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Tracking eCommerce Growth in the CIS

Date: August, 2012 --


CIS might stand for “Center for Internet Security”, which is a respected non-profit organization that is concerned with just what it says, but here it means “Commonwealth of Independent States”, which was formed as an organization of former Soviet Union territories to address trade, finance, lawmaking and security questions. One of the chief projects is development of a free trade area. So, it’s a market, if not quite yet a Common Market.        

 

Of the ten members, the largest are Russia (142 million), Ukraine (46 million), Uzbekistan (27 million), and Kazakhstan (15.5 million). There is developing wealth in all these countries, with Russia, Kazakhstan and Ukraine having the highest GDP per capita.

           

Four of the postal administrations in the aforementioned markets have recently taken on the development of eCommerce as a strategic goal. They conducted and presented at the Universal Postal Union an important survey that reveals some definite opportunities for Western marketers, and some important points to remember when marketing into the region.  The four active Posts are Azerbaijan, Moldova, Russia and Ukraine.

The aim of the survey was to determine the profile of customers purchasing products from foreign eCommerce sites.  The ultimate goal was to increase inbound parcel traffic as much as possible by a combination of convincing foreign websites to target their populations and by making the receiving process for consumers easier. In short, it’s all about generating postal traffic from abroad into their markets.     

           

Here are some interesting insights into the consumers in these four countries: 

 

The variation in purchasers by gender from country to country was dramatic. In Russia, 61% of purchasers were female and in the Ukraine 79% were female, while in Azerbaijan and Moldova less than 50% of the purchasers were female.  

           

The average order value was in line with the GDP rankings of the countries, with Russians spending the most. On average, 45% of the orders were for up to €100 and 41% from €101 to €500. In Azerbaijan, Moldova and Ukraine, the average order was below €100 in up to 75% of the cases.

 

Method of payment preferences are also a surprise. In Russia (67%), Azerbaijan (57%) and Moldova (48%), the bank card is preferred. In all three countries, Paypal is used frequently, ranging from 26% to 33% of purchases. If you are going to sell in the Ukraine, it is all COD. It also appears that currently only the Ukraine Post offers COD service, but 67% of Russian customers would like to pay this way if given the option.

 

In short, there is a developing eCommerce market in the CIS countries. These four countries have over 200 million eager consumers with a confirmed interest in COD payment through what is a pretty good infrastructure of over 57,000 postal offices. Moreover, the Posts themselves know full well that the retail sector in their respective countries is poorly developed and that there is growing consumer wealth and demand for various consumer products. 

 

There are B2C and B2B direct marketing lists being made available in Russia, and there are reports that the Russian Post is studying entering the list/data business in much the same way China Post has done.

           

We have also learned that a business has been established in the US to provide a US “ship to” address for CIS consumers shopping at US websites. This service was developed by Saudi Post and by some of the posts in Latin America to promote parcel traffic into their countries. Through these means, one can see the potential for serious growth within this still-emerging group of markets. 

 

What’s next? Direct mail campaigns to the CIS market can’t be far away. Be sure to talk to Data Services Inc about ensuring your CIS or other international marketing data is properly standardized, validated and duplicate-free to ensure your program delivers!