Ruin if “Mail of Russia” the Russian online retail business

The Golden age of Russian Internet-retail

Sounds great and plans are quite realistic. Over the last couple of years “Mail of Russia” has significantly improved the quality of service — according to international ratings, the subjective sensation and news of the company. If this continues, people will begin to take orders from post offices, not from the points of issue of orders (SLR) of private companies. While the latter is higher service quality, faster delivery times and lower prices. But “Mail” has one distinct competitive advantage: presence in almost all localities. This is not and never will be no service or network pvz. And when the company will build those 38 logistics centre, will, quickly and cheaply deliver nationwide goods and teach their staff to smile — Russian e-commerce market could change beyond recognition. This is good for both buyers and shops. First get a quality delivery in any point of Russia. The second will have access to more buyers and will be able to deliver the goods turnover will increase together with income. All of this threatens to become almost the “Golden age of the Russian e-commerce”… but no.

Погубит ли «Почта России» российский онлайн-ретейл 

Chinese Russian market

The problem is that there are more Chinese stores and is not very clear the policy of the state. Here are a few eloquent figures. In 2017, according to AKIT, the share of the foreign segment of the Russian e-commerce market amounted to 36%. By 2018 the figure will definitely be more. According to “Mail of Russia” for the first three quarters the number of international parcels grew by 25%. While 94% of all foreign parcels processed “Mail of Russia” take place in China. Until the end of the year these will be typed more than 300 million When plans of “Mail” on the construction of logistics centers will come true, Chinese stores will receive even greater access to the Russian buyer than now. Moreover, in September the company announced the opening of a new route for deliveries of parcels from AliExpress. And according to the Chinese companies, Russia ranks among the Top 3 largest areas of the store. Only that they for the first time revealed statistics on deliveries to Russia: 20 million Russians a year are making purchases through AliExpress. In AKIT expect revenue in 2018 will amount to 212 billion rubles.

But next year the trend will only intensify. From 1 January in Russia increased VAT by 2%. This means that Chinese online shopping is still 2% more profitable to make purchases. Foreign stores are still not exempt from any duties and the threshold bespalchenko cross-border trade, though plan to reduce, but not reduced, and it is unlikely it can play a key role in the balance of power. If nothing changes in a couple of years, the Chinese Internet retailing starts to dominate in Russia — and it will make your hands of the Russian state.

The Weakness Of Siberia

Worst of all have, of course, regional shopping. Now they have a simple strategy: buy in Moscow for 10 rubles, to bring, say, in Novosibirsk, to sell for 20 roubles. There are no other possibilities, these are features of the Russian economy. With the development of Internet and logistics in Novosibirsk, the buyer prefers to order goods from Moscow for the same 10 rubles to pay for shipping, wait a week and get the exact same product. When the “Mail of Russia” will build logistics centers, goods from Moscow to Novosibirsk will be delivered even faster, and local shops will be even less likely to win the struggle for the buyer. On the one hand, Moscow and St. Petersburg, on the other — China.

While residents of the Urals and even parts of Siberia and the Far East it is more convenient when the orders are brought from Moscow and not from China. With new logistics centers advantages in speed and ease of delivery of the Russian shops will lose. The Russian buyer, who lives in the Urals, there will be no reason to order products from the Russian, not Chinese shops. The range is wider, the speed of delivery is the same or faster, and the prices are lower simply because they do not pay any fees. Quality? This is a pretty subjective concept, and in the era of crisis and falling of consumer ability of choice in a natural way is made in favor of cheaper goods. As people who live in Siberia and the far East, flying to vacation to Asia, not Europe, so here: it’s closer, easier and cheaper.

The threat monopoly

In the end, the share of Chinese e-commerce on the Russian market exceeds 50% faster than you thought. Without duties, VAT and need to pass the certification, the Chinese players can endlessly dump to defeat local rivals. How long these conditions will exist Russian online retail?

Built a pretty simple chain. In Russia, rising taxes, rising prices for gasoline, rent, and all costs are increasing. Stores are forced to raise prices. The demand for this is decreasing, buyers still prefer to order goods in China. Russian stores becomes unprofitable to work, they are closed, and the vacant niche is immediately Chinese retail. That’s all. First, his share will be more than 50%, then 60% and so on. Will start a monopoly.

What is a monopoly? He can do what he wants, because no one can compete with him. Nothing will stop him from free shipping to pay. Why not tighten the return policy for buyers? After all, those flexible terms that are now established due to severe competition for the buyer. And if in the Russian store to return the product is quite simple (at least it is clear how to do it), and there are CPS in which the buyer can complain, what about in the case of the Chinese stores? Buyers here do not have such preferences, and Chinese goods by law should not be certified.

Equal conditions for all is just

It seems that it would be better “Post of Russia” did not build their terminals. This, of course, wrong. Such investments in infrastructure can really give acceleration to the Russian e-commerce. But with cross-border trade need to do something. Out here it is simple, which is a long time, many experts say. You just have to put all the players — both Russian, and foreign — in more or less equal terms. If the Russian shops pay taxes and duties, that even foreign stores pay comparable fees. Now they have an advantage in 50% (the Russian shops will soon be paying 20% VAT plus almost 30% for various fees) is a huge handicap. Meanwhile, it turns out that the state itself lays carpet for Chinese stores and driving nails (in the form of VAT and the absence of any fees for foreigners) in the coffin of Russian Internet-retail.