Russia is home to Europe’s largest online population — up 14 percent over the year to 53 million users, The Economist reports, and that’s with an Internet penetration rate of just 37.1 percent, nearly half that of nearby France and Germany. In addition, the Russian online retail market is projected to increase from $10 billion to 30 billion by 2015. However, despite the low barriers to entry, foreign penetration has been dismal.
Amazon has virtually zero online presence while Google only has 27 percent market share. Yandex, a Russian online firm similar to America’s Craiglist, owns 61 percent of market share and E-bay has yet to penetrate Russia entirely due to fierce competition from rival Molotok, CNNMoney reports.
One could argue that the absence of foreign players could have a direct link to the country’s immature web connectivity infrastructure. Even domestic players who dominate the market have yet to fully capitalize on Russia’s eCommerce opportunity since the country lacks basic infrastructure necessary to foster its mobile market.
As a result, cash is still king — even on eCommerce sites. A study conducted by East-West Digital News in partnership with Data Insight and Moscow’s Higher School of Economics confirms that bank cards are still underutilized due to Russian consumers’ preference for cash.
The following illustrates the use of bank cards in some on Russia’s eCommerce sites.
The study also shows that Russians believe it is more rational to pay cash on delivery, that bank cards are not easy to use especially when pre authorization is required, and that Russians just flat out do not trust banks. On the merchants site high commission fees and related costs make alternative payment methods more attractive than bank cards.
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To read the entire study on Russia’s eCommerce landscape download the report here.
