6 main advantages of trading on the Internet

The e-commerce market in Russia is one of the main engines of trade. Residents of foreign countries have been buying everything on the Internet for a long time, and Russians are gradually adopting this need.

According to analytical studies, in 2011-2019, the volume of the online trading market increased by an average of 28%. If you translate the percentages into numbers, you get a huge amount: sales volume increased from 235 billion to 1.72 trillion rubles . This was influenced by the rapid growth of active network users and changes in their needs.

Trade statistics for 2020

Sales of 1.72 trillion rubles only take into account physical goods that Russian retailers shipped to customers. In fact, the volume of the online sales market in Russia is much larger. In the first half of last year, Russians bought almost 37 million train tickets. If you include in the statistics the sale of other tourism services, gaming content, lotteries and other virtual goods, the numbers will increase significantly.

In the article we will analyze the current statistics for 2020, but before that we will look at the numbers for 2020, since the current year has not ended yet. Retailers usually count statistics early next year. Current data for 2020 will be available in early to mid-2021.

Sales analytics for 2020 will not be significantly different in 2020, since the main niches have remained unchanged for a long time. There will definitely be changes in the online education niche , but it is not included in the e-commerce reports.

According to analysts, last year the online trading market showed significant growth compared to previous periods. The catalysts that influenced the unprecedented activity were investments from major players. They invested in advertising and expanding the logistics infrastructure.

At the end of 2020, Russia took 5th place in the ranking of the fastest growing markets after Mexico, India, the Philippines and China . A comparison of markets taking into account the population showed that the Russian Federation is in 9th place in terms of e-commerce volume per capita. The first positions are occupied by the USA, South Korea and the UK.

Russian buyers brought more than 100 billion in revenue to online trading giants. These are Aliexpress, Wildberries, Ozon, Apteka.ru. The list also included Tmall and Russian Aliexpress sellers. The Beru marketplace, which launched Yandex.Market in 2020, was included in the short list of top retail players at the end of 2020. According to statistics, the average monthly turnover of the site amounted to more than 4 billion rubles.

Analytics show that 78% of the Russian population over the age of 12 use the Internet . 90% access the global network every day. The monthly audience grew by 6% in 2019.

Important indicators of online trading over the past year:

• 1.6 trillion revenue;
• 425 million orders;
• average bill 3,800 rubles;
• 25% increase in rubles;

The number of Internet users and online shoppers is steadily increasing every year, but the average bill has been falling for 3 years. The number of orders increases due to an increase in the frequency of purchases. Residents of Russia constantly order goods via the Internet, and everything is heading towards the fact that online trading will become the main source of sales.

Large online stores are increasing delivery volumes through internal logistics services. The share of Russian Post decreased by 4% over the year to 20%. In 2020, the state-owned enterprise processed 88 million parcels, and in 2020 only 44. The share of self-pickup is rapidly growing, customers are increasingly picking up orders themselves.

Wildberries processes 33% of the total volume of online orders in Russia. In product categories, electronics and household appliances, household goods, clothing and footwear, cosmetics and perfumes, and auto products traditionally lead.

A study by the analytical agency Data Insight provides comprehensive information on the state of the online trading market in Russia. The number of buyers is growing, and so is the volume of orders. The positive dynamics cover the drop in the average check. If the value increased compared to previous periods, sales volume should have increased several times.

Features of organizing online trading

 In recent decades, the Internet has been developing quite rapidly, turning from a great toy for intellectuals into a full-fledged source of all kinds of information for all segments of the population. The information web has become especially widespread in the field of Internet commerce, bringing large profits to companies and organizations that actively use this type of work with their clients.

The term “e-commerce” is on everyone’s lips these days. Attention to this topic is due not only to the growth in the number of online stores, but also to the interest of users and traditional trade market participants in a new type of business that has become possible with the development of Internet technologies. [4.18] According to the Data Insight portal, which assessed the development of online commerce in Russia, in the first half of 2019, Russians made 190 million orders in Russian online stores worth 730 billion rubles. At the same time, the number of orders increased by 44% year-on-year, and sales volume in money by 22%. This dynamics of order growth became the highest in the history of the Russian online market. [6] The process of making online purchases is simple and in most cases the ordering process is identical in all stores. As a rule, all orders are made through the website or mobile application of a certain commercial/governmental organization, after which the selected and processed goods are delivered to the location specified by the client by courier or to a pick-up point.

When choosing a particular type of shopping, the client refers to certain factors, among which the following are worth highlighting:

– Price

– Service (economic feasibility, transaction security, technical equipment)

– Variety of products

– Availability of discounts and promotions

– Comfort and convenience [2, 270–285]

Comparing the traditional and electronic types of commerce in accordance with the above-mentioned factors, one can notice that in almost each of them the younger, but no less widespread type of online commerce is in the lead, which conquers the competing majority of buyers. However, in order to gain its current popularity and wide distribution among consumers, this type of trade took a couple of decades.

The basis of online shopping originated in America in the 1990s, since already in the 90s the Internet became a way of communication for a large part of the population. The idea of ​​creating the first online store came from Jeff Bizos in 1994. He often reflected on how public and free the Internet had become, given the fact that this information network occupies a huge layer of human life. He came to the conclusion that the audience’s activity on the Internet must be used competently and rationally, inviting them to make purchases online, namely, order goods and services. He understood that the consumer nature of a person always leads to the need to purchase new goods, which means that this idea has every chance of success. Thus, Jeff Bizos compiled a list of all kinds of goods that can be sold online, from which he excluded those that are difficult to ship and store for a long period. As a result of this, the first online stores were opened where you could purchase books, audio cassettes, video cassettes and discs. This also entailed the creation of the first electronic payment system, since sellers immediately had a question about possible methods of paying for goods. [1, p.48]

Over time, the development of online stores has increased, gaining today a huge number of customers and becoming a large-scale commercial platform. Through this network, the buyer uses a browser to access the website of the online store, which contains an electronic storefront presenting a catalog of goods (with search functionality) and the necessary interface elements for entering registration information, placing an order, making payments via the Internet, choosing a delivery method, obtaining information about the seller company and online help. The most simplified type of shopping, focused primarily on creating comfort for the client, has the following number of advantages:

– Customers are provided with 24-hour shopping services without the need for geographical attachment to a retail outlet. Customers can select products and make decisions at home, anywhere, anytime.

– Customers can choose home delivery via courier or place an order with arrival at the pickup point, which makes the service very flexible.

– Online stores are completely freed from the problems associated with traditional shopping, such as long queues at exit points, searching for parking spaces in shopping centers, wasting time and money on preparation and the process of making purchases.

– Clients receive a larger number of interesting offers, including various promotions, sales, the ability to accumulate points, as well as the use of a cashback service.

– Most stores provide customers with the opportunity to familiarize themselves with the rules of use, as well as take advantage of online consultation services. [8]

Along with the above advantages of this system, it is worth mentioning some of the negative aspects of this type of service, among which are:

– Inability to evaluate the quality of the product and receive products that are not suitable in color, size, consistency.

– Poor technical equipment of some websites, which makes searching for a specific item a difficult task and, as a result, leads to the loss of a client.

– High delivery costs.

– Possibility of fraud, since payment is made long before receiving the goods.

In order to neutralize the possible risks of developing the previously mentioned negative aspects that could lead to the loss of a client, many online companies pay great attention to competently building relationships with their clients, studying the theory of CRM (Customer relationship management). CRM is seen as an important tool for “ensuring revenue growth by improving the quality of customer service, retaining and expanding existing customer bases, and increasing customer acquisition levels. The vision of the CRM initiative is to provide a better understanding of the customer, identify the requirements of individual customers and sell them relevant products and services. Customer relationship management is a corporate-level initiative aimed at creating and maintaining customer relationships.

The need to develop CRM in the field of online sales is caused by the rapid growth and increase in the level of customer competence, as well as the constant growth of the client base caused by online advertising campaigns. [7]

Prerequisites for studying and implementing CRM in online commerce:

– Currently, the level of customer awareness in the field of online shopping has increased significantly due to the growing use of mobile phones and the ability to connect to the Internet to exchange information, and therefore working with customers requires a very high level of staff competence.

– Customers are provided with a large number of discounts and coupons, which attracts buyers to online portals that have a large number of similar offers. The customer pays more attention to portals that provide good after-sales services.

– The quality of services provided by online stores is becoming a priority in the minds of customers.

“In addition, consumers are increasingly providing feedback on quality, quantity and service, and they expect service providers to use this information to improve the shopping experience.

– The more a company participates in CRM activities, the more customers are satisfied with the services provided, which leads to an increase in consumer loyalty. [5]

To develop and prosper a business through the Internet, great attention should be paid to the requirements and expectations of customers. It is necessary to focus on factors such as product variety, price, quality, return options and various payment methods to increase sales and improve the customer base. There is a need to strictly ensure that price matches product quality, website/app navigation, providing free home delivery options for high customer satisfaction. It is also worth paying attention to the rules for returning goods and the variety of payment methods.

These days, customers pay more attention to how consumer-friendly one company is. Thus, companies should focus more on maintaining competent and high-quality relationships with them. [8]

Literature:

1. Mikhailovskaya I.D., Tsygankova A.Yu. The concept of Internet trading. — 2nd ed. - M.: Mashinostroitel, 2004. - 45–54 p.
2. Kryuchkov A. F. Marketing management. - 1st ed., - M.: Konrus, 2005. - 270–310 pp.
3. Vasiliev P.V. Marketing research // “Marketing in Russia and abroad”. - 2005. - No. 1. - P. 68–76.4.
4. Vorobyova I. E. Marketing research // “Marketing in Russia and abroad”. - 2003. - No. 6. - P. 18.
5. Kuznetsov A.V. RISK // “Electronic markets / Issues of economics”. — 2004. — pp. 72–81.
6. Online trading in Russia 2020 //DATA insight.URL: https://www.datainsight.ru/ecommerce_2019 (access date: 02/10/2020).
7. KPI Report 2020 from Wolfgang: search remains the main source of traffic and income in ecommerce // Сossa. URL: https://www.cossa.ru/news/252093/ (access date: 01/30/2020).
8. Advertising in the remote method of selling goods // EUP.RU. URL: https://www.eup.ru (access date: 02/08/2020).

E-commerce during a pandemic

2020 is called a year of difficult trials and a test of strength. After the spread of the new coronavirus and the introduction of restrictive measures, it became clear that the online trading market would face big changes . First, the delivery mechanism will change. Secondly, buyers will reconsider their needs and focus on essential goods.

The CMS AdvantShop team analyzed the platform’s internal statistics and found that online trading in Russia is significantly increasing its turnover compared to the previous year . Russians order products online to protect themselves from negative consequences.

The source of data is statistics on the TOP 100 online stores with the largest number of orders. Thanks to the calculation methodology, not only changes during the period of self-isolation are visible, but also the general trend compared to 2020.

The AvantShop team found that 1.5 times more new stores opened in April 2020 than in April 2019 . Offline businesses had to urgently enter a new market and develop a niche that they had not paid attention to at all or spent little time on development.

Since the start of the self-isolation regime in April 2020, the turnover of the largest retailers has increased by almost 24% compared to March and by 36% compared to April last year. There were 25% more orders. At the same time, the average bill has not changed since the beginning of 2020 and even fell compared to last year.

Large growth compared to previous months was recorded in several niches. These are food products, goods for children, home and garden, hobbies and handicrafts, goods for adults. Sales of equipment and electronics, pet supplies, cosmetics, furniture, gifts and souvenirs fell sharply.

The food niche has greatly increased. People began to order more food online, and store turnover increased almost 2.5 times compared to the same period last year.

Some online stores have managed to maintain their place in the niche. For example, in April people bought 6% more clothes and shoes compared to March. This is surprising considering that millions of Russians observed self-isolation.

The Data Insight agency highlights one of the unusual growth factors in the online trading market - an increase in online demand for FMCG products . These are everyday products that people cannot do without: food, household chemicals, medicines.

FMGC products account for more than 50% of retail sales in Russia , but very few of them are purchased via the Internet. If the volume of online orders increases by even a few percent, it will affect the entire market.

Dynamics of development of different niches

The pandemic has made adjustments to the preferences of Russians, but sooner or later the situation will level out. It is obvious that people will always buy essential goods, but the trend of penetration of online commerce into various categories indicates the clear dominance of e-commerce in the coming years.

Changing online shopping behavior has positively impacted some niches. Many did not believe that it was possible to buy fresh food online. It is still difficult for us to get used to this delivery method, since food is one of our main needs and there are increased demands placed on it.

Along with the increase in demand for food, sales of personal protective equipment have increased. People bought antiseptics, gloves and masks at exorbitant prices. As the incidence rate decreases, the demand for these products will fall, but many Russian residents will stock up in case of emergency.

The list of popular product categories includes:

• electronics and household appliances;
• Goods for pets;
• cosmetics;
• clothing and shoes;
• household products;
• books.

According to analysts, the volume of orders in online pharmacies will increase significantly . In 2020, Russian residents ordered medicines worth 86.3 billion rubles, the average bill was 1,670 rubles. The number of online orders increased by 98% in 2020. Online pharmacies boast the highest conversion of visitors to customers.

Payment and delivery methods

In the article we have already partially touched on logistics, but now we will dwell on it in detail. Analytics of delivery methods clearly shows that Wildberries and other large retailers are investing in the development of logistics systems. Leaders of the e-commerce niche in Russia want to reduce dependence on Russian Post and private companies. Online retail giants are building their networks of parcel terminals and pick-up points, delivering orders from competitors and actively buying land for the construction of logistics facilities.

Representatives of the Ozon marketplace note that the main limiting factor for e-commerce in Russia is the lack of infrastructure . The company is actively building new factories and logistics centers to meet its needs.

E-commerce leaders are finding new ways to get products to customers quickly and affordably. For example, in 2019, the Beru marketplace offered to pick up orders at the checkout counters of stores in the Pyaterochka retail chain.

There is no doubt that the share of self-pickup will increase in the coming years . People are willing to wait to save on shipping. This is especially true for large-sized goods, when parcel delivery can cost several thousand rubles.

According to online stores and logistics services, almost 40% of customers abandon an order if the delivery cost is too expensive. For example, if a book is sold for 500 rubles, and delivery to a Russian Post office costs 200.

The online store logistics market is experiencing a change in the operating model. If previously contractors collected all orders in one warehouse, now the city or region is divided into several zones. Thanks to this approach, delivery time and cost of the service are significantly reduced.

In July 2020, Data Insight together with RBK Money released a new study on online payments. The report provides a lot of useful information that reveals people's behavior on the Internet.

Important Features:

1. Buyers most often pay with bank cards.
2. 31% of users used 5 or more payment methods.
3. Electronic wallets are more popular than online banking.
4. 2% of respondents use only cash.
5. Young people prefer mobile payment systems, middle-aged and elderly people prefer electronic wallets.
6. Online shoppers value convenience and security of payment more than rewards and free shipping.
7. 41% of users do not want to pay online if the amount exceeds 10 thousand rubles.
8. Buyers value a money-back guarantee and the availability of different payment methods.
9. 25% of people look at the commission when choosing a payment method.
10. Cryptocurrency remains the most unpopular means of payment.

The behavior and preferences of online shoppers have not changed for many years. Speed ​​of delivery, the ability to return funds, a convenient payment method and the amount of commissions have always been important to people. The last factor has the highest priority. Some stores still pass on the payment of commissions to customers or include them in the price of goods.

Delivery of goods to customers

Think in advance about how and by whom you will deliver the goods to customers. The courier is, after all, the only person whom the client sees with his own eyes, as a representative of the online store. Meeting a courier with a client is a bit of a stress, especially for those who use the services of online stores very rarely. Try to hire neat couriers, and not attract someone cheaper, for example, young people who are adherents of any social networks. cultures who decided to earn extra money. Not every client of yours will be very happy to see a punk or goth on their doorstep.

Also, it is important to deliver the goods on time; customers do not really like to wait. Try to be client-oriented and make every effort to satisfy the client's needs. After all, a client who likes your online store can become a regular one, and even tell his friends and acquaintances about you, and this is worth a lot!

Top online stores in Russia

To better understand the situation in the online trading market, let’s briefly look at the top online stores in Russia, the statistics of which were analyzed by the Data Insight agency and compiled a rating.

An analysis of the activities of large retailers showed that the number of orders and revenue of stores from the TOP 100 increases every year . Wildberries has been ranked first in terms of revenue, orders and market share for 4 years in a row. In 2020, the number of orders in the Beru marketplace increased by 860% compared to 2018.

TOP 5 Russian online stores:

1. Wildberries.
2. Citilink.
3. Ozon.
4. Mvideo.
5. DNS-Shop.

Statistics from major online retailers clearly indicate that the effectiveness of trading platforms largely depends on the product category . The number of orders from Wildberries increased by 110% over the year, and the average bill fell by 10% to 1,380 rubles. The fall did not prevent revenue from significantly increasing - from 152 million to 210 million rubles.

The number of orders on Aliexpress over the year increased by 154%, and revenue increased by 162%. The statistics took into account only orders from Russian sellers by buyers from the Russian Federation. The largest receipt in the TOP-15 is from the online store Petrovich.ru. This is due to the high cost of goods and the popularity of the trading platform.

Online store website

An online store website is your showcase; it should be well thought out and convenient for your potential client. Before you start creating a website, think about how you can make your online store stand out from your competitors. Even if you turn to professionals on this issue, remember, most of them do not care about your resource, they are pursuing the goal of selling you a product or service, and nothing more. Approach creation as a future tool for your business, and not as a bunch of scripts, stolen text and pictures.

Remember a few basic commandments:

• The website must contain up-to-date information about the product or service. If there are not 10,000 product names, make sure that the texts are at least partially unique.
• The product must be presented in person. There should be a photo of the product or even a gallery of photos so that you can examine the product before purchasing. If you have any videos or other media materials about the product, do not be lazy to insert them into the description too. After all, people prefer to watch and listen rather than read.
• There should be easy navigation around the site. Consider the usability of your site. Try to make sure that the search and purchase of a product is completed in the least number of clicks. Don’t forget about the “shopping cart”; this is a problem for many, even large online stores. Make the information clear and visual, do not force the client to fill out a huge amount of information about himself.
• Choose stable hosting and a beautiful second-level domain name, ideally not very long, so that it conveys the essence of your business (this will make it easier for you to be remembered). If you have a small budget for this, spare no expense, buy an old domain, this will help with promotion in the future.

Forecast for the coming years

According to Data Insight forecasts, the e-commerce market in Russia will rapidly increase in the next 4 years . The main growth factors are the growing number of online shoppers and increased demand for essential goods online.

Factors that will influence the growth of online sales in 2020-2024:

1. Popularization of remote work. Due to the coronavirus crisis and self-isolation, people were forced to urgently change their cozy office to work on their home computer.
2. Influx of online shoppers. According to analysts, during 3 months of quarantine, more than 10 million new buyers appeared on the Internet. Some will switch to offline purchases, but many appreciate the convenience of online shopping.
3. Increase in sales of goods from the FMCG category. The food niche has grown significantly over the past six months, and people have also begun to actively buy medicines online.
4. Increasing the volume of investments. Offline entrepreneurs who had not even considered moving online realized that the future is on the Internet. They invest money in advertising and development of digital infrastructure.
5. Decrease in the share of offline sales. Some businessmen are completely refocused on online sales.

The coronavirus crisis has dealt a massive blow to the Russian economy and citizens’ incomes. The unemployment rate in Russia has reached its highest level in the last 8 years. Since the beginning of quarantine, more than 1 million people have lost their jobs, many were forced to change their occupation. At the same time, some e-commerce niches have seen an unusually high flow of orders and repeat customers.

Despite temporary difficulties, Russians continued to buy online. According to analysts, changes in the online trading market due to the pandemic will bring an additional 1.6 trillion rubles over 5 years.

Analytics and statistics are important components that will help you choose the right niche. It is obvious that electronics, household appliances, clothing and pet products will soon have to be sold only through marketplaces. It’s better to focus on niches with little competition and use our tips for choosing a CMS for your online store.