Forecast: The volume of the e-commerce market in Russia to reach 7.5 trillion rubles in 2025
E-Promo Data Driven Agency has published an analytical report on the study of Russian e-commerce.
The report includes growth forecasts, as well as details of changes in consumption patterns and their impact on the development strategies of market participants.
According to E-Promo experts, based on actual data and forecasted values, the volume of the e-commerce market in Russia will reach 7.5 trillion rubles by 2025. Forecasted compound annual growth rate (CAGR) for 2021-2025 is 22.8 %.
By 2025, the volume of the global e-commerce market will amount to $7 trillion. Forecasted compound annual growth rate (CAGR) for 2021-2025 is 10.5 %.
"The dynamics of the e-commerce market development and its evolution will be determined by several development areas," says Ivan Fedin, Head of E-Commerce E-Promo. "First of all, it is the personalization of goods and services, additional promotion opportunities.
We are talking about the tools available specifically in digital space — a wide range of segmentation options and targeting to the level of an individual buyer. Such tools have appeared due to the collection and accumulation of information about purchasing behavior — not only in the digital space, but also in traditional trade channels.
"The second area that will have a positive impact on the dynamics of the channel is a significant reduction in transaction costs not only at the stages of logistics and production of goods and services, but also at the stages of development and design."
In 2020, the e-commerce market has seen major changes due to the pandemic and the subsequent alteration in consumption patterns. E-Promo analyzed the dynamics of the market as a whole and its individual segments (Fashion, Electronics and Household Appliances, Beauty, FMCG, etc.).
According to the experts who participated in the study, the growth of the e-commerce market in the coming years will continue at a relatively high rate. However, 2020 will remain the year of abnormal changes in consumer behavior.
Key factors for market growth are the continued impact of the pandemic, the formation of online shopping habits; increasing consumer confidence in online shopping; maturing and increasing the level of paying capacity of a generation for which online shopping is a familiar process; increasing the average check online; the emergence of new industries in e-commerce (pharma, auto, jewelry, etc.); an increase in the number of categories in e-commerce and the assortment in general.
In 2021, a number of trends are expected to intensify. For instance, the share of regions in online sales will continue to grow. Major players in the e-commerce market will continue to form their own ecosystems. This will help the business retain loyal users, attract new audiences, and control the entire customer journey. Partnerships will be actively developed: integrations and collaborations of sellers from various industries.
The pandemic has made its own adjustments to the approaches to promoting goods and services in e-commerce. The study showed noticeable changes in marketing strategies: redistribution of budgets in online advertising channels, reaching for new audiences, revising KPIs.
For example, a slowdown in growth in the contextual advertising channel is recorded; the share of this tool will decrease due to the expansion of advertising means. On the contrary, advertising in social media will continue to gain popularity — experts predict the active development of Social-commerce: sales through Facebook, Instagram, VKontakte.
Social networks will focus on the formation of a global ecosystem, where e-commerce is one of the most important components. The share of programmatic advertising will also grow due to the emergence of new tools and the use of third-party data.
Elena Shutyuk, CEO of the federal logistics company IML, believes that Russia has great growth potential, the main factor of which is the relatively low penetration of e-commerce.
"Events such as the global pandemic should at least make one wonder how representative the averages are in the long run. That said, $7.5 trillion is an attainable market size. The penetration of e-commerce in our country is at a low level, especially in medium and small towns. In this sense, Russia has great growth potential.
"At the same time, businesses invest in infrastructure development: logistics centers are opening, large multi-brand sites are developing, new technologies are being introduced. User experience is developing — making purchases online becomes easier and more enjoyable. This is just a small part of the factors influencing the market. Therefore, the claimed level looks quite realistic," the expert comments.
Alexey Vaisberg, development director of the logistics operator Logsis, believes that the Data Driven Agency E-Promo scenario is at least logical.
"We are a little more cautious in assessing the market: it is obvious that in the next 5 years, the growth rate of online sales will first increase and then decline. And, perhaps, by the end of the mentioned five-year period, the world average will be reached — an increase of 10 % year-on-year. But for big data, such differences in forecasting can be seen as a measurement error," the expert predicted.
In addition to the changes that have already occurred in the model of consumer behavior, the expert identifies three main drivers: the regional expansion of large market players and logistics operators, the maturing of an audience accustomed to online behavior, and an increase in the level of paying capacity of this audience, as well as the development of marketing tools, that is, the formation of real omni-channel communications with the consumer.
"There are also factors that can hinder the implementation of such a scenario. For example, the development of logistics in the regions. There is an important segment of online sales, which is rather poorly developed in the regions today — the sale of food products. Logistic solutions for the fast delivery of food in the regions are simply not available today. Offline shopping outside of a city with a million-plus population still looks both more reliable and significantly faster.
"The second risk factor is "surprises" from the state regulation system. It is difficult to predict anything here. The state today generally supports the development of the industry, adopts the long-awaited amendments regarding the management of remote selling of alcohol, jewelry, and pharmaceuticals. But, obviously, surprises are possible," commented Alexey Vaisberg on the results of the study.