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Iurii Popolitov of Shiptor: “The Russian market is not reserved for Chinese players: Western sites have all their chances, too”

In spite of the economic crisis in Russia and the ruble’s depreciation, Russia is still a land of opportunities for foreign players — Chinese and Western ones alike, — believes Iurii Popolitov, Sales Director at Shiptor

Mar 08, 2017
International players are eyeing the Russian e-commerce market, which reached some $26 billion last year (including $16 billion for cross-border sales), according to EWDN’s latest industry reports. In spite of the economic crisis in Russia and the ruble’s depreciation, Russia is still a land of opportunities for foreign players — Chinese and Western ones alike, — believes Iurii Popolitov, Sales Director at Shiptor. In this interview, he shared with East-West Digital News his vision of the market, and provides advice to Western e-commerce companies.

Over the past few years, the Russian market seems to have lost a bit of its appeal from the point of view of western players. Do you think this is a "lost market"?

Indeed, due to the ruble’s fall and other factors, many western players has seen their sales to Russia grow more slowly, or even fall, from 2014 to 2016. Simultaneously, the sales of Chinese players (especially via marketplace AliExpress.ru) have grown extremely fast.

However, the Russian market is not reserved for the Chinese: there are big opportunities for Western players, too. People interested in branded items still buy them, and now that the ruble has stabilized, or even regained some value, the market is far from being dead.

Witnessing this, Shopotam, our B2C cross-border marketplace, has seen its sales grow significantly in 2017 after two years of decrease.

Another example is iHerb, a US site selling natural products. Now Russia generates even more traffic (17.7%) than the USA, according to the freshest stats from Similarweb. And Russia stands second (15.7%) after Italy for Yoox, second (9.7%) after the USA for Farfetch, third (7%) after the UK and the US for ASOS.

Regarding ASOS, I believe that their Russia sales might be in the range of $100 million per year, if extrapolating from the data they have announced at a recent conference and and from the traffic they generate from Russia.

Amazon’s sales in Russia, in contrast with these players, account for a small proportion of their total business.

Chinese e-commerce players are doing fine on their side, but we’re talking about different product categories (e.g. electronics), different product classes, or product quality in similar categories (e.g. clothing).

Which segments or niches are the most promising for Western retailers?

Branded clothing and shoes, quality electronics, cosmetics, perfumes, a variety of niches like vitamins and supplements, sporting supplements, etc.

Should an e-commerce company to localize its site in Russian or try to sell via local marketplaces?

Both strategies should be considered, or perhaps combined. Marketplaces will provide you with traffic, but you should check their capacity to sell in your particular product category. For example, via Yandex Market you are more likely to sell big quantities of small electronic appliances, audio and video, than clothing or footwear items. Lamoda, KupiVip or Mamsy are better places to do so.

You should also look closely at the marketplace’s financial terms (commission fees) as well as their technical and legal requirements. These may be even more demanding, in the case of certain Russian players, that those of Amazon.

One of our clients, El Corte Ingles, will soon enter the Russian market. We studied all options together: from localizing their existing site, to building a dedicated Russian site, to dealing with Russian marketplaces. They liked the third option, which may reduce their marketing costs. We did for them the required integration works. We’ll also provide support in terms of logistics – from first-mile pickup in Madrid to delivery to Russian customers – and payment acceptance. We’ll spare El Corte Ingles any complexities : they will receive only euros from our German entity.

What about international marketplaces: Are they efficient to sell to Russian consumers?

Amazon doesn’t sell a lot to Russia. eBay has significant traffic in Russia, but their Russian site mixes domestic and international offers, making the latter insufficiently visible. By the way, this is why our platform Shopotam.ru, which helps Russian consumers make orders on eBay, is popular.

As for AliExpress, it is theoretically possible to sell via them to Russian consumers even if you’re not a Chinese company. We are conducting such an experiment with AliExpress, but the integration process is very hard and it’s too early to say what the results in terms of sales will be.

Do you think that international e-commerce sites should offer their Russian customers a cash-on-delivery option?

COD is the rule in domestic e-commerce. In the field of cross-border, this option is still rarely offered, but the first experiments over the past few years have shown that it may bring positive results, with the number of orders increasing much more than the rate of refusals.

We have organised this option for our client El Corte Ingles as well as for one more of our upcoming clients selling beehives. Another client, a US apparel retailer, expects that 80% of their Russian customers will opt for COD. The returns rate may be significant, but this is part of their business model.

Please tell us a bit about your service offer.

As a provider of cross-border express shipment services, we tend to go beyond the standard service offer in this field. While most providers will just receive your parcels or packages and organize shipment to Russia, we can organize pickup from your warehouse and provide the subsequent fulfilment operations in Germany or the USA.

For example, El Corte Ingles will send their euro pallets to our Berlin warehouse, where orders will be fulfilled by ourselves. We also have a warehousing and fulfilment facility in Claymont, Delaware. All storage and fulfilment options are also available at our Moscow warehouse.

This type of service is not common on the cross-border shipment market – even though some big online stores, like Amazon, do consolidate orders themselves. But for companies that do not generate huge quantities of orders, it may be a pain to adapt their processes to Russian orders, and it would be a none sense to build a warehousing and fulfilment infrastructure in Russia.

In addition to fulfilment and shipment services, we can provide assistance for site localization, integration to Russian marketplaces (Yandex Market and Lamoda), payment processing, customer support, marketing, COD, returns management and other essential services. We have our own courier delivery service in Moscow and cooperate with a variety of strong Russian last-mile delivery companies.

Compared with international shipment giants, we’re certainly a smaller company – but this allows us to serve our customers in a very individual and tailored way. All the integration goes seamless with an API protocol.