Russia’s e-commerce trade growth expected to slow to 10% in 2021 – Business New Europe

The volume of Russia’s e-commerce trade is expected to slow to 10% in 2021 after it expanded by the pandemic lockdown bump of 59% in 2020, Russian Online Retail Association (AKIT) President Artyom Sokolov told Russian newswire PRIME.

“In 2021, the e-commerce advance in the country was smooth, stable from month to month. The January–September results of RUB2.41 trillion [$322bn] are slightly above the same period of 2020 of RUB2.34 trillion,” Sokolov said as cited by PRIME.  

Russia’s e-commerce was already booming before the epidemic struck, but an enforced lockdown that started in April 2020 that prevented people leaving the house and ordered them to minimise social contacts led to a major fillip for the burgeoning online retail business.

“A year ago there were several months of lockdown in the period when e-commerce was the only channel of almost the whole non-grocery retail for a long time, and, as a consequence, we saw abnormally high demand for goods on the internet. The figure of RUB2.41 trillion proves clients’ interest to the online channel – the patterns of the buyer behaviour that emerged during the tough restrictions in brick-and-mortar retail imposed due to the COVID-19 pandemic stay in force after their relief,” Sokolov added.

Russia’s online business has been growing at five times the rate of the real economy, but that growth is starting to slow now and the gap is also being closed at the real economic growth picks up as part of the post-COVID bounce-back.

The Russian economy grew 4.3% year on year during the third quarter, but the post-coronavirus recovery is almost over, say economists. “The solid 3Q21 figures were likely due to the still strong but waning momentum in retail and wholesale trade, manufacturing, and freight and passenger turnover,” Sova Capital said in a note.

At the same time, retail sales in the real world surged 5.6% y/y in September of 2021, accelerating from a 5.3% increase in the previous month, above market expectations of a 3.8% rise.

Nevertheless, online retail has still become a major driver of consumption and analysts say the pandemic has caused a permanent change in the way Russian retail works. Local online sales accounted for 86%, or RUB2.07 trillion ($26.8bn), but its share of overall retail trade has fallen by about one percentage point in the last year.

Logistic and supply change problems during the pandemic also knocked cross-border online trade, AKIT reports.

“In January-May, we saw stably falling volumes of cross-border trade, by 30% on average. There was a noticeable rise by 50-70% in July-September, but the cross-border market still failed to regain the position it lost with the breaking of the logistics chains due to the lockdowns,” Sokolov told PRIME.

In 2019, orders placed with foreign online stores accounted for 31% of the total e-commerce volume, but that plummeted to 14% in 2020 and was flat in January-September at RUB341bn ($4.6bn).

“In January-September, the share of online in total retail stood at 8.5%, but it will change …….

Source: https://www.bne.eu/russia-s-e-commerce-trade-growth-expected-to-slow-to-10-in-2021-228130/