Update on Cross-Border E-Commerce Sales to Russia

cross-border e-commerce selling to russia

Cross-border sales to Russia have been skyrocketing as more and more Russians discover the wide selection and low prices of established foreign sellers such as Amazon/Shopbop, ASOS and Taobao.

In fact, many foreign sellers have instituted Russian-language versions of their sites while still fulfilling orders from abroad, thus making their sites more appealing toward the vast majority Russians, who are not fluent in English.

Other major frictions experienced by foreign sellers are also being addressed, with companies starting to offer enhanced payment options (including cash-on-delivery) to overseas sellers.

At the same time, current Russian regulations do little to discourage local e-shoppers from buying from abroad. Russian residents can import goods valued up to EUR1000 per shipment per month without having to pay VAT or customs duties, and the documentation requirements are relatively straightforward.

All of these factors add up to enhanced competition for Russian e-commerce players, who have responded by lobbying the Russian government to make the current import regulations more strict. Policy proposals include lowering the exemption amount to EUR100 from the current EUR1000.

Another response is that Russian sellers are starting to establish their own offshore fulfillment centres. Wikimart and KupiVIP have both announced such plans. Still, this is unlikely to make a significant impact in the trend to shop abroad, as the core of the problem is that Russian sellers offer a narrower selection at higher prices. Their higher prices are not solely due to tax differences, but rather that domestic competition is lower. They charge higher prices simply because they can.

Anna Oshkalo, who writes the “Russian Search Tips” blog has recently written an update about the cross-border e-commerce market in Russia in 2013, summarizing recent publicly-available market statistics. I’ve contributed some comments to the article. You can read her full post here.

 

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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