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Provides in-depth analysis of the latest trends in online consumer shopping, covering drivers of online shopping, consumer insights, market dynamics (covering 25 product categories) and reviews of the latest best practice in online retail site design- Based on the latest data, the report not only provides details of the size and growth of this increasingly important channel, it also provides essential contexts on the penetration of online sales by product groups, how growth has developed over time, and the key drivers of this market in the future
Introduction and Landscape
Why was the report written?
"Consumer Attitudes and Online Retail Development in Russia" is the result of Canadean's extensive market research covering the online retail industry in Russia. It provides the magnitude, growth, share, and dynamics of the online retail market in Russia, and is an essential tool for companies active across Russia's online retail value chain and for new companies considering entry into the Russian online retail market. It provides data for historic and forecast online retail sales, and also includes the business environment and country risk related to the Russian online retail environment. By examining best practice from leading national large-scale online retailers (but specifically excluding the likes of Amazon, whose sites are well-known and vary little by country), as well as reviewing innovative approaches from smaller companies, the report provides insights and ideas about how best to approach growing online sales for your business.
What is the current market landscape and what is changing?
While the online shopping markets in Moscow and St. Petersburg are strong, key to the future of online shopping attitudes and behaviors in Russia are the developing cities of the country's Southern and Eastern regions, which have rapidly growing populations, whilst infrastructure investment is bringing down the price of broadband connections.
What are the key drivers behind recent market changes?
Population growth in urban areas, increasingly affordable internet connections and growing computer literacy, will combine to make Russia one of the most valuable e-commerce opportunities in the world; however, security issues with online payments and the complex logistics of delivering goods across such a vast country may stunt the growth of online markets.
What makes this report unique and essential to read?
Consumers have been reacting to the effects of the global recession, including the following recovery period, on their discretionary spending, and retail markets have been no exception. While the country by country market changes have varied, nowhere has been left totally untouched. This report quantitatively examines the components of change in the market by looking at historic and future growth patterns, including how changes in consumer behavior have affected the online retail sector for different product categories.
Key Features and Benefits
Understand consumer behavior and the online trends in Russia.
Understand which products will be the major winners and losers in the coming years.
Learn from best practice approaches outlined in the case studies of leading online retailers.
Improve market and strategic planning using highly granular, forward-looking market data. Detailed category coverage is provided, covering 25 products across eight product groups that include: Apparel, Accessories, Luggage and Leather Goods, Books, News and Stationery, Electricals and Electronics, Food and Grocery, Furniture and Floor Coverings, Home and Garden Products, Music, Video and Entertainment Software, and Sports and Leisure Equipment.
Assess the impact of the economic recession and recovery on market growth.
Key Market Issues
While online retail sales in Russia will grow much faster than sales in traditional retailers, growth patterns across both channels mirror each other. Annual growth rates declined rapidly during 2007-2009 as the Russian economy was hit by the global financial crisis. The Russian economy recovered in 2010, after which, growth rates will increase in both traditional and online retail to 2016.
Growing internet penetration in the regions outside of Moscow and St. Petersburg will be the key driver of future growth in the number of internet users. Penetration rates in most of Russia's regions lag far behind those in Moscow and St. Petersburg as a lack of infrastructure investment means high connection costs; however new investment is driving these costs down, resulting in a rise in penetration rates.
Approximately one-fifth of mobile phones in Russia in 2011 were smartphones, and this relatively low penetration will limit the potential for mobile commerce (m-commerce). Unlike in Western Europe, Russian mobile operators tend not to subsidize the cost of handsets, which means that consumers have to purchase smartphones at full price; making them too expensive for many.
The sheer size of Russia, coupled with an unreliable postal service, has created logistical difficulties for many online retailers. To get around this, leading retailers such as Ozon have launched their own courier services, and operate pick-up points around the country.
Online retailers are targeting key regional cities, whose populations are growing rapidly and are benefiting from extensive infrastructure investment, which is driving down connection costs and increasing connection speeds. However, the novelty of online shopping means that many consumers use the internet to look for products that are difficult to find locally, as opposed to in Moscow and St. Petersburg, where online retailers compete directly with local retailers on the basis of price, range, and service.
Online retail's share of total retail sales increased from 0.8% in 2006 to 1.7% in 2011, and is expected to reach 3.4% in 2016.
Books, News and Stationery was the category with the highest percentage of sales originating online in 2011; however, by 2016 it will be overtaken by Music, Video and Entertainment Software as a growing amount of media will be both purchased and consumed online.
Russia has a low Fixed Broadband penetration rate, only 12.2% in 2011. This low penetration rate is the result of the country's large size and undeveloped communications infrastructure, though the rapid increase in the penetration rate from 2.0% in 2006 shows that investment in key urban areas is taking place.
In 2011, online retail penetration in Russia was lower than the global penetration rate by two percentage points. Although the gap will decrease slightly over the following five years, by 2016, online retail penetration in Russia will still remain below the global average.
In terms of absolute value, Computer Hardware and Software was the largest product category in the Electrical and Electronics group; however, in terms of online sales growth, Communications Equipment was the fastest-growing category during 2006-2011, and will remain the fastest-growing category during 2011-2016.