Being an enthusiastic consumer of that great Russian creation, vodka, imagine my disappointment at discovering that the Russian economy is not in fact powered by my favorite beverage, just boring old natural gas and oil. According to the twin Bretton Woods institutions, the IMF and World Bank, Russia’s economic growth has consistently outperformed other G8 nations over the last few years because of oil production and natural gas resources.
When it comes to the Russian consumer however, I was even more surprised to learn that they also indulge in online retail therapy and shop for books, music, gadgets and videos on sites like Ozon.ru – think Amazon.com.
We’re not just a store: Ozon is a complete Russian entertainment resource. A comprehensive guide to the Russian cultural scene in Moscow, St. Petersburg and elsewhere in Russia.
Launched in 1998, the online store has everything Russian speakers could want in terms of Russian language music, books, and entertainment. The delivery options are attractive and a reflection of the subtle differences between the Russian and US markets. Delivery times range from just 24 hours by courier if you live in Moscow and up to ten weeks by international mail service if you live in the rest of the world (over 60 countries.) One of the subtle differences for shoppers in Moscow, St Petersburg and Israel is that they can pay cash on delivery if they select the courier not postal option. In its guide for ‘shoppers’ mail-order bride Web site womenrussia warns about the limited use of credit cards in Russia, particularly in small towns alongside tips on the best season to visit (summer, June to August) and a suggestion to get a ‘talking translator‘ which conveniently they sell!’
The rest of us can use Visa or Mastercard but Amex cardholders will have to wait a while before they can use their cards to shop on Ozon.
In the first half of 2008 Ozon’s revenue grew by 78% to $45 million compared to the same period in 2007.
The best-selling items are books, with 36% of sales, cell phones, cameras and other electronic devices, with 30%, and movies, with 14%.
Businesses wanting to sell electronics, books, movies or music to Russian speakers in over 60 countries would be well-advised to get familiar with www.ozon.ru and other online retailers in Russia for two key reasons:
- Future Growth Potential: In 2008 Russia ranked fifth among European nations in terms of monthly Internet visitors (and that was with only 14% of the population online – I’m not a mathematician but the growth potential is glaringly obvious.
- Current Growth Rate: In 2008 Russian consumer spend online grew by a whopping 35.4% compared to 2007, to an impressive $4.42 billion – a growth rate that is faster than the US market.
Despite the clear potential for profits in online shopping in Russia, businesses should also be aware that there are some issues that could impact success. For one thing, Russian consumers are not yet as confident about disclosing personal data online and still distrust the banking system.
Secondly, there is a subculture of young Russians, who are frustrated by limited job opportunities and consider online fraud as a lucrative career option. It is not hard to find stories of hackers with interesting names like ‘The Corpse‘ who sells viruses to anyone who can pay $3000. 250 customers of the Swedish Nordea Bank were swindled out of $1.4 million by hackers using a virus like that sold by ‘The Corpse.’
Overall though, the future of online shopping in Russia looks bright because there is still a large part of the market potential that is untapped and continued growth in Internet and online shopping and credit card uptake among Russian consumers. Read Top 10 Russian consumer trends here.