PayPal: online export from Russia is growing twice as fast as domestic e-commerce
13.12.2016 234 views
Retail & Loyalty discusses with Vladimir Malyugin, PayPal Chief Representative in Russia, the current state of the Russian online retail export, barriers to its development and the need for expert support for this business.
R & L: What is the volume of retail online-exports from Russia today?
Vladimir Malyugin: According to the Data Insight experts, the volume of cross-border online retail sales of Russian goods and services to other countries will amount to USD 2bn in 2016 – a 32% increase as compared with sales in 2015! Meanwhile, the market of domestic online retail is 10 times greater to exceed $ 20 billion in 2016, according to various estimates, but is growing almost twice as slowly.
R & L: What kind of products are exported today from Russia through the online channel?
Vladimir Malyugin: 51% of the Russian online export are digital goods such as games and related electronic products (about 35%), software (9%), services of social networks and dating applications (7%). The average check is quite low – 41% of all transactions are in the “below 1000 rubles” category. 23% of Russian online retail exports are physical goods - clothing and footwear, handmade items and unique products, auto parts and electronics. This volume is mainly generated by medium and small businesses.
R & L: Do Russian online sellers need “national platforms” for the promotion abroad? What can serve as a driver of its organic growth?
Vladimir Malyugin: They need expert support and partnership opportunities in other countries rather than a “ platform”, i.e. companies, which would help enter the markets of other countries, would assume part of the risk related to the interaction with foreign clients. Simplification of certain regulatory requirements, in particular in the area of launching electronic purses, would also contribute very much to the growth of the Russian online-export.
R & L: What are the main barriers today for Russian online merchants in retail exports?
Vladimir Malyugin: Among the main barriers, our respondents (about 2,700 companies selling abroad) name the lack of clear terms of delivery, the lack of transparency of the postal system, language barriers, the lack of confidence of foreign buyers in Russia, the complexity of document management - especially at customs. The latter is important primarily for medium-sized businesses, where turnovers are bigger - for them customs clearance can be a significant risk factor when dealing with foreign buyers.
R & L: How can PayPal, for its part, stimulate the Russian online export?
Vladimir Malyugin: Export development for us is a very important area. Now cross-border sales exceed 25% of the global turnover of PayPal. For sellers exporting to other countries, we have opened PayPal Passport portal and plan to russify it. The entrepreneurs will be able to find there useful information about online retail specifics, about professional associations, purchasing behavior and traditions of different countries, key holidays schedules, days of sales, etc. We have also proposed to introduce a simplified identification procedure for small online merchants in Russia. This would allow us to check the applicant’s information reliability on the basis of a full package of documents only once. In the future, the client would be able to provide a shorter list of the documents that prove the completion of the identification, and to begin working with electronic means of payment acceptance sooner.