The main trends of Russian e-com

Russia’s e-commerce market today is mature, with top online marketplaces tightening entry conditions and competition continuing to grow. Nevertheless, brands have a good chance of growing and succeeding on these platforms. It takes robust market analysis, keeping track of trends and adjusting strategies. SMEs as well as larger businesses continue to vigorously compete for sales on marketplaces.

The volume of trade on online marketplaces is in the trillions, with ever increasing numbers of people drawn into their orbit as buyers, sellers, technical staff or manufacturers of goods. This means that a large proportion of society is interested to know where the industry is heading.

According to a Yandex survey, in 2023, the number of customers of e-commerce marketplaces grew by 9 percentage points, reaching 67% of Russians aged 16-55. According to Mediascope, this growth was due to the mobile segment. The number of mobile app users has almost reached 78 million (up 15% year-on-year), while only 25 million customers use desktops for online purchases (and the growth has actually stopped in this segment). In total, in February 2024, users made 3.2 billion search queries in e-com, which was 31% more than in the same month last year.

Unfortunately, the continued hype and booming growth of e-commerce has given certain sellers illusions, making them think online marketplaces were a source of fast windfall profits. But if we take a closer look at online sales trends, we will see that most sales are made by large brands. Hundreds of thousands of smaller merchants barely break even. Most sellers’ turnover on Ozon (55.32%) is less than 100,000 rubles.

Trend 1. Retail media, a new digital ad channel

Just listing your product on a platform, sitting back and making a profit is an almost surreal story. Without a marketing budget, one really shouldn’t pin much hope on organic search results anymore. This strategy may have worked a few years ago, but now sellers need to properly assess their resources. Previously, brand promotion on an online marketplace was an important, but supplementary activity. Today, it should be a solid part of your marketing budget, like any other channel, including television, outdoor advertising, and other allocations.

By the end of last year, advertising in this segment showed a 400% increase. And by the end of 2024, according to RoRe, advertising budgets here are expected to shoot up another 200% and reach 312 billion rubles. This is due to the rising prices on most platforms – the increase is expected to be around 35-40% – as well as to the high competition among brands.

Trend 2. Third party ads on retailers’ digital channels

Businesses that do not have any product feeds also include advertising on marketplaces in their digital ad budget. These are, for example, banks, insurance companies, telecoms, or major developers. Having lost foreign platforms and tools for promotion, large brands with significant marketing budgets expand to whatever new platforms they find available – Telegram or online marketplaces, or anything else that has emerged over the past two years. These players are looking for new customer touchpoints, and they usually buy large advertising formats. On the downside, they also tend to take the marketplace’s customers back with them, to their own channels and websites.

Trend 3. Ecosystem development

Most marketplaces are developing their own ecosystems, offering additional services such as car sharing, food delivery, insurance, and financial services. This strengthens their market foothold and attracts new customers. They have the resources for this type of expansion. The range of goods and services they offer may change to include perishable food, large furniture, home improvement or assistance in paperwork such as writing CVs – services that used to be available on service marketplaces like Profi.ru.

Listings with services, something unusual for most online marketplaces, are only there to attract customers and provide another touchpoint. But adding new products prompts expansion and sophistication of logistics and warehouse systems, the development of new facilities and new jobs.

Trend 4. Mounting pressure on sellers

Firstly, sellers are becoming increasingly dependent on first-party customer data that platforms have. Most marketplaces want merchants to join their FBO (Fulfillment by Operator) programs where they outsource order fulfillment to the marketplace including storage, packaging and shipping. This enables the platform to record consumer behavior. First-hand purchase data is essential to building promotion strategies. Naturally, platforms seek to monetize this data. The first steps have already been taken — Ozon Data now offers services such as assessing and analyzing demand.

Many platforms carefully monitor which products sell best to keep track of what their customers need. Marketplaces can actually replicate good products offered by small brands, not necessarily by popular ones, and offer copies under their own label or in other ways. This is a certain risk for the original brand; even if this does not really push you to constantly innovate, it certainly suggests that you need to take steps to remain on top, but not everyone has the resources for this.

A situation where giant marketplaces threaten to displace small sellers may seem hopeless. However, there is a strategy that will help sellers not just survive, but successfully compete with corporations. This strategy is to move into an expert niche. Despite the challenges, this approach will create a unique brand that will be in demand among the target audience and stand out from competitors.

Look for a niche carefully and extensively — invest in research and estimate unit economics. If you already have one, stay there and grow steadily.
Your brand will be short-lived unless you create a unique offering. Brands need to be aware of the customer value they offer. It does not always have to be the cheapest price; it can be excellent customer service.
Stay on the lookout for new platforms. Next to the giants, there are niche marketplaces which are growing quite successfully now. They will have more lenient conditions for sellers.

Trend No. 5: Improving customer experience

Businesses around the world invest in the best customer experience because they want to see sales grow as a result. This is exactly why product analytics is on the rise, as brands track customer behavior across their websites and apps, fix inconvenient features and develop support services. If a customer feels comfortable and has been relieved from hassle, they will be more lenient and loyal to the brand. The price will no longer matter as much: people are more willing to pay for good customer service and personalization. So, how can this be implemented in marketplaces?

Assigning a dedicated employee for quickly answering questions on product pages.
Investing in logistics to expedite delivery.
Making the choice easier by providing quality visuals, with a 360° overview or a video.
Raising product value for a customer by exceeding quality expectations, adding unexpected free gifts or cards, investing resources in quality package, batteries, clear instructions, etc.
Implementing systemwide solutions to analyze user preferences, etc.

Trend 6: Changing marketplace audience

The latest customer research by Yandex shows that consumers from outside metropolitan areas are actively joining the customer base of marketplaces. They are mainly residents of smaller cities and especially women over 45; the number of senior customers aged 60 and older is also constantly growing. Sellers can take advantage of this trend, especially if their product matches this customer profile. In general, brands should be getting rid of stereotypes: the older generation and people with high buying potential are now solid users of smartphones and marketplace apps. For example, women who used to prefer shopping malls and brand stores now use marketplaces, as do people who used to buy household goods at small local markets. What other changes are noteworthy?

There has been a substantial increase in the number of people who do not check discounts for honesty if they trust the brand in general. This happens not because the reasonable consumption trend is no longer relevant. But very close to it, there is a trend for making faster purchase decisions. Taking time to choose and compare products, discounts and prices is considered a waste.

The conclusion is, it is important to improve customer service and loyalty programs to become customers’ favorite store where they buy without thinking twice.

Another extensive group of consumers continues to search for goods and brands to replace those that left the Russian market two years ago. They choose carefully, check and ask questions.

The bottom line is, it is important to adapt product pages to fit trends and consumer demands.

The customer journey for men and women may differ. In most cases, it is based on social gender stereotypes: women usually buy children’s goods, cosmetics, interior décor and clothing while men buy electronic devices, large household appliances, car parts, etc. However, there are also gender-neutral goods such as food, large furniture and creative hobby supplies. This is where their customer journeys may overlap.

The conclusion is, explore consumption barriers for your target audience. Every segment needs tailored creative marketing and personalized offers.

Trend 7: The ubiquitous AI

It is clear that most backend processes on marketplaces have long been powered by AI. But how can a brand take advantage of this tool? There are two aspects to consider: content and automation.

Every user scrolling a marketplace feed knows that they will eventually pick a product page with high-resolution video and detailed images. AI can handle photo and video content creation, including background editing and image enhancement. AI can be an excellent aid for smaller sellers. They don’t have to spend money on quality content plus it will be generated faster, cheaper and with more variety.
Sellers integrate AI services with their marketplace analytics tools to obtain extra data and calibrate their strategies. AI can also expedite and automate SKU processing. It is not difficult to manually replace a photo, edit the description or fix product features if you have up to 50 product pages. But what if a major seller with tens of thousands of SKUs wants to adapt their product pages? Hiring more product page managers is a failing strategy for the budget. The only solution is to automate the process and use scripts for automatic replacement.