The Russian cross-border ecommerce is still growing fast. In 2014, it reached an estimated USD 5 billion, up from USD 3 billion in 2013. While Chinese players capture a growing share of this market, ecommerce flows from western countries, overall, have been stagnating since early 2014, with a variety of situations, however, depending on each segment or player.
Operators from all countries face operational challenges to serve this huge territory. Just a few years ago, this was a major hurdle. The standard postal service was highly unreliable, at least from the Russian side, while the tariffs of big global shipment providers were prohibitive to many consumers.
Furthermore, the shipping process was subject to unpredictable changes in customs legislation or practice, or changes that were not always understood or anticipated by shipment providers. Thus, in January 2014, DHL Express, DPD and FedEx suspended shipments to Russian consumers. Many foreign internet stores were affected.
In 2013 and 2014, however, the situation improved:• The Russian Post has significantly enhanced its capacities with new sorting centers and routes to serve customers more efficiently. For example, a large fraction of orders from China are now delivered in weeks vs. months some time ago. In addition, the proportion of lost or stolen packages has fallen dramatically.
• Alternative shipment offers have developed, creating an ever more competitive environment.
• Progress has been noticed, too, in customs clearance, with the progressive introduction of electronic procedures and simpler rules being tested now.
Thus, the shipment and customs processes still undoubtedly require attention, but can no longer be considered as blocking factors. A potential revision of the current tax-free import threshold (EUR 1,000 per person and per month) was much discussed in 2014, but has yet to be confirmed.
To serve Russian customers, international merchants may consider the following options:
1. Delivery via postal operators remains the cheapest method in most (but not all) cases. Moreover, the special customs regime for postal deliveries (under the UPU rules) makes the clearance procedure easier and/or cheaper to customers. However, postal delivery is still relatively slow, and services are unsatisfactory. Some foreign postal operators, such as Estonia’s Omniva and Finland’s Posti, have launched special offers to serve Russia at a higher level of efficiency.
2. Global shipment companies (essentially DHL Global Mail, TNT Post and UPS) offer a convenient, unified solution since they serve virtually all countries. However, they might charge you more than local opertors, which they use as subcontractors for a part of their last-mile operations.
3. Russian shipment operators, such as Boxberry, CDEK, Shiptor or SPSR, to name just a few, are worth a look. In many cases, their rates are lower than those of global operators – and sometimes even lower than postal rates. Some of these operators have made available to foreign retailers advanced service options such as cash-on-delivery. Moreover, Russian providers are usually well placed to address customs issues, as demonstrated in early 2014.
Operations may be outsourced to a first-mile operator (such as Borderfree in the US, SalesSupply in the EU, or wnDirect in the UK). However, some of them seek to cover their costs by establishing higher pricing for Russian consumers – which will not stimulate your sales, especially in crisis times.
About Adrien Henni
Adrien Henni is chief editor and co-founder of East-West Digital News, the international resource on digital industries and e-commerce in Eastern Europe. After 10 years of experience in the Internet, mobile and venture businesses in France, Russia and Ukraine, Mr Henni advises a variety of startups, funds and other organizations.
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