Chinese giants make their move into Russia’s booming cross-border e-commerce scene
The past few months have seen several significant moves on the booming China-to-Russia cross-border e-commerce scene. This important market represents roughly one half of international e-retailers’ total sales to Russia, or up to $1.5 billion last year, according to a study by East-West Digital News, but still suffers from product quality and delivery time issues.
Dominating this market is Alibaba, the Chinese e-commerce giant preparing its imminent introduction on the NASDAQ, via several sites and projects.
In early July, AliExpress, the group’s B2C platform – currently sending around 120,000 parcels daily to Russian consumers in spite of a poorly localized website – made Yandex.Money available as a new payment option. In addition to its virtual wallet, this major Russian electronic currency allows its users to pay via mobile phone as well as in cash via 170,000 offline locations across Russia. This includes the Sberbank cash-in kiosks and Russian mobile retailer outlets.
In an earlier move, in May, the Chinese group also launched iTao, a social network project dedicated to Russian e-shoppers. The service is a mixture of social networks Pinterest and Instagram, with users posting successful and unsuccessful shopping experiences, adding product information, as well as sharing tips with each other. iTao has set itself the “very modest goal” of attracting “one million visitors a day” by the end of the year, said project manager Guzel Galeeva in a recent interview with the Russian online publication Siliconrus.com.
Alibaba’s Russian language social network iTao allows Russian e-shoppers to share successful and unsuccessful shopping experiences
The Russian media also reported that Alibaba intends to open a representative office in Moscow soon – prior to opening a full-fledged Russian subsidiary in 2015.
Alibaba, however, is far from being the only Chinese player active on the Russian market. LightInTheBox.com, a low-cost general goods retailer, serves many markets, including Russia. DealeXtreme.com is a Hong Kong-based e-commerce platform for low-cost electronics, digital accessories and a variety of other apparel, which also serves Russia.
Osell, the B2B subsidiary of major Chinese cross-border sales platform DinoDirect.com, came to Russia more than one year ago with the ambition of linking small and mid-sized online and offline merchants to thousands of Chinese manufacturers. The company, which opened a representative office and a subsidiary in Russia earlier this year, claims sales of “several billion yuans” on the Russian market. It is also setting up branches in Ukraine, Brazil, Indonesia, Canada and Australia.
Addressing quality and delivery issues
In early July, Osell announced a partnership with the Chinese authorities to launch the country’s first state-regulated cross-border e-commerce custom clearance service platform. Located in the port of Humen in Guangdong province, southern China, the platform aims to help Chinese factories connect to buyers in a more direct, legal and transparent way.
“The point is to regularize and standardize what is, in large part, a grey business area. This means more quality control and more tax revenues,” said Yanling Li of Osell’s PR service in an exchange with East-West Digital News.
Chinese B2B platform Osell offers a “new business model” to Russian bridal businesses
Li recognizes that many Chinese products leave much to be desired from a quality point of view: “If you focus on cheap products, margins are so low that no quality guarantee can be offered.” Osell is trying to change this landscape, says Li, by being “more selective in choosing factories and more attentive to quality” with a focus on the mid-level market.
Delivery is another issue, with standard shipping via the postal service taking weeks or even months to reach the buyer – with some parcels being even lost or stolen on the journey.
To address the issue, US giant eBay – whose Chinese sellers generate an estimated one third of the platform’s sales to Russian customers – has just signed an important agreement with the Russian Post.
Smaller players, too, are at work to offer better shipment conditions. One of them is Shopotam.ru (formerly known as Ebaytoday.ru), a Russia-based cross-border B2C platform that helps Russian customers make their purchases on Chinese, as well as US and German, Internet stores. Last June, the company launched its own shipment offer, christened “Shopotam Express,” which it presents as being “three times faster and almost three times cheaper than China Post.” Logistics, customs clearance and last-mile delivery services are provided by Shiptor.com, another B2B subsidiary of Shopotam.
Earlier this year, the company also launched a B2B solution for Russian entrepreneurs seeking suppliers in China. “We help them find proper manufacturers and test orders. We also provide warehousing services in Beijing and Guangzhou, and then organize transportation by sea, air, auto or railway,” said Shopotam Development Director Yuri Popolitov in an exchange with East-West Digital News.
Russian cross-border platform Shopotam has launched its own B2B shipment offer
Among other Russian platforms in the China-to-Russia segment are Kupinatao.com (formerly RuTaoBao.com), which functions as a translated catalog of products from TaoBao.com; Kitmall.ru, an affiliate of Kupinatao that offers goods from other Chinese marketplaces; and Nazya.com, which functions as a marketplace for a variety of predominantly Chinese goods.
- East-West Digital News has released a special report on cross-border sales to Russia, a market which amounted to up to $3 billion in 2013 – up 75% in volume from the previous year. Included is an analysis of the main issues defining this business – from shipment and customs rules, to marketing, to payments – based on exchanges with more than 50 market players and experts. To receive an executive summary at no charge, please contact us at email@example.com.