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E-commerce in Russia:Market overview
Boris OvchinnikovFedor Virin
Data InsightResearch Agency
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1. Market size
2. Digital gap: capitals vs. regions
3. Who are online shoppers?
4. What do they buy?
5. Market forecasts
Agenda
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Russian e-commerce market*reached $8bn. in 2010
* B2C retail only
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Market size
Since autumn 2010 we see conformity in
estimates* of e-commerce market size:
$7-8 bn. whole market
$5.5-6.5 bn. material goods
* estimates by Data Insight, Public Opinion Foundation, Insales,
Chamber of Commerce and Industry
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14% of Russian adult population
shopped online in 2010;
e-commerce accounts for 1,6% of all retail sales
These numbers are comparable to some European
countries, but they are 3-5 times lower than the EU
average or United States level
Online & Offline, Russia & World
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Online shoppers share
Source:Eurostat;Data Insight
0%
10%
20%
30%
40%
50%
60%
70%
80%
90% % of adult population% of internet users
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E-commerce as share of retail (2010)
Source:Forrester; Centre for Retail Research;Data Insight
UK
German
y US
Scan
dinavia
France
EU av
erage
Benelu
x
Poland
Russia
Spain Ita
ly0%
2%
4%
6%
8%
10%
12%
1,6%
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1. Fragmented market without strong leaders
2. High significance of Yandex.Market price
comparison service
3. High significance of price factor
4. Cash payments still dominate
Some specifics of the market
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Moscow & S.-Petersburg account for only 30%
of Internet users but almost 60% of
e-commerce volume
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Population Retail volume
Internetusers
Online shoppers
Active online
shoppers
E-commerce volume
15%28% 28%
40%48%
60%
85%72% 72%
60%52%
40%
Capitals Regions
Capitals vs. regions
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Capitals vs. regions
There is real digital gap. Regions are far behind
Moscow and Petersburg in e-commerce development
In regions:
- Online penetration is lower
- Limited offer from online shops
- Share of online shoppers is lower
- Frequency of online purchases is lower
- Online purchases are not diversified
- Average bill is lower
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E-commerce penetration in regions is lower because:
- income of regional internet users is lower, than
that of internet users from Moscow and Petersburg- average internet experience in regions is lower,
than that of capitals
- and there is a bunch of “geographical” factors
Roots of digital gap
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What are these geographical factors ?
In regions:
1) Shortage of online shops + lack of their “visibility”
2) Delivery is of low quality, complex & expensive
3) Time-saving effect is not so huge in regions
4) The price advantage of e-retail is nearly invisible
5) There is no scale effect
6) There is no viral effect
Roots of digital gap
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E-commerce geography
50%
9%3%
6%
6%
10%
6%
7%4%
Moscow & Moscow regionPetersburgNorth-West regionCentral regionSouth region & CaucasusVolga regionUral regionSiberiaFar East region
Russian e-commerce marketsplit by macroregions
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Leading cities
Leaders in terms of e-commerce market volume:
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Capitals vs. regions
Despite current lag, regions will generate main growth
for e-commerce in next years
Capitals Regions0
50
100
150
200
250
300
350
400
143
97
270 279
E-commerce market volume, bn. rubles 2010 2015
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Every month 7-8 mn. peopleare shopping online in Russia
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Wealthy, experienced, metropolitan
There are three key factors determine whether internet
users will buy or not buy online:
- Income level
- Internet experience
- Place of residence: capitals or regions
If all three factors coincide, online shoppers share could
reach 90%
All 3 factors have a positive effect also on frequency of
online purchases and on volume of online spending
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Obvious dependence: with higher income more
people buy online
1,000 RUR 10,000 RUR 100,000 RUR20%
30%
40%
50%
60%
70%
80%
столицырегионы
Income as a shopping driver
Online shoppers share against monthly income
Source:Data Insightusing МАСМИ data
capitals
regions
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Share of online shoppers is also growing along with
the growth of the online experience
0 1 2 3 4 5 6 7 8 920%
30%
40%
50%
60%
70%
80%
столицырегионы
Years online
Experience as a shopping driver
Online shoppers share against internet experience
Source:Data Insightusing МАСМИ data
capitals
regions
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11%
13%
16%
23%
18%
19%
0—1 years
1—2 years
2—3 years
3—5 years
5—7 years
> 7 yearsmaximum involvementspeed
60% of online shoppers have made their first online purchase more than 3 years later than they got Internet access
How quickly users become buyers?
Time gap betweenbecoming Internet user
and becoming online shopper
Source:telephone survey, 3200 respondents, Moscow & SPB, 04.2011
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Tickets and electronicsare two biggest pieces
of Russian e-commerce market
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14%
6%
8%
6%3%7%
4%
16%
25%Portable Electronics
Household Appliances
Audio&Video Appliances
Computers & Periphery
Digital Content
Books
Clothing and footwear
Food
Transport Tickets
Other
What Shoppers Buy Online?
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Where are the money?Purchases of more than 15 ths. roubles account for
15% of deals and 63% of market volume.
Expensive purchases are concentrated in six segments
Source:telephone survey, 3200 respondents, Moscow & SPB, 04.2011
26%
21%
13%
12%
12%
10%
8%
Home Appliances
Phones/Portable Electronics
Auto Parts and Tires
Air & Train Tickets
Computers/Laptops
Housewares, furniture
other
Distribution of purchasesabove 15K RUR (~$500)
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Market segments: capitals vs. regions
High share of regions: books, CD/DVD, digital content,
clothing & footwear
Leadership of capitals: housewares, baby goods,
portable electronics, computers, air & train tickets
Dominance of capitals: household appliances, “black”
electronics, food, concert tickets
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Two groups of market segments
Group A Group B
ElectronicsHomewareBaby goods
ClothingBooksDisks
Main demand in MoscowPrice-orientedDriven by Yandex.MarketNo strong brandsStrong positions of retailers
from offline
Strong demand in regionsPrice is not so importantStrong brandsHigh market concentration
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Russian e-commerce market will grow 2,5 times (+145%)
in 5 years
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Growth forecast
Number of online shoppers will grow
from 14m in 2010 to 28m in 2015
CAGR 15%
Market volume will grow from $8bn. in 2010
to $18.5 bn. In 2015
CACR 18%
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Growth factors
1. Growth of Internet audience (+75% in 5 years)
2. Growing online experience => higher % of
online shoppers, higher spending, higher
frequency and diversity of online purchases
3. Income growth (more money to spend)
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Growth concentrated in regions
As said above, regions will generate main growth for
e-commerce market in next 5 years. More details:
- almost 90% of new online shoppers will come
from regions
- share of online shoppers from regions will grow
from 60% to 73%
- e-commerce in regions will grow 2.9 times in 5
years, while in capitals it will grow only 1.9 times
- share of regions in market volume will grow from
40% to 51%
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Chances for extra growth
E-commerce market may grow faster than +150% in 5
years. Additional growth may be obtained from:
the launch of new ambitious e-commerce projects
successful brand-building by largest online retailers
higher quality of service delivered by online shops
higher popularity of price comparison services
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Tel. +7 495 7254946www.datainsight.ru
Common questions:[email protected] Subscriptions for news monitorings:[email protected]
Fedor Virinfacebook.com/fedor.virinluchiaen.livejournal.comtwitter.com/#!/luchiaen
Boris Ovchinnikovfacebook.com/boris.ovchinnikovbarouh.livejournal.comtwitter.com/#!/barouh_boris
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