Russian Buyers Set To Drive Online Retail
Published: December 5, 2013 (Issue # 1789)
According to research from Jones Lang LaSalle released in November, Russia is ranked seventh in a new appraisal of predicted e-commerce sales growth.
The report states that by 2017, the local online retail market could increase by 12.5 percent. Currently, online retail sales account for less than 2 percent of total retail sales in Russia.
The main causes for such low numbers are attributed to a general distrust of online payment systems, limited use of credit cards, low broadband Internet penetration and concern over the reliability of delivery services among Russians. Jones Lang LaSalle found that Russians prefer to collect online purchases from special pick-up points, paying cash for their purchases, rather than home delivery. Thirty five percent of Russian online shoppers canceled their orders when they learned about the necessity to prepay, according to the research. In September 2013, PayPal began operating on the Russian market, allowing transactions to be made in rubles. Analysts expect that this should decrease the level of distrust among local customers making online payments.
The main local online retail markets are Moscow and St. Petersburg. Jones Lang LaSalle predicts growth of e-commerce in the regions, while the country’s two largest cities will maintain their leading positions.
“Over the longer term we expect [the popularity of online retail] to ripple out to the regions, where physical retail is still undeveloped, and where there is strong demand from consumers to access better-quality and reasonably-priced retail products,” said Pyotr Zaritskiy, the head of industrial and warehouse properties with Jones Lang LaSalle in Russia and the CIS.
“However, this growth will depend on improvements to logistics infrastructure in more remote areas, including the availability of better quality warehousing and parcel delivery networks,” he said.
Although younger generations are more educated in IT, most Europeans, including Russians, prefer first to see what they will buy and only then make their purchase online, according to CBRE. The tactile and visual perception of a product are more important for Russians than for any other nationalities.
The birth of the online retail market has had the most impact on sales of books, music and video.
“Online shops, alongside with the opportunity to download content from the Internet, played an essential role in the reduction in the number of book shops and shops selling music and video. Thus, online retail became a significant threat to traditional retail,” said Yelena Prozorova, a consultant with Maris, part of CBRE Affiliate Network, speaking to The St. Petersburg Times.
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