Russia is emerging as the next big e-commerce frontier with a population of 143 million, 70 million of whom are Internet users. Although online sales in Russia are not has high as U.S. online sales, they have grown rapidly in the past few years. That fact has caught the attention of global e-commerce firms such as the U.S.’s Amazon and eBay and China’s equivalent of Amazon, Alibaba. The leading local online retailer in Russia is Ozon Group, often referred to as “Russia’s Amazon.” Ozon’s sales last year were close to $500 million, an almost 70 percent increase in just two years. There are obstacles to e-commerce in Russia, however. The majority of consumers do not have credit cards because many do not trust them to pay for purchases online or offline, making Russia a heavily cash-based marketplace. Delivery is another problem. To combat these barriers, Ozon developed its own courier system, and drivers not only collect cash payments, they even offer style advice on apparel orders when delivered. Russian consumers ordering items from international e-commerce sites such as Amazon may never receive their packages. In fact, officials at Moscow airport reported having 500 metric tons of unprocessed packages in one month alone. Seeing an opportunity for revenue, Russia’s Customs Service is considering import duties on packages ordered from foreign Web sites. What types of barriers are present in Russia that might slow the expansion of international e-commerce there?
Russia is emerging as the next big e-commerce frontier with a population of 143 million, 70 million of whom are Internet users. Although online sales in Russia are not has high as U.S. online sales, they have grown rapidly in the past few years. That fact has caught the attention of global e-commerce firms such as the U.S.’s Amazon and eBay and China’s equivalent of Amazon, Alibaba. The leading local online retailer in Russia is Ozon Group, often referred to as “Russia’s Amazon.” Ozon’s sales last year were close to $500 million, an almost 70 percent increase in just two years. There are obstacles to e-commerce in Russia, however. The majority of consumers do not have credit cards because many do not trust them to pay for purchases online or offline, making Russia a heavily cash-based marketplace. Delivery is another problem. To combat these barriers, Ozon developed its own courier system, and drivers not only collect cash payments, they even offer style advice on apparel orders when delivered. Russian consumers ordering items from international e-commerce sites such as Amazon may never receive their packages. In fact, officials at Moscow airport reported having 500 metric tons of unprocessed packages in one month alone. Seeing an opportunity for revenue, Russia’s Customs Service is considering import duties on packages ordered from foreign Web sites. What types of barriers are present in Russia that might slow the expansion of international e-commerce there?
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