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Sunday, February 18, 2018

Russian Internet-trade destroys China

Paradoxical at first glance, the processes recorded in the Russian trade, the traditional retail complains about falling sales, but the Internet sites claim a sharp rise. However, the idyll may soon be over, and this is directly linked with the Russian laws, and with the expansion of the Chinese.

While in crisis the traditional retail trade in Russia is declining (5.2% in 2016), the Internet trade shows an amazing growth. Last year it grew by 21% to 920 billion rubles, said President of the Association of companies the Internet-trade (AKIT) Alexei Fedorov.

Russians have become more like the Germans, who are always very prudent spending money”

This increase even exceeded the expectations of experts of the AKITA. Statistics shows that the crisis and the reduced purchasing power of Russians has not had a negative impact on online trade. In 2017, AKIT expect growth of at least 25%, to 1,150 trillion rubles.

Why did the Russians save in regular stores, go to the products of the economy class, whereas on the Internet are buying more and more? Of course, nominally the volume of these markets are not comparable, but the crisis is clearly in favor of electronic Commerce.

“Due to the decline in the purchasing power of the people began to actively take your money, and the Internet you can always find cheaper,” – says the newspaper VIEW President of AKITA Alexei Fedorov.

Secondly, as the money became less, buyers began to treat them more carefully. “They are afraid to make a spontaneous purchase an emotion at all left. If two or three years ago worked very well offers “buy three for the price of two”, “take a gift with purchase,” etc., now the customer only cares about price. If the difference in the price of the item exceeds 10%, the client is ready to forgive the long shipping, no additional goods and services,” – says Fedorov.

Resignation emotions in the purchase indicated by the increased time the layout of goods on the website, that is the time that the customer takes the buying decision. “Previously, the purchase of household appliances occurred during the week. The young people visited different sites, I chose the camera or the laptop, watched the performance and read reviews, then went to the store and bought or ordered on the Internet. And all this for a week. Now is the time for explication of the goods on the website increased to three weeks in household appliances, in power tools – up to four weeks in clothes from three to ten days,” – says the President of AKITA.

Online the Russians are buying most often, electronics and appliances. On the second place in popularity – the clothes and shoes. In addition, often the Internet purchased goods, perfumes and cosmetics, sporting goods.

We can say that consumer behavior of Russians is close to the European model. “Russians have become more like the Germans, who are always very prudent spending money – unlike the Russians, who in the last 20 years spending money thoughtlessly and emotionally. But the era of reckless spending has passed,” – said Fedorov.

However, e-Commerce, despite double-digit growth, there are negative trends. First, some Internet stores have become generators of black money. “Those online shops, which do not penetrate checks, or punch them in advance in the warehouses, or come from a strange patch – win compared to “white” honest sellers. Billion rotates on the black market of Russia”, – says Fedorov. “There are sites which clearly says that the cash – less and card – more expensive. The share of such stores has grown. In the first one thousand Internet-shops of Russia of such stores 15%. Do this in order to earn an additional 10% on the sale of this cash,” explains the source.

Another disappointing news is gaining momentum in the market the Internet-trade in Russia grabs China. While domestic e-Commerce is still higher than the volume of purchases abroad, its share is 67%, but every year the gap is narrowing, and not in favor of Russian players. Cross-border trade (import) is coming and has already reached 33% market share. For comparison: in 2010, domestic trade took 92%, in 2015 – only 71%.

Last year the number of orders in the domestic market grew by only 6%, while the number of parcels from abroad – as much as 102%, to 233 million shipments. And in 2017 the Russians will order one and a half times more goods abroad and 400 million pieces of parcels, expect to AKITA.

Most goods imported from China. The share of shipments from this country leaves 90% of the EU – 4% USA – 2%. In monetary terms, China’s share is 52%, EU 23%, US – 12%. This suggests a low average price of purchases in China. Overall, more than 64% of purchases (transactions) in foreign stores does not exceed the cost of 22 euros.

Fedorov is sure that soon the Russian market of Internet Commerce will fully comply with the Chinese players. “In the next three years we will guarantee the death of the Russian retail market. Just because Russia is a huge offshore for crossborder (offshore) cross-border trade. We do not charge any taxes or duties on goods worth up to 1,000 euros. In China, there are protective barriers for Russian products sold on online channels: duty in size from 12 to 60 percent, plus goods must be certified,” – says the President of AKITA. “We do no goods can not in China to send there – the wall. To us, anything. This creates uncompetitive conditions for the Russian Internet-shops,” – says Fedorov.

In his opinion, Russia should learn from the experience of Europe. There is a duty-free threshold for packages from abroad just 22 euros. But in 2021, the threshold is zero, then there is no duty free. The fee will be determined depending on the value of the parcel.

“We need to make in Russia zero – in the same way as in Europe. Because 64% of parcels go to Russia at a price lower than 22 euros,” – says Fedorov.

Meanwhile, the Russian government has recently paid special attention to development of export of goods from Russia, including via the Internet. However, the President of AKITA sure that brakes the Internet-the export of Russian tax system.

“No exports from Russia is impossible until the Russian Internet-shops will not be able to quickly reimburse VAT for packages and do it almost for free. For example, now owner, which buys Russian-speaking German, “Ozone” costs 600 rubles, VAT with her 100 rubles, and to reclaim this VAT, you need to spend 1200 rubles for the collection of documents. The Russian tax system in this regard is to protect foreign interests,” concludes the source.


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