How Has E-Commerce Conquered Post-Soviet Countries?
The ever-changing landscape of eCommerce is both exciting and nerve racking. Fashion businesses, designer stores, and mass-market retailers are facing the question each day of how technology will change how the processes of their work function. Technology is driving e-commerce forward. In our previous article, we discussed that the total sales of online stores around the world are projected to reach $2 trillion by the end of 2019.
In addition, e-commerce creates new opportunities for retail, like m-commerce and ar-commerce. M-commerce greatly increases online purchases because users can always buy the right product or service. AR-commerce, augmented reality technologies, allow consumers to use mobile phones to visualize products in real time. This option will not only produce an increase in orders, but it will also help to reduce returns. The DigitalBridge report shows that more than 70% of consumers would be more loyal to brands that use AR or VR in their strategies because it would facilitate and improve their shopping experience.
These are just a few examples of how the online shopping market is developing. The development of e-commerce in each country differs depending on fashion trends, habits, and user requests. Today, we will talk about how e-commerce is developing in post-Soviet countries.
1. Kazakhstan
In Kazakhstan, the share of e-commerce is about 1–1.5%, and the market grows by 30% each year. According to Satu.kz, the leader of e-commerce in Kazakhstan, Kazakhstanis bought goods for 20.144 billion tenges ($52 million) on the marketplace in 2017. The average check for one online purchase grew by 19% and amounted to 34,742 tenges.
There are 8% more women shop online than men. Kazakhstanis mainly use smartphones to search for goods and purchases on the Internet, and about a third of buyers use desktop computers. According to international studies, 70% of e-commerce traffic in Kazakhstan comes from mobile devices; in Ukraine, it is 43%, and it’s 35% in Belarus. This demonstrates that Kazakhstan is developing e-commerce faster than other CIS countries.
Since the beginning of 2018, 110 new e-commerce retailers have been registered in the country. Kazakhstan currently has 1,658 online stores which employ 71k workers. The government has begun investing in this job segment by improving legislation and postal services, as well as exempting e-commerce companies from taxes. The most popular e-commerce category in the country is fashion.
Two obstacles for the development of e-commerce in Kazakhstan is the rudimentary systems of online payment and delivery, and a low level of consumer confidence in e-shopping; 60% of all payments are made with cash and 20% of purchases are made with cards.
2. Ukraine
According to EVO company, the e-commerce market in Ukraine is estimated at UAH 65 billion ($2.5 billion). Operators earned UAH 2.6 billion from the delivery of goods purchased online and earned another UAH 0.8 billion from online payments.
There are several trends that pertain to the development of e-commerce in Ukraine:
1. Cross-border trade. Ukrainians are happy to purchase goods from online stores in other countries. It is predicted that by 2022, 20% of all clothing bought online will be from abroad.
2. Omnikanality, virtual shelves, and new services. For 85% of users, it is quite natural to use several devices for making one purchase. A consumer may use a smartphone, a tablet, and a computer to search for the desired goods and services. They will compare prices and read reviews about the product.
3. Use of chatbots. Chatbots use automation to answer questions that relate to products. A consumer will be left with the impression of operational interaction with the seller. It is a great advantage and helps the user save time.
4. VR devices. Virtual reality can change e-commerce, even the offline section of e-commerce can benefit from it. In recent years, there has been a reduction in retail space because companies have been using virtual shelves.
5. Use of video content. With the use of video content, sales have increased by 60, sometimes even 80, percent. Video content allows consumers the opportunity to become acquainted with the product in detail.
The most popular products to buy online are clothing, shoes, and accessories. Out of the total turnover on the local market, this segment accounted for 4 million UAH. It is estimated that the e-commerce market in Ukraine could exceed UAH 81 billion in 2020.
3. Russia
Predictions indicate that the share of e-commerce in Russia will be more than 20% in total trade by 2025.
Russian residents have high online purchasing power; 55% of Russian consumers make online purchases at least once a month, and the average number of orders is six per year. Clothing, shoes, and accessories are the second most dynamic segments of online shopping.
Almost half, 49%, of online purchases in Russia are made from smartphones. Although the desktop still remains the main device for online shopping, smartphones have greatly reduced this gap in recent years. The majority of online shoppers — 94% of them — say the transparency of shipping cost information, the possibility of free shipping, and the absence of hidden fees are incentives to shop online.
Drivers for the Russian consumer to shop online include:
- the ability to save time and money;
- the lack of influence of the seller;
- and the ability to compare a lot of options simultaneously and choose the greatest value.
Future trends of online shopping in Russia are:
- The development of the Russian marketplace, which allows consumers to select products from different online stores all in one place;
- Active growth in the use of smartphones and mobile applications for online purchases;
- Fast delivery and the ability to order goods and services around the clock;
- Erasing the boundaries between online and offline trade;
- The development of augmented reality.
Russia is not a leader in Internet shopping; however, there is an annual increase in the volume of this type of trade. Online shopping volume continues to grow each year.
4. Belarus
At the end of 2018, the total e-commerce market of Belarus amounted to $730 million. This amount includes not only the sales of goods and services on the Internet but also related services: advertising, payment, and delivery. In addition, 45% of Belarusians, 4 million people, make at least one Internet purchase a year.
When choosing a product, Belarusian consumers focus on the price. The diverse market of goods that the Belarusian market does not offer makes online shopping at foreign stores increasingly popular.
Over the past 5 years, clothing shops have dominated the market in terms of popularity. Belarusian consumers know exactly what they want. Almost half, 45%, of buyers know what product they need, and they immediately start looking for it at online stores; 31% of people are looking for a specific product through a search engine; and only 11% of potential buyers do not know what product they need and explore their options. Belarusian consumers also care about product reviews and the reputation of stores.
The greatest e-commerce competitor for Belarusian companies is China. Belarusian consumers turn to foreign Internet sites, like Chinese, in pursuit of lower prices.
In order for e-commerce in Belarus to reach its full potential, it must make a number of legislative reforms; for example, they must develop electronic payment systems and Internet banking, and they have to promote the liberalization of conducting business over the Internet. The absence of these factors slow down the advancement of e-commerce.
Despite this, e-commerce in Belarus is expected to gain greater momentum.
Problems and Solutions of Fashion Shopping Online
Of course, in addition to all the advantages of online shopping, it has a number of problems that need to be solved. Here a few of them:
- The inability to make all purchases abroad in person. Online customers from abroad currently cannot shop at retail stores, boutiques, and outlets without a personal presence at the point of sale. In our previous article, we wrote that the best way to make purchases abroad is to ask acquaintances who are abroad to make the purchase for you, or to hire a shopping agent — professional buyer — to fulfill the purchase order.
- A small number of marketplaces that allow cross-border purchases under acceptable conditions. They exist, but due to a lack of offers in the market, the commission for their services is too high. For example, an online luxury fashion retail platform that sells products from over 700 boutiques and brands may charge 25% of the value of the goods on top of the purchase price as a fee for its services. Given that the platform is aimed at selling luxury items, the fee is too high.
- A large number of products from Instagram buyers, who can not always be trusted. In this case, buyers must transfer a 100% prepayment without being sure that their goods will actually be delivered in the desired form.
How does ChiPeer solve this problem?
ChiPeer is a platform for fashion shopping at overseas retail and online stores; it is powered by a collaborative economy. With ChiPeer, every customer can hunt for discounts and sales in brick-and-mortar stores and outlets around the world, like Milan or Paris, without leaving home. This allows users to buy previously inaccessible goods and save up to 70% of the usual cost of purchasing such an item. For the services, ChiPeer requires a commission of only 7% from the purchase while other fashion marketplaces, like Farfetch, charge around 25% on top of the retail seller’s price.
Conclusion
The fact that the e-commerce market is developing quickly no longer surprises anyone. In many ways, its trends depend on customer requests. In China, where live-streaming channels top online stores, users were the driving force of such changes. This country is one of the leaders of e-commerce in the world. The development of e-commerce markets in Post-Soviet countries is in the hands of its consumers, and it is vital for them to seek the changes they desire.
