Russia’s e-commerce market today: huge potential but tough reality

 

The past few years saw a radical transformation of attitudes on behalf of both sellers and buyers. A myriad of small and mid-scale e-commerce retailers have mushroomed in the country, not to mention the blockbuster success stories of companies like Ozon.ru and KupiVip.ru, whose outstanding results have raised a few eyebrows.

Leading foreign players have given Russia a try too, hoping to avoid staying on the sidelines of one of the fastest growing markets on the planet. In 2011, the volume of e-commerce in the country amounted to $10.5 billion, with PWC consultancy estimating it to reach some $50 billion before the end of the decade.

Despite its undeniable potential, Russia’s online retail is full of diverse peculiarities. "The market is arguably least known and most misunderstood in the world, because it’s hard to find any real figures. For instance, if you look at the official statistics, it states that in 2010 there were 261 online retailers in the country. In reality though there are about 20,000 or 30,000 online retailers in Russia. One of the reasons why they are not accounted for is because many of those firms are registered under another category for instance,” said Adrien Henni, chief editor of East-West Digital news, an online resource on Russian digital industries, over the phone, concluding that, "this example illustrates the pressing issue of poor statistics when it comes to this sector.”

Recent research by East-West digital news, PWC and the Moscow Higher School of Economics outlined, yet another acute feature of e-commerce in Russia. At present the sector lacks qualified human resources, and the paper stressed the negative impact of this factor on the development of online retailers in the country.

Representatives of one of the companies interviewed by PWC speculated that there are no more than a hundred "really good professionals” in Russia, who have a thorough understanding of the concepts of e-commerce in all their diversity. While the number is extremely low, many firms have no other choice but to hire employees with insufficient skills or to have certain vacancies open for months.

With that in mind, some online retailers move towards hiring foreign specialists with the necessary expertise and experience. The option however could hardly serve as a panacea, since these professionals expect to receive an exceptionally high salary. Hence in reality only those firms with hefty budgets can afford this scheme.

Anthony Parks is an online retailing expert, who moved to Russia work in this industry. Anthony graduated from one of the leading institutions in the UK, and worked five years in the e-commerce sector in Europe. He was well aware of the fast paced development on the industry in Russia and began looking for vacancies in 2010. It didn’t take too long, and within three months he was hired by one of mid-size companies in St. Petersburg. "In Russia I got a unique opportunity to work in one of the country’s most dynamic industries. Moreover, my salary here is at least five times as high as it used to be in Europe,” Anthony said in explaining his decision to move to the country.