bne IntelliNews – Russia’s e-commerce growth expected to slow to 10% in 2021
Russia’s e-commerce volume is expected to slow to 10% in 2021 after increasing due to the 59% increase in the pandemic in 2020, the president of the Russian Online Retail Association (AKIT ), Artyom Sokolov, at the Russian PRIME news wire.
“In 2021, the growth of e-commerce in the country was fluid, stable from month to month. Results from January to September of 2.41 billion rubles [$322bn] are slightly above the same period of 2020 of 2.34 trillion rubles, ”said Sokolov quoted by PRIME.
Russian e-commerce was already booming before the epidemic hit, but a forced lockdown that began in April 2020 that prevented people from leaving home and ordered them to minimize social contact led to a coup major whip for the booming online retail business.
“A year ago there were several months of foreclosure when e-commerce was for a long time the only channel for almost all non-grocery retailing and as a result we saw a unusually high demand for goods on the Internet. . The figure of 2.41 billion rubles proves customer interest in the online channel – the patterns of buyer behavior that emerged during severe restrictions on brick and mortar retailing due to the pandemic of COVID-19 remain in effect after their relief, ”Sokolov added.
Russia’s online business has grown five times faster than the real economy, but that growth is starting to slow now and the gap is also closing as real economic growth picks up as part of the post-rebound. COVID.
The Russian economy grew 4.3% year-on-year in the third quarter, but the post-coronavirus recovery is nearing completion, economists say. “The strong 3Q21 numbers were likely due to the still strong but declining momentum in retail and wholesale, manufacturing, and freight and passenger revenues,” Sova Capital said in a note.
At the same time, real-world retail sales jumped 5.6% year-on-year in September 2021, following a 5.3% increase in the previous month, exceeding market expectations of a 3-year increase. , 8%.
Nonetheless, online retailing has always become a major driver of consumption, and analysts say the pandemic has caused a permanent change in how Russian retailing works. Local online sales accounted for 86 percent, or 2.07 trillion rubles ($ 26.8 billion), but its share in overall retailing fell by about a percentage point last year.
Logistics and supply change issues during the pandemic have also affected cross-border e-commerce, reports AKIT.
“In January-May, we saw a stable drop in cross-border trade volumes, averaging 30%. There was a notable 50-70% increase in July-September, but the cross-border market still has not regained the position it lost with the breakdown of supply chains due to blockages, ”Sokolov told PREMIUM.
In 2019, orders from foreign online stores accounted for 31% of total e-commerce volume, but fell to 14% in 2020 and remained stable from January to September at 341 billion rubles (4.6 billion rubles). dollars).
“In January-September, the share of e-commerce in total retail was 8.5%, but it will change by the end of 2021. It could break the 2020 record of 9.6% . This is not only explained by the new restrictive measures, which certainly boost e-commerce, but November and December are traditionally the peak retail season with sales and preparations for the New Year holidays, ”he said. declared to PRIME.
IPOs and good results
The boom in online retailing in Russia has fueled a wave of IPOs as major players are listed on national and international stock exchanges to raise additional investment capital. Ozon’s December 2020 IPO was initially launched in hopes of raising $ 500 million, but demand was so great that the IPO raised a total of $ 1.2 billion. In general, Russia has been experiencing an IPO boom for over a year, although recent emerging geopolitical tensions may have closed the window for further IPOs for now.
Meanwhile, the major players continue to record strong growth in sales volume, although not all of the leading companies are really profitable.
The gross merchandise volume (GMV) of the Russian subsidiary of Chinese e-commerce site AliExpress increased 36% on the year to 133.3 billion rubles in April-September, excluding services, reports AKIT. At the end of September, the turnover of the local activity of the company represented more than a third of the total turnover.
Likewise, Ozon said the company’s GMV jumped 145% on the year to reach 108.3 billion rubles in July-September, including services. The number of orders climbed 239% to 56.2 million.
The turnover of Russia’s largest e-commerce player Wildberries in the children’s goods category jumped 54% year-on-year in 9M21 to reach 74 billion rubles ($ 1.04 billion), reports the society. As followed by bne IntelliNews, retailer Detsky Mir faces heightened rivalry with Wildberries in online sales, Detsky Mir’s fastest growing segment.
As of 1H21, Russia’s three largest e-commerce markets, Wildberries, AliExpress and Ozon, controlled 34.3% of the market, 10 percentage points more than the same period last year, the portal reported. RBC sales representative citing InfoLine Analytics data. By the end of 3Q21, the share of the three main players had further increased to 36.5%.
The e-commerce market for sales of goods is expected to reach 4 trillion rubles ($ 55.1 billion) in 2021 and more than double to reach 10.5 trillion rubles by 2025, according to InfoLine.
As followed by bne IntelliNews, it has already been suggested that the Russian “big four” e-commerce operators AliExpress Russia, Wildberries, Ozon and Beru are expected to overtake the market and face imminent market consolidation, while Internet leader Yandex is also emerging as a highly competitive e-commerce competitor. .
In 2020, the top three e-commerce markets were Wildberries (RUB437bn), AliExpress Russia (RUB229bn), and Ozon Holdings (RUB197bn). In the meantime, InfoLine estimates that Ozone has already beaten AliExpress in 4Q20 in terms of revenue.
Compared to Europe and Asia, Internet retailing in Russia is about five years behind other countries, Sokolov said.
“Taking this into account and the online volumes in other states – 32% of total retail trade in the UK, 27% in China and 14% in the US, the Russian e-commerce market has the one of the highest growth potentials, “AKIT said.