BayRu is a US Exporter of the Year?

News recently came out that Bay.ru was named as an ‘exporter of the year’ by the US Government’s Department of Commerce (press release).

We congratulate Bay.ru and believe this development underscores the huge potential for e-commerce in Russia. Their whole business model is predicated on exploiting the frictions in cross-border retail between the US and Russia, some of which include:

  • Major differences in prices, driven by customs and VAT exemptions for individual imports
  • US companies which ignore the international market
  • Russian consumers who prefer to transact in the Russian language, using Russian payment methods
  • Scarcity of selection available from Russian retailers

While there is a movement underway from Russian e-tailers to pressure the Russian government into enacting policies to address the customs and VAT price distortions, the other factors are not destined to change any time soon.

Still, it is misleading to name BayRu as a major exporter when they are basically functioning as a logistics and fulfillment agent on behalf of Russian consumers. We might as well name FedEx, UPS and DHL as super exporters as well.

 

About Leighton Peter Prabhu

I am a partner in Interstice Consulting LLP and head of the Russian office. My practice focuses on e-commerce business and marketing consulting, especially for foreign e-commerce brands entering the Russian market. I also serve as a consultant to some of the largest international portfolio investors in Russian equities (both public and private). You can find out more about my background and business interests on LinkedIn. You can also connect with me on Twitter and on Google+.

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