Russians have increased spending in foreign online stores

In the first half of the year, Russians spent $ 5.19 billion in foreign online stores, a 24% increase from a year earlier. Traditional retailers complain about the inability to compete with foreign sites.
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Russians in the first half of the year spent on the purchase of goods in foreign online stores $ 5.19 billion, according to statistics from the Central Bank. This is 24% higher than the level of January-June last year. The peak of expenses came in the first quarter, when Russians spent on overseas online purchases reaching $ 2.72 billion (an increase of almost 35%), in the second they fell slightly (to $ 2.48 billion), but still were 13.8% higher last year's level.

The growth of online purchases abroad continued, despite the weakening of the ruble against the dollar and the euro in April against the backdrop of new US sanctions. If in the first quarter the dollar cost about 56–57 rubles, in the second quarter its value fluctuated around the level of 62 rubles. for a dollar. The euro exchange rate of 68–71.5 rubles. after the April peak values, reaching 80 rubles, moved to the range of 72.5–74.5 rubles.

These statistics forced the Association of E-commerce Companies (ACIT) to revise the forecast for the whole 2018. Earlier, ACIT expected total spending by Russians in foreign online stores for the year at the level of 470–480 billion rubles. ($ 6.9-7.3 billion at the current rate), told RBC head of the organization Artem Sokolov.

“If in the first half of 2018 these expenses reached $ 5.19 billion, we can expect about $ 11–12 billion for the whole year, since in the second half of the year the volumes are traditionally higher due to New Year holidays and discounts in Chinese stores in November”, - explains Sokolov. In general, last year the Russians spent in foreign online stores, according to the Central Bank, totaled $ 8.9 billion, and this was a record figure in the entire history of statistical calculations (the Central Bank began to indicate such expenses of Russians since 2011).

Why spend more? Go

According to Artem Sokolov, the rapid growth of the indicator in 2018 could have been influenced by the investment of foreign stores in reducing delivery times and creating more lucrative offers to customers. “They do not pay VAT, customs duties, they have no obligation to certify goods or use online funds. Accordingly, there are less costs and there are extra funds that can be spent on advertising, as well as offer buyers the best conditions for the purchase. Consumers buy goods where they are cheaper and more qualitative, ”Sokolov said.

Drivers of growth in cross-border trade are traditionally such categories as electronics, clothing and footwear, says Deloitte Consulting Senior Manager Andrey Semenov. "Most often in foreign online stores buy goods in the price range of up to € 22 (1660 rubles. - RBC), which is associated with low purchasing power of the population," - said Semenov. In his opinion, the growth of the cross-border trade segment today is caused, among other things, by pent-up demand: there may be a surge in consumption after 2014, when, due to the crisis, buyers were forced to cut costs. Another reason is the expectation of growth in the exchange rate, after which purchases in foreign online stores will become more expensive for Russians.

Central Bank data may not reflect the real picture, suggests Alexander Ivanov, President of the National Association of Distance Trading. In his opinion, the figure may include not only the purchase of physical goods, but also other costs, such as the transportation of these goods. According to Ivanov, the cost of Russian consumers in foreign online stores in 2016 stopped at about $ 3 billion a year, and the average bill has only decreased since then and now stands at about $ 12.

Starting next year, a larger number of Russian users of foreign online stores may be faced with the need to pay a fee. Now in Russia, the duty is not charged on goods purchased from the Internet from abroad, the total cost of which is less than € 1 thousand (75.4 thousand rubles) per month, and the weight is lighter than 31 kg. From January 1, 2019, the threshold will be reduced to € 500 (37.7 thousand rubles), and from 2020 - to € 200 (15 thousand rubles). A faster reduction of the duty-free threshold is being discussed, as well as the introduction of a duty of 20% on all goods purchased by Russians in foreign online stores, the Federal Customs Service made such a proposal in mid-June. This proposal was supported by ACIT. According to Sokolov, the thresholds currently under discussion for goods from foreign online stores will not allow Russian stores to be supported. “The cost of 98% of online orders is less than € 200, which means [reducing the threshold for duty-free entry to this level] is only an illusion,” Sokolov said. “Now all countries are canceling outdated thresholds for duty-free imports.”

Do Russian retailers see the threat?

Andrey Semenov predicts a further increase in the number of purchases on the Internet and expects that in the long term this may be a threat to certain segments of the traditional retail. Now in Russia, despite the high penetration of the Internet, a rather low share of Internet commerce is about 3% of the total trade in the country, according to ACIT. According to Morgan Stanley, the volume of the entire e-commerce market in Russia in 2018 will amount to 1.292 trillion rubles. ($ 19.8 billion at the current rate), and by the end of 2023, the figure should rise to 3.491 trillion rubles. ($ 53.4 billion).

“For Russian retailers, such a growth rate of cross-border trade is very critical, because if this money stayed in Russia, it could be a driver for the development of many sectors of the economy inside the country, the ground for the emergence of various start-ups, new technology spheres,” said a representative of shoe retailer Zenden Alexander Milikh.

The president of the clothing company Finn Flare, Ksenia Ryasova, states that retailers in Russia "are in noncompetitive conditions and are seeing a drop in sales due to the lack of regulation in the [cross-border trade] area." “Foreign Internet sites, unlike Russian ones, do not have to pay VAT. They will develop exponentially, and in fact this is official smuggling, ”Ryasova insists.

However, the representative of the Obuv Rossii group of companies (Westfalika, Pedestrian and others) Natalya Pauli does not see a big problem. “Any company, even if it works in the local market, competes not only with local, but also with global players, so you need to be ready for this,” argues Pauli. - Our companies, manufacturers have the opportunity to compete in the quality of brands, product, range, i.e. in the mainstream segment, which is almost 40% of the Russian shoe market. ”

According to partner of consulting company Bain & Company Yevgeny Belashchenko, online trading has a negative effect on offline retailers, in principle, since it incurs less costs and often offers lower prices for the same or comparative products. Cross-border trade has advantages: it contributes to the development of online commerce in Russia as a whole, the degree of its penetration into settlements throughout the country, creates a habit among buyers, and increases price competition in the market. “The question of the dangers of cross-border trade is ambiguous, because price competition is healthy for the market, and for the consumer it only brings advantages,” the expert said. Although there is a negative impact: cross-border trade takes a share from Russian retailers, potentially causing damage to the Russian economy, since the state does not receive enough taxes from such items.