Russian Internet Marketing The Russian e-commerce market is ...
Russian Internet Marketing The Russian e-commerce market is growing rapidly every year, driven by increased internet usage and penetration. This has led to higher B2B and B2C volumes, with offshore internet retailing leveraging on greater credit card security to provide Russians with an economical, convenient and safe opportunity to buy online. Quick Summary: Number of Russian internet users: 23.7 million Russian broadband access: 1.24 million users Russian mobile phone usage per capita: 515(per 1,000) Most popular local Russian search engine and website: www.Yandex.ru Credit card penetration in Russia (2006): Less than 1%(per 1,000) Russian B2C spends (2005): US $ 600 million Russia ended 2005 with its seventh consecutive year of economic growth. Russia has now adequately recovered from the financial crisis of 1998, boosted by high oil prices and a relatively cheaper Ruble (Russia’s currency). Since the year 2000, investment and consumer-driven demand have played a significant role in Russia’s economic revival. Russia’s GDP at current prices for 2006 stood at US $ 975.3 billion, a growth of 27.8 % over 2005 Russia estimates, according to the IMF’s World Economic Outlook Database dated September 2006. According to www.etforecasts.com, the total number of Russian internet users by the end of December 2005 was 23.7 million, constituting 2.2% of the total number of internet users worldwide and representing 16.5% of the total Russian population. This has grown by a whopping 664.5% since 2000 estimates for the same. The World Bank -ICT database has also estimated Russia’s per capita internet usage at 91 users (per 1000) in 2004, having increased from 20(per 1000) in 2000. Chart 1: Total Number of Russian Internet Users 2000-2005 23,700,000
25,000,000
22,300,000
Internet Users
20,000,000 15,000,000 10,000,000 5,000,000
3,100,000
0 2000*
Mar-05
Source: www.etforecasts.com, except 2000 * Source: ITU (International Telecommunication Union) Data, 2000
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Dec-05
Russia’s rapidly growing broadband access per capita is still at miniscule levels, standing at 0.9(per 1000) in 2004, according to the World Bank ICT database. According to data available from research firm J’son & Partners (J&P), between 30 June 2004 and 30 August 2005, the number of Russian broadband internet subscribers grew by 106% over a small base. At the end of June 2005, 1.24 million Russians subscribers were using this service. The World Bank ICT database also estimated that Russia’s per capita personal computer usage stood at 113(per 1,000) in 2004, while Russia’s mainline and mobile phone usage also stood at 261 and 515(per 1000) respectively for the same year. According to the estimates of AC & M Consulting (which monitors the Russian Telecommunications market), the number of Russian mobile users stood at 134.7 million in April 2006, growing rapidly year on year. This growth has been on account of increased penetration in Russia’s urban regions like Moscow and St.Petersburg. CIA’s ‘The World Factbook –Russia’ database (www.cia.gov) has also estimated that the total number of Russian telephone mainline users stood at 40.1 million by the end of 2005. Chart 2: Total Number of Russian Mobile Phone Users 2005-2006 160,000,000 Mobile Phone Users
140,000,000 120,000,000 100,000,000 80,000,000
129,600,000
134,700,000
Feb-06
Apr-06
115,800,000 78,500,000
85,600,000
Jan-05
Mar-05
60,000,000 40,000,000 20,000,000 0 Oct-05
Source: AC & M Consulting Data provided by www.mediarevolution.ru ranks www.Yandex.ru as Russia’s most popular search engine, indexing 2.8 million sites and 26,600 GB of data as of July 2006. It was also the largest Russian website with 22 million visitors in June 2006. www.google.ru is popular with Russian-speaking users abroad, with Russian residents generally preferring local sites. According to the same source, Russia’s top-3 portals are www.yandex.ru, www.mail.ru (Russia’s biggest web-mail provider) and www.rambler.ru (a search engine and a rating/catalog website). Another significant Russian portal is www.RBC.ru (a news portal, which is also a major Russian web design studio and a business TV-channel) Credit card penetration in Russia is at low levels, with only about five million active credit-card accounts, according to a Brunswick UBS Warburg report for the year
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2000. According to a 2006 Merrill Lynch report as well, Russia’s credit card penetration is also very negligible. Russians generally prefer to use pre-paid cards, rather than credit cards. According to a 2004 report produced by the British Council, Russia and the Institute of the Information Society, Russia’s Card turnover reached US $ 65 million in 2001. In 2002, it fell abruptly by over 50% following a request from the VISA system to have a number of major billing organisations shut down for selling illegal content through some of their websites. The share of payments from abroad exceeds 90% of this turnover. With regard to Russian B2B expenditure, various international sources have estimated that the Russian B2B market is expected to grow to US $1.1 billion - US 1.3 billion in 2003 and to US $ 2.1 billion - US $ 2.4 billion in 2004.According to the State Statistics Committee, in 2004, Russian B2C internet retailers generated sales worth about US $ 600 million, which represented a 40% increase over 2003 estimates. During the same period, overall retail sales in Russia increased by 12% to around US $ 194 billion. Factors spurring the growth of the Russian e-commerce market include the rapid rise in internet usage, preparation of the Special Federal Programme “Electronic Russia” for the years 2002 to 2010, availability of intellectual resources for the use of modern ICT for the development of B2C Russian e-commerce models and changes in the Russian tax system, in favour of transparent methods of payment of wages, which facilitate the saving of money in individual bank accounts, making transactions aided by electronic payment systems more convenient. With credit card fraud a major issue in Russia, offshore internet retailing seems the best possible solution for the future, ensuring foolproof credit card security, convenient deals at discounted prices and faster turnaround times and product deliveries. Reference Sources/Further Readings: 1. IMF World Economic Outlook Database 2. World Bank ICT Database 3. www.etcnewsmedia.com / J’son & Partners (J & P) 4. www.cia.gov - The World Factbook 5. www.internetworldstats.com / www.etforecasts.com 8. www.mediarevolution.ru 9. AC & M Consulting 10. Brunswick UBS Warburg 2000 Report 11. Merrill Lynch 2006 Report 12. State Statistics Committee 2004 estimates 13. ‘Russia e-readiness Assessment’-British Council, Russia and the Institute of the Information Society, 2004 Report
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25,000,000
22,300,000
Internet Users
20,000,000 15,000,000 10,000,000 5,000,000
3,100,000
0 2000*
Mar-05
Source: www.etforecasts.com, except 2000 * Source: ITU (International Telecommunication Union) Data, 2000
Copyright © A2ZTranslate Limited 2006-7 1
Dec-05
Russia’s rapidly growing broadband access per capita is still at miniscule levels, standing at 0.9(per 1000) in 2004, according to the World Bank ICT database. According to data available from research firm J’son & Partners (J&P), between 30 June 2004 and 30 August 2005, the number of Russian broadband internet subscribers grew by 106% over a small base. At the end of June 2005, 1.24 million Russians subscribers were using this service. The World Bank ICT database also estimated that Russia’s per capita personal computer usage stood at 113(per 1,000) in 2004, while Russia’s mainline and mobile phone usage also stood at 261 and 515(per 1000) respectively for the same year. According to the estimates of AC & M Consulting (which monitors the Russian Telecommunications market), the number of Russian mobile users stood at 134.7 million in April 2006, growing rapidly year on year. This growth has been on account of increased penetration in Russia’s urban regions like Moscow and St.Petersburg. CIA’s ‘The World Factbook –Russia’ database (www.cia.gov) has also estimated that the total number of Russian telephone mainline users stood at 40.1 million by the end of 2005. Chart 2: Total Number of Russian Mobile Phone Users 2005-2006 160,000,000 Mobile Phone Users
140,000,000 120,000,000 100,000,000 80,000,000
129,600,000
134,700,000
Feb-06
Apr-06
115,800,000 78,500,000
85,600,000
Jan-05
Mar-05
60,000,000 40,000,000 20,000,000 0 Oct-05
Source: AC & M Consulting Data provided by www.mediarevolution.ru ranks www.Yandex.ru as Russia’s most popular search engine, indexing 2.8 million sites and 26,600 GB of data as of July 2006. It was also the largest Russian website with 22 million visitors in June 2006. www.google.ru is popular with Russian-speaking users abroad, with Russian residents generally preferring local sites. According to the same source, Russia’s top-3 portals are www.yandex.ru, www.mail.ru (Russia’s biggest web-mail provider) and www.rambler.ru (a search engine and a rating/catalog website). Another significant Russian portal is www.RBC.ru (a news portal, which is also a major Russian web design studio and a business TV-channel) Credit card penetration in Russia is at low levels, with only about five million active credit-card accounts, according to a Brunswick UBS Warburg report for the year
Copyright © A2ZTranslate Limited 2006-7 2
2000. According to a 2006 Merrill Lynch report as well, Russia’s credit card penetration is also very negligible. Russians generally prefer to use pre-paid cards, rather than credit cards. According to a 2004 report produced by the British Council, Russia and the Institute of the Information Society, Russia’s Card turnover reached US $ 65 million in 2001. In 2002, it fell abruptly by over 50% following a request from the VISA system to have a number of major billing organisations shut down for selling illegal content through some of their websites. The share of payments from abroad exceeds 90% of this turnover. With regard to Russian B2B expenditure, various international sources have estimated that the Russian B2B market is expected to grow to US $1.1 billion - US 1.3 billion in 2003 and to US $ 2.1 billion - US $ 2.4 billion in 2004.According to the State Statistics Committee, in 2004, Russian B2C internet retailers generated sales worth about US $ 600 million, which represented a 40% increase over 2003 estimates. During the same period, overall retail sales in Russia increased by 12% to around US $ 194 billion. Factors spurring the growth of the Russian e-commerce market include the rapid rise in internet usage, preparation of the Special Federal Programme “Electronic Russia” for the years 2002 to 2010, availability of intellectual resources for the use of modern ICT for the development of B2C Russian e-commerce models and changes in the Russian tax system, in favour of transparent methods of payment of wages, which facilitate the saving of money in individual bank accounts, making transactions aided by electronic payment systems more convenient. With credit card fraud a major issue in Russia, offshore internet retailing seems the best possible solution for the future, ensuring foolproof credit card security, convenient deals at discounted prices and faster turnaround times and product deliveries. Reference Sources/Further Readings: 1. IMF World Economic Outlook Database 2. World Bank ICT Database 3. www.etcnewsmedia.com / J’son & Partners (J & P) 4. www.cia.gov - The World Factbook 5. www.internetworldstats.com / www.etforecasts.com 8. www.mediarevolution.ru 9. AC & M Consulting 10. Brunswick UBS Warburg 2000 Report 11. Merrill Lynch 2006 Report 12. State Statistics Committee 2004 estimates 13. ‘Russia e-readiness Assessment’-British Council, Russia and the Institute of the Information Society, 2004 Report
Copyright © A2ZTranslate Limited 2006-7 3
