As a Polish-based UK Market Specialist at International Coupons, it is equally important for me, and the global business I work at, to be clued up with the varying market trends and challenges across the world.

Following on from my last guest piece on ‘Why Poland is ‘the Gateway to Eastern Europe‘, and my colleague’s piece on ‘Customs & Costs – The Troubles with E-Commerce in Argentina’, given its current attention due to the 2014 Winter Olympics, I thought it was a good time to look at the e-commerce landscape in Russia.

Why do Russians prefer UK online stores?

Even though Russians make up the biggest number of internet users in Europe, when it comes to the total value of the single e-commerce market they are ranked fifth of all the European markets. This is because more and more often they decide to make cross-border online purchases. Russians are particularly interested in the UK market as shopping there has always been associated with high quality and blameless customer service.

It is likely that the number of transactions in the UK online stores will not stop increasing until Russians solve the problems created by the state trade. It might not happen any time soon, though…

Russia is a country of a vast e-commerce potential. For the time being the number of Russian internet users is greater than in any other European country. What is more, forecasts show that in 2013 the number will reach 80 million of active users.

In regard to the number of online transactions, Russia is ranked fifth in Europe, bearing in mind that some Russians have only just now started to discover the opportunities of online shopping.

Big country, big problems

Russia is believed to be a rich country, but in reality its size and geographical conditions make it difficult to run a manufacturing business. That is why Russia has become the country of import. It is much cheaper to deliver and sell in Russia than to build an infrastructure and arrange the logistics.

Nevertheless, there is a considerable number of Russian shoppers who distrust Russian entrepreneurs that have earned notoriety for being greedy and eager to make fast profit. Russians who travel across Europe are outraged by the fact that for the same products across borders they can pay two or three times less. Those Russians are not willing to overspend by purchasing from the Russian stores. What is more, in a number of Russian price lists (label|tag) a customer can compare prices in different currencies to see the retailers’ profit margin.

It seemed that online stores would solve this problem, but the recent ‘Black Friday’ marketing campaign once again exposed the true nature of Russian retailing: right before Black Friday prices went up to be lowered for Black Friday, creating the illusion of a big bargain.

“That is exactly the reason why Russians turn to foreign stores that offer real bargains, in which customers can actually save money purchasing products with hefty discounts,” said Nikolay Kashcheev; account manager at Russian voucher code website, moipromokody.

Where and how do Russians shop?

Russians respect and often shop at the English, German and US stores, mainly due to affordable prices and wide choice of products. Moreover, for Russians ‘British’ and ‘German’ are synonymous to good European quality. The most popular UK online stores are Next, M&Co and ASOS to name just a few. A good incentive to make cross-border purchases is free worldwide shipping, a desirable deal for the Russian shoppers.

However, there is a problem – the state Post Service is not handling this amount of orders. It often happens that a purchase made during Christmas arrives no sooner than in May. Current postal infrastructure is not satisfactory as goods purchased in China, before they reach Vladivostok (far east, about 200km from the Russian-Chinese border), must go the 900km distance to reach Moscow and the same distance back. Each package must undergo customs control done by the one and only Custom Service in Moscow.

This situation has contributed to the creation of a unique model for cross-border shopping. There are many forums dedicated to so called ‘collective shopping’, where a person living in a certain country abroad collects orders from buyers, makes purchases delivered to his or her home address, and then ships separately to a person on the Russian side, from whom each buyer separately collects his order.

Even though go-betweens must be paid off, it’s still much cheaper than shopping in Russia, or faster than by post. Obviously, the returning process in this model is quite complicated and very costly. For that, these forums have such topic names as ‘Clothes that didn’t fit’, where Russians successfully sell unwanted items.

Uncertain future of e-commerce

The Russian Government currently speculates about the project on the limitation of shopping at foreign online stores. There is no taxation at the moment, but only if the total monthly value of deliveries doesn’t exceed EUR 1,000 However, the Government plans to lower this quota to EUR 150. Such action will significantly impede cross-border purchases. On one hand it is aimed to beat the competition of the local online stores, while on the other, to make foreign stores open offices in Russia and pay the taxes.

The post Why Do Russians Prefer UK Online Stores? appeared first on PerformanceIN.

Poland is considered to be the ‘gateway to Eastern Europe’ in terms of performance marketing and e-commerce opportunity. It is a good country to explore in more detail because of this.

Online marketing in Poland has changed significantly over the past six years. Specifically performance marketing, which has been successfully establishing its presence in the e-commerce space. And there is still more potential in Poland to be explored. 

There are currently over 25 million internet users in Poland, which represents 64.9% of all the population. The largest group of online shoppers are aged between 25 and 34 years old, while the smallest group are people over 55.

The most popular places to buy online goods are auction sites (over 50%). Surprisingly, social networking websites are actively selling products to over 13% of online buyers and group buying sites deliver purchases to 8% of internet users. 

Poor-converting Polish portals

Interestingly, Onet.pl, WP.pl, Interia.pl and Google.pl, the biggest Polish portals with more users than Facebook, do not convert well for the retailers. Merchants are choosing Facebook to sell their goods, but only within the fashion category.

The most popular products bought online are clothing, footwear (31%), telephones and accessories (30%), computers (26%), books (18%), as well as airline tickets, travels, hotel reservations and tickets for events. The number of Poles buying food online is also increasing. 

About 40% of Poles do not use the internet to shop at all. What is very interesting, for air travel is that the internet is the preferred booking channel in Poland, whereas accommodation and travel packages tend to be booked offline. A similar situation exists with finance products – they are being actively promoted online but actual sales are happening offline.

Favourite online shops

Poles’ favourite online shops are Reserved;  RTV EURO AGD, Zalando; OleOle; Komputronik; bonprix; Answear; Agito.pl; Media Expert; Empik; which proves above sector popularity.

Poland is now the fastest growing market. Its total online sales are around €5 billion, but the growth has been significant (34% in comparison to the UK online market which represents only 14% of development dynamics).

The last six years brought over 10,000 new online shops. This proves the huge opportunities which lie in the Polish market as online growth is reported to continue. 

The Home and Garden sector represents the highest number of online shops (2,500). Groceries recently reported a huge increase in the interest among Poland consumers.

Tesco, Alma started offering online shopping and orders, closely followed by Lidl and Biedronka, which promoted products on the web. Every third shop sells internationally and the highest margins are being achieved in the gifts and accessories (26%) and clothing (25.8%) categories. 

Verticals with low margins

The lowest margins retailers receive are from electronics and photography (around 10%). Over 40% of merchants earn more than around €2,500 revenue monthly. The ABV counts around €26.

Poland’s e-commerce market continues its growth and this will result in an increase in online advertising spending. It is being reported that online retailers pay around €48 billion more on their online marketing each year. The most popular online marketing activities are SEO, SEM and advertisements in shopping directories (on average 70-60% total advertising spent). 

Social media, price comparison websites, auction shops are equally important to retailers (50%). On average around 10% online marketing spent is being allocated to the group buying websites and affiliate channel each. 

Finance is the sector which spends the most on online advertising (16% of total ad share). Telecommunications and automotive’ s retailers are also among the biggest spenders. Mobile advertising is also getting popular. It is predicted that by 2015 the value of online marketing will reach €35 billion. 

Affiliate shopping categories

With regards to affiliate marketing, there is a significant group of shopping categories that are especially interesting. The biggest affiliate networks operating in Poland are global ones such as Tradedoubler and Zanox. They represent a large client portfolio and good international potential. Smaller but very popular Polish networks are SalesMedia and WebePartners.

The number of good partners is also increasing. Voucher publishers in Poland include Voucherful.co.uk sister company, KodyRabatowe.pl, Mojekupony and Alerabat. Several comparison sites also operate in the country such as Ceneo, Nokaut, Okazje Info, but the cashback landscape is poor with only Freemo.

What is really interesting and slightly different from the UK market place is the popularity of payment methods accepted by online shops. Over 95% retailers accept bank transfers, and debit/credit cards are available only at 60% online sellers.

This payment type has been overtaken by payment aggregators, e-transfers, and others. This is one of the biggest challenges for the online Polish shops – to facilitate more options to pay online; quicker delivery and more effective customer service are others. All of those issues have been addressed and worked on. 

As performance marketing is quite a new advertising channel in Poland, the organisation supporting the development of internet marketing for Middle East Europe is quite new as well.  IAB launched in Poland in 2000 and now has over 187 members. The well-known Polish portals, niche communities and associations such as: Grupa Onet, Wirtualna Polska, INTERIA.PL, AGORA SA, O2.pl, Google Polska and NK.pl all belong to it.

The potential of the online Polish market has been noticed by retailers, international brands and guarantees the growth, development yet to be reached. 

The post Why Poland is ‘the Gateway to Eastern Europe’ appeared first on PerformanceIN.