The main shortcoming of e-business in Russia

Finnish companies have discovered the growing potential of Russian consumers and realized how beneficial this can be for them. In Finland many big shopping malls have been built in order to attract Russian tourists. Therefore, companies are truly interested in electronic marketing channels in Russia and customer service in Russian, both online and in the traditional stores. However, one issue of these current development efforts has been forgotten. Companies do not make use of the largest-growing sector of the Russian market: e-commerce.

Studies have shown that the popularity of online shopping is growing at an exponential rate in Russia. In the year 2013 Russians made purchases of approximately 10 billion euros, and cross-border sales counted to 18 %.

The annual growth of online purchases is about 25-30%, meaning that in 2015 the growth up to 17 billion euros is expected. In Russia online retailers have already created a challenge for traditional retail stores.

This trend has been noticed in Finland as well. Many different operators offer products of Finnish companies for sale online on the Russian market. However, there are some shortcomings, and the main one can be distinguished in the picture below.

Payment methods

Customers do not have any other payment alternatives apart from the credit card which is usually offered automatically. However, it is extremely important to provide Russian payment methods as well. Thus, the choice of payment methods given to Russian customers should look like this:

Russian payment methods

A customer should have the following options of making a payment online: cash, bank card, Qiwi-purse, Webmoney and Yandex.Money.

This problem is a sore one in Russia. Approximately 30 million of Russians make purchases online, and the most popular payment method is cash. However, the use of bank cards and other payment systems is rising. In the year 2013 the amount of cards exceeded the population of Russia and made up approximately 216,9 billion of cards (150%). But it is important to mention that most of those cards work only inside Russia and are not valid for making online purchases abroad. If foreign companies are interested in gaining benefits from the growing potential of Russian consumers, they should seriously consider engaging with Russian payment methods.

Besides payment problems, there are other challenges faced by Russian e-commerce such as logistics, import and export customs clearance and freight forwarding. We will return to these issues in the following writings of this column. So, the story will be continued. And, as all good stories, this one will also have a happy end.