population in comparison to the 16% in the United States but not reaching the 37% over in China back in 2019.
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The three competitors in Russia's e-commerce industry
According to Bloomberg, there exists three different contenders to substitute as Russia's Amazon. These are AliExpress, the joint venture between both Alibaba Group Holding Ltd. in China and the London-listed Mail.ru Group Ltd.
After the company reportedly lost market share due to the long wait for goods coming from China, the company has now started to work with more local suppliers. AliExpress is even able to subsidize delivery costs and also provide same-day service for specific goods through a strong partnership with the known state postal service.
Another competitor is Ozon, which is said to be a Russian version of Amazon that is backed up by the billionaire Vladimir Evtushenkov along with Baring Vostok Capital Partners. They reportedly offer next-day delivery for 40% of the entire population but shipping to Siberia might take up to five days, according to BNE Intellinews.
The "smallest competitor" is Yandex NV, which holds 2% of the entire online retail market. However, Yandex already runs Russia's known leading search engine along with its biggest car-hailing service. Shortly after an attempt to create their own online marketplace along with the Sberbank PJSC ended some time earlier this year, Yandex then sold a total of $1 billion in shares to the billionaire known as Roman Abramovich along with other partners to put more investment in e-commerce.
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This article is owned by Tech Times
Written by Urian Buenconsejo
