Отчет по рынке эл. коммерции в России от Fastlane Ventures и East-West Digital News

1. AND
PRESENT
KEY INSIGHTS

2. About this study
These are excerpts from a comprehensive research study offered by East-
West Digital News, the international resource on Russian digital industries, in
partnership with Fast Lane Ventures.
Based on interviews with over 80 industry executives and experts, the
research was conducted with the participation of leading consultancies and
universities.
To receive an executive summary at no charge or order the full version
(10 chapters, 316 pages), please email us at report@ewdn.com
About the publisher
East-West Digital News is the first international information company dedicated
to Russian digital industries. Its website EWDN.COM provides news, market
data, business analysis and updates pertaining to the Internet, e-commerce,
mobile and telecom industries, digital TV and satellite systems, software and
hardware innovation, as well as to the related investment activity and legal
developments.
A consulting branch, East-West Digital Consulting, provides international
players with assistance for business development in Russia and advises
Russian companies on their international strategies.
For more information, please contact us at contact@ewdn.com

3. Foreword
Marina Treshchova
In 2010, while deciding on our first company to launch, there was no doubt in our minds
that it should be an e-commerce startup. We were absolutely sure that the time had
come; the e-commerce market had started to boom and would continue to grow quickly
and exponentially. We saw a large gap in the market; the absence of convenient and
necessary consumer services available in Russia. It may be difficult to believe but two
years ago, when we started Sapato.ru, there were no online shoe shop in Russia!
Skeptics tried to convince us that Russian women would never buy shoes online but 2
year later Sapato.ru is the №1 online retailer generating millions in revenue and
receiving hundreds of thousands of orders per year.
This proved to be a game changer; we proved the necessity of qualitative internet
services for Russian consumers and now see huge opportunities in the future.
In a recent study into the potential growth of e-commerce in the emerging markets made
by consulting company A. T. Kearney, Russia was ranked number three. The key driver
behind this ranking is clear; Russia’s constantly expanding internet audience. Currently,
the demands of Russian consumers are still not being met, and so we anticipate the
number of online retailers will increase dramatically to satisfy this demand.
The number of the new online services reflects Russia’s expanding online audience.
There are about 30,000 online shops in Russia at the moment. We have seen a new
generation of customers appear, those that demand perfect service and a wide choice
in goods, and it is these customers who prefer the advantages of online retailers.
Furthermore, we see an unprecedented growth in the number of internet
entrepreneurs in the country, and e-commerce is one of the key market sectors setting
the tone in the development of Russian internet businesses.
Fast Lane Ventures continues to be on the cutting edge of the Russian internet,
launching new e-commerce businesses with the capability to become market leaders
and setting new standards for Russian customers. With other players of the market,
we are bound to take Russian e-commerce to the next level.
Marina Treshchova is the CEO and a co-founder of Fast Lane Ventures

4. Chief Editor’s note
Adrien Henni
We are pleased to offer key insights of a year-long research project on the
Russian online retail market, one of the fastest growing but least known (and
understood) on the planet.
The report provides international audiences with the first reliable and precise
data on this market, plus middle and long term forecasts and trends.
Beyond capital-centric analysis, the full version also explores the regional
e-commerce scene – now nearing the tipping point in a market thus far
dominated by Moscow and St. Petersburg.
Yet our research is, above all, a practical guide. In the full version, more than
150 pages are dedicated to analysis of and recommendations for each of the
key issues defining the industry – from marketing to payments, from fulfillment to
legal requirements and on to little known HR challenges.
Last but not least, entrepreneurs and investors will enjoy a review by Fast Lane
Ventures of the e-commerce-related investment deals that have taken place in
Russia over the last two years, with an analysis of the financial issues pertaining
to Russian e-commerce and the exit perspectives in the industry.
We hope you enjoy this groundbreaking collaborative effort and wish you every
success in your e-commerce projects.
Adrien Henni is the Chief editor and a co-founder
of East-West Digital News

5. 18
Russian E-commerce 2011 million
THE NUMBERS Russians
shopped online
Sources: Data Insight and East-West Digital News in a 6-month period,
unless stated otherwise or 14% of the population 18+
(or 7 million monthly)
Total of which
market $10.5bn was spent on
size:
(310bn rub.)
$7.8bn physical
(230bn rub.) goods…
…while cross–border
sales reached
$ 700 m
Online retail
accounted of the total Russian
2%
for less than retail market…
…but grew by at least in one year
+25%
89 orders
of which
of physical goods 45
million
were made during the year
million
(or 245,000 per day)
(or 125,000 per day)
came from the regions
Insales counted
25,000 of which
only 10 made $100m or more
in sales (physical goods only)
Internet
shops while the revenues of the
30 top players
up from 16,000 in 2010
or just 268 that same
totaled less than
$3bn
year, according to the
Russian official statistics or 1/3 of the total market size
(physical goods only)

6. Russian E-commerce 2011
INTERNATIONAL
COMPARISONS
In 2011, the sales volume of online retail in The fact that Russia ranks fairly high among
Russia was similar to that in Italy, Spain or European countries in share of online
Brazil, while significantly behind the USA shoppers in total Internet users, does not
and the EU. The share of online retail in total provide evidence of exhausted growth
retail amounted to less than 2%, compared potential. The mid-term potential of Russia’s
to between 7% and 9% in the USA and most online shopper base to expand could be
West European countries. In the UK, the higher than that of European countries.
share has gone beyond 10%. The low
penetration of e-commerce in Russia (where This optimistic outlook is based on the fact
in 2011 only around 15% of adult population that many characteristics of Internet use in
shopped online) is, however, linked not so Russia, such as Internet behavior, is less like
much to lack of interest in online retail, but other European countries and more like what
rather with a relatively low Internet is seen in Asian and Latin American markets,
penetration. where the Internet audience is significantly
more involved in e-commerce than in
Relevance of Internet retail in Russia is fairly Europe.
high, as 40% of Internet users shopped
online in 2010, which was ahead of Italy, In Europe, only the UK has a share of online
Greece, and new EU members from Central shoppers as a percentage of total Internet
Europe and the Baltics. The share of online users that has surpassed the 80% level,
shoppers in total Internet users in Spain that whereas the level is well above 80% in such
year was comparable to that in Russia, while other developed markets as the USA and
being 1.5-2 times higher in the most Japan, and developing ones, such as Brazil
developed countries (65-85%). and China.

7. Russian E-commerce
FORECASTS
We anticipate an at least 2.5-fold market In a long term perspective, according to
growth between 2010 and 2015. The total e- moderate forecasts, the market size of Russian
commerce market could amount to somewhere e-commerce could reach $50 bn by 2020. In no
between 690 bn rubles ($23 bn) and 900 bn case should this figure, which represents
rubles ($30 bn) in 2015, at 2010 values. This around 6% of Russia's total retail market, be
corresponds to up to 5% of total retail volume regarded as a maximum. Further strong growth
in Russia. For reference, the same level of e- will be fueled mainly by such structural factors
commerce existed in the USA in 2008, i.e. as:
Russia is behind approximately 10 years, by • Fulfilment infrastructure reaching maturity:
this measure. With reduced delivery costs, the scope of e-
commerce will extend to cheaper product
The fastest growth rate, 3.6-fold or more, is categories;
expected to be found in the regions, with a • E-signature and online payments becoming
considerable flow of new Internet users from more popular, with mass demand for non-
there. They will account for the majority of the material products such as insurance and tour
growth of the e-commerce market – for 87% in package offers.
terms of number of new online shoppers and
for 59% in terms of market value growth Russian e-commerce could thus represent a
between 2010 and 2015. market of up to $150 bn within 15 to 20 years.

8. Russian E-commerce 2012
THE TRENDS
Source: East-West Digital News
The market is growing by at least 25% each
1 year; some major online retailers are even
seeing their sales double or triple.
The regions still lag behind the capitals, but
2 pioneering retailers now generate more than
half of their sales from the regions
Major offline retailers are now coming to
3 e-commerce while online-offline concepts
multiply.
Investment activity is growing fast, but exits
4 are still exceptions and are likely to remain so
at least in the short term.
Logistics and delivery are still bottlenecks for
5 e-commerce in the regions; major retailers
overcome this by building their own capacities.
Cash-on-delivery is the rule for physical goods
6 and will remain so for a long time, but merchants
find ways to cope with the related issues.
The lack of qualified human resources
7 appears to be one of the most painful issues,
hampering the entire Internet industry.
Cross-border sales have grown considerably
8 over the last few years, but foreign e-merchants
still have to pull down two major walls: customs
clearance and delivery across Russia.

9. TOP RUSSIAN
An exclusive ranking
by East-West Digital News
and Data Insight
E-COMMERCE
PROPERTIES
O N L I N E S A L E S 2 0 1 1
PHYSICAL GOODS
SERVICES & VIRTUAL GOODS

10. Methodological
Note
In the absence of officially disclosed Vseinstrumenti.ru, a site offering tools
figures for most players, establishing a and appliances for the home and
ranking of the top Russian online garden, had remained under the radars
retailers is a daunting exercise. until recently. Its importance on the
Russian e-commerce scene is revealed
Several rankings do exist, based on a for the first time in this ranking.
variety of online measurements,
information from industry sources and/
or other unspecified methodology; none *
of these can be considered completely
reliable.
Our methodology for estimating
For certain sites, 2011 sales estimates turnovers has been the following:
may vary up to eight-fold between two
rankings. In particular, the turnover of • We systematically requested figures
Citylink.ru, a major site offering and sometimes obtained them, either
consumer electronics, was estimated at officially or unofficially;
$310 million by Online Retailer – a far • For some other sites, we received
cry from Insales' more modest estimate information from reliable insiders or
of $37 million. An internal source industry sources;
assured us that Online Retailer's figure
was close to reality, but Data Insight's • In still other cases, we relied on the
experts remained skeptical. Due to expertise of Data Insight, whose
these uncertainties, and in the absence analysts are among the best on the
of an official answer from the site, market;
Citylink.ru has not been included –
perhaps unfairly – in our ranking. • In the absence of official or unofficial
figures, reliable sources or an estimate
While KupiVip.ru's turnover "varies" from Data Insight, we averaged the
from $77 milllion, according to Insales, figures from existing rankings – or did
to $193 million, according to Online not include the site in the ranking when
Retailer, a well informed source told us the latter seemed unreliable.
that the site's gross merchandise value
was actually close to $160 million. In the absence of official figures, we felt
we reached a high degree of certainty
It is very likely that Amazon and eBay whenever at least two reliable industry
should be included in our ranking, sources, or experts, converged in their
based on the assumption that cross- estimates; or when the three main
border sales may have totaled some existing rankings offered similar figures.
$600 or $700 million in 2011, and that
these two sites account for a significant In other cases, the figures should not
part of this volume. However, neither be considered more than
site agreed to disclose data on their approximations, with a much lower
sales to Russia. degree of certainty.

11. A research by Fast Lane Ventures
V E N T U R E in partnership with
East-West Digital News
INVESTMENT
IN RUSSIAN E-COMMERCE
Official data
2 0 1 0 - 2 0 1 1
PUBLICLY DISCLOSED TRANSACTIONS Unconfirmed data

12. A research by Fast Lane Ventures
V E N T U R E in partnership with
East-West Digital News
INVESTMENT
IN RUSSIAN E-COMMERCE
Official data
2 0 1 0 - 2 0 1 1
PUBLICLY DISCLOSED TRANSACTIONS Unconfirmed data

13. A research by Fast Lane Ventures
V E N T U R E in partnership with
East-West Digital News
INVESTMENT
IN RUSSIAN E-COMMERCE
2 0 1 0 - 2 0 1 1
PUBLICLY DISCLOSED TRANSACTIONS
These are excerpts from
"The Russian Internet Deal Book,"
a comprehensive research on the
financing of Russian Internet companies
and startups in 2010 and 2011, offered
by Fast Lane Ventures.
To get your free copy, please contact Fast Lane
Ventures' Senior Investment Analyst Andrey Kulikov at
akulikov@fastlaneventures.ru

14. 10 CHAPTERS
Contents 316 PAGES
of the full version 12 CASE STUDIES
& I N T E R V I E W S
9 8 I L L U S T R A T I O N S
Forewords
By Ozon CEO Maëlle Gavet, Acrobator founder Bas Godska, and David
Waroquier of Mangrove Capital Partners
Key figures and trends
Top 40 Russian e-commerce properties
Part 1. Main market trends
Part 2. Demand side: Online consumers
Part 3. Supply side: Merchants
Part 4. Fulfillment
Part 5. The "Russian payment jungle"
Part 6. Marketing and sales channels
Part 7. Legal aspects
Part 8. HR: The most painful issue?
Part 9. E-commerce in the Samara region: A monograph
Part 10. Serving Russian customers from abroad:
From cross-border sales to market entry
Twelve case studies and interviews
eBay – KupiVip.ru – The Otto Group – Ozon.ru – Sapato.ru – Shoesofprey.ru –
Svyaznoy.ru – Travelmenu.ru – Utinet.ru – Vseinstrumenti.ru – VTB Capital –
Daily deal sites

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