By Dmitry Danilenko, Chief Commercial Officer at Yandex.Money
Russians are heading across borders to do their shopping – virtually.
According to a recent study by the research group GfK, over 40% of survey respondents said they started shopping at foreign online stores in the last 2-3 years. The same study revealed that almost half of Russian online shoppers order goods from China.
What makes a Russian consumer click? Well, just what you would expect really. Russian e-shoppers aren’t so different than their counterparts in Western Europe or the US, except for an apparent 5-10 year lag. Top shopping categories include clothing, cosmetics, consumer electronics, and children’s goods. Building materials and furniture show slower growth, but still decorators love to buy striking items that are lacking in small, urban craft shops.
Russia’s most spontaneous shoppers are twenty-something women living in smaller cities. They admitted that 13-15% of their income goes toward unplanned, unnecessary purchases that they make while virtual window-shopping. Who can blame them? Some online stores have masterfully designed ‘storefronts’ that you won’t find in their out-of-the-way towns. Those same women tend to buy things through social networks and group purchases. They buy clothes, makeup, perfume, and children’s toys. Mostly these spontaneous shoppers are young mothers, who, since gaining access to the internet, prefer shopping online at prestigious international stores to lugging a baby stroller around a dreary shopping mall.
Given this picture, it’s not surprising that people’s motivations to shop online in the first place are typically a factor of geography. For urban residents—Moscovites, mostly—time is money. Who has time to go to the mall, when you can use your smartphone to order what you need during your morning commute? In smaller urban areas (pop. 100,000-500,000) people are more likely to turn to the internet for goods that aren’t available in local stores.
Shoppers in Russia are more likely to buy electronics from Chinese stores than from English-language ones (probably because of the price). In other goods categories English-language sites take a more equal slice of the pie. Those who shop at foreign stores show a clear preference for where they shop: only a quarter of those shoppers made orders at both a Chinese store and an English-language store in the last year. As a rule, low-income young women from smaller cities are more likely to load up on discount clothing and household goods from China. Meanwhile, if you’re a wealthy man over 40, you’re probably shopping for gizmos and gadgets from well-known European stores that lack a localized Russian-language site.
Stocks to Watch This Week – Expedia Group, IncGo to article >>
What about the nearly 50% of participants who answered they don’t shop at foreign stores at all? 40% admitted that it’s because of a language barrier that they stick to Russian stores only. Online businesses: time to hire a translator! Depending on your demographic, Russian customers aren’t too particular about this either. Some stores even use machine translation, which, when coupled with pictures, gives shoppers a passable idea of the items they’re buying (for example, Rutaobao.сom, the localized version of the Chinese store Taobao and a favorite among Russian female shoppers). And it works!
Russian shoppers distinguish themselves from their American counterparts by their patience. Perhaps, they’ve come to terms with their postal service. Everyone is delighted by one-week delivery, but they are also quite content with waiting a month.
Russian shoppers are more particular however when it comes to payments. While most Americans would have trouble imagining how they could pay online without a credit or debit card, Russians make the majority of their online payments without one. That is because Russia’s economy is still cash-obsessed. Most online purchases are paid for by cash on delivery, but online merchants who don’t want to risk rejected orders should offer the prepaid options through payment kiosks. After a customer completes their order, he receives a unique payment code, goes to the nearest payment kiosk (they’re all over the country and Russians are used to them for regularly topping off their mobile phones), types in the code and deposits cash straight into the kiosk. Even those who have bank cards tend to withdraw their entire salaries in cash. Another way Russians pay is with E-money—the most popular and well-known service being Yandex.Money (according to the research group TNS, 84% of Russians are familiar with Yandex.Money). Today, the electronic payment service Yandex.Money offers users a lot more than just an Ewallet. Those who aren’t used to paying online with a bank card can issue a Yandex.Money bank card, whose balance is in their Ewallet and use it to make purchases, both on and offline. According to our data, 44% of Yandex.Money cardholders use their card for making purchases outside of Russia. Additionally, Yandex.Money recently started offering its users a free virtual card for online shopping. All of these products are meant to make shopping online simpler and safer for Russian users.
Online stores contending for a chunk of the Russian market should offer all these options if they’re gunning for a 100% conversion rate. The simplest way to offer your Russian clientele these payment methods is to sign up for a local universal payment solution. In addition to the payment methods listed above, Yandex.Money’s processing solution includes payments made from mobile phone balances (the service is available for customers of the three largest mobile operators in Russia – MTS, Beeline, and Megafon—essentially a majority of the Russian population). Currently, over 50,000 online stores in 37 countries around the world accept Yandex.Money as a form of payment. 52.4% of these stores are in Europe while 40% are located in Asia.
Although GfK’s study reveals the vast majority of customers prefer to pay for an order upon receiving it, most Russians are perfectly comfortable paying up front—if they trust your brand. Developing a good reputation in Russia starts with local advertising and SMM (Social Media Marketing). Businesses who work in Russia can attest to its unique marketing environment—Russians use Yandex more than Google, including for initiating a product search, and instead of sneaking Facebook from their bosses, they sit on VKontakte all day.
If an online merchant is still daunted by the idea of entering such a foreign market, he’ll be happy to know that Russians do not insist on things like free returns. GfK’s research shows that even when customers aren’t satisfied with their purchase, only half of shoppers return their order and ask for their money back. The other half will throw it out, resell it, or give it to someone else as a gift.
Dmitry Danilenko, Chief Commercial Officer of the e-payment service Yandex.Money
Dmitry has worked in the internet industry for over a decade. He has been in charge of the implementation and development of various services on Russia’s mass market including broadband internet access, IPTV, and Wi-Fi and WiMAX with the company Vimpelcom (the brand Beeline). Starting in 2011 he served as commercial director of the company Begun, where he was responsible for the commercial strategy of the company on the market of context and media advertisement. He took on the role of chief commercial officer at Yandex.Money in June 2012.