Cybershopping: new crisis and its impact on marketplaces

Marketplaces have experienced a major boost in the past couple of years, one catalyst being the pandemic. The Russian online shopping sector is undergoing a transformation as imports are decreasing and foreign platforms are ceasing operation in Russia. What has changed for the multi-department hypermarkets since the end of February 2022? What are the current challenges for sellers and what awaits the e-commerce sector in the next few years?

Pickawood / Unsplash

Only figures

Marketplaces currently account for more than half of all online orders in Russia. The internet retail market has grown almost 53% over the year.

Online grocery sales are showing the fastest growth, both in terms of numbers (up 244%) and spent money (up almost 160%). The sector is booming and the new crisis will only speed up its development thanks to changes in consumer behavior.

Where there is demand there is supply

In late February 2022, the amount of products available on the Russian marketplaces significantly dropped due to depleted stocks and supply chain changes. The niches that have opened up are being actively taken over by new players. The popularity of online shopping continues to grow and sellers have no intention to miss out on profit. Russia is still behind China or the United States where marketplaces show 60–70% in penetration rates. Our country will, however, reach the same level within the next years.

The Russian marketplaces will see growing demand due to several factors, one being the redistribution of sales channels. Customer traffic in shopping malls has dropped since foreign brands, which served as certain anchors for buyers, left Russia. Customers shop offline less often these days. Their habits with respect to certain categories of products have also changed, the change being the second factor of marketplace growth. For example, only recently it was difficult to imagine that gardeners would buy seeds via marketplaces – however, this spring, it was an extremely popular category of goods purchased online. The idea of ordering toilet paper or canned meat online and collecting them from a pickup point used to sound absurd. Now it is another popular trend, largely due to the price factor. The difficult economic situation prompts customers to look for better deals which are most common on marketplaces.

Weather vane of consumer behavior

Consumer behavior changes every time a crisis happens and the current challenges are no exception. During difficult times, customers usually opt for the substitution strategy by switching to cheaper brands and looking for bargains and more affordable shops. They rigorously study the price dynamic and become incredibly market-savvy.

Analyzing past crises, it can be concluded that this behavior model among Russian consumers is here to stay. Therefore, business people should review both their pricing strategies, marketing and sales tactics. The main questions are how to attract customers and encourage them to buy? Also, how to satisfy the demand with a specific product? How to rationalize the choice and add higher value while reducing the risks of low satisfaction, and to boost the purchase high?  

Speaking about goods with better prospects, there is definitely logic in looking towards those goods that are only starting to trend. Sellers who end up taking a leading position in such niches will eventually establish themselves and reap the perks when the trend picks up. Another good strategy is monitoring consumer habits that form and carving out a niche for goods that sell well via marketplaces. 

A look into the future

The e-commerce market in Russia will keep growing regardless of the situation. During the coronavirus pandemic, customers have had the taste of convenience that comes with online shopping, and now they are actively using it and learn how to find the best deals.

The strategy of major marketplaces is currently focused on creating ecosystems. The cost of attracting new customers increases every month, and the model when a customer can purchase anything, from socks to an apartment, at one platform is the most profitable. OZON is a good example here: customers can buy groceries and real estate on one website.

As for market players, large producers will join marketplaces in the next year or two. They used to sell their production through wholesale dealers, but now nobody wants to share their margin with intermediaries. Small businesses should learn to be more flexible, adapt quickly to changes and attract investment. Successful will be those who tick all three boxes.

It is unlikely that all sales will move online within the next ten years. According to some forecasts, 95% of purchases will be made online by 2040, but in reality, the transition will take much longer because some consumer habits are not easy to change. However, offline shopping should be considered not only a direct sale but also a certain emotional interaction between the customer and the product. Those entrepreneurs who will be able to promptly reform their channels and adopt the omnichannel approach will be the most successful.

By Anna Kovtun, marketing expert, entrepreneur, expert in starting and promoting businesses on marketplaces

Previous ArticleNext Article