Understanding Russian E-Commerce and Seasonality
In this exclusive report, MotionPoint examines several Russian fashion websites, and provides an unrivaled perspective of how region-specific nuances—from culture to climate—can affect online sales.
Russia is an increasingly attractive international market for expanding e-commerce companies. The country has continued to extend its lead as Europe’s largest online population (over 80 million users as of June 2015, according to comScore), with rapidly-growing Internet penetration (61.4% in 2013, larger than Italy’s and China’s, according to the World Bank). Connection speeds are also peppy. (An average of 19Mbit/sec in Moscow.)
And since Russian is the proverbial lingua franca of many neighboring countries such as Estonia and Ukraine, companies can easily cater to those online markets, too.
But launching e-commerce sites in the Russian language for the Russian market isn’t enough to generate sustained growth. An understanding and respect of the market is required—from culture to climate. This is especially prevalent in fashion e-commerce, and the critical aspect of “seasonality” in a market such as Russia.
Seasonality—regular and predictable changes that occur throughout the year—makes a meaningful impact on an e-commerce company’s bottom line. Not understanding an international market’s unique seasonality often leads to missed sales opportunities and alienated customers.
For over 10 years, MotionPoint has helped e-commerce companies enter the Russian market, and optimize their localized sites for optimum engagement and sales. Along the way, we’ve learned a great deal about the market and its buying preferences. Seasonality greatly informs Russians’ shopping habits.
Let’s look at some data and analysis we’ve collected from operating several Russian sites for fashion e-commerce clients.
General Trends and Top Products
Russian fashion e-commerce traffic peaks between late December and early January and again in July. Of the two, winter sees the biggest traffic bump, accompanied by year-long highs in transaction, revenue, and conversion rates. AOV tends to be higher during the summer months, however.
For newcomers to the market, this post-holiday shopping behavior seems counterintuitive. Why isn’t there a robust pre-holiday spike in transactions, as seen in so many western nations? Russians celebrate Christmas on January 7; their holiday season usually lasts from December 31 until after January 7. Holiday shopping skews later in the year for this reason.
But why are AOVs higher during summer months, compared to holiday? The likely explanation: Russians have chosen to decrease the allocation of their holiday budget to themselves to only 13%, according to Deloitte’s New Year Spending Survey 2015. At the same time, Russians tend to not buy clothing as gifts for others, and instead prefer cosmetics, chocolates, books—and increasingly cash.
The takeaway for fashion retailers: target Russian customers preparing for summer trips. These consumers are ready to spend more on themselves, and offer more affordable gift-type items during the winter.
Digging deeper, trends emerge on the timing of specific product purchases. Using data we culled from creating a hypothetical cart of our sites’ Top 30 fashion items, we observed their performance over time. Highlights from the results:
Shoes & Seasonality
Not surprisingly, shoes show extreme amounts of seasonality, with only one specific product (a sub-$20 canvas shoe) appearing in our sites’ Top 30 carts between October and December.
Russians love buying shoes online, though. They certainly purchased a large amount from our sites between March and August (peaking in May), with an average of 7 shoe products always appearing in the sites’ monthly Top 30. Another region-specific trend: Russian women strongly prefer flats, and Russian men prefer stylish brown leather dress shoes.
Shoes from Western brands are especially popular in the market.
Interestingly, boot purchases don’t have a strong relation to the winter buying season. In fact, boots hardly made an appearance in our sites’ Top 30 products at all. Why? Throughout most of Russia, winters are very cold and the combination of snow, dirt, and deicing chemicals are extremely harsh on shoes. Russian consumers may think twice before purchasing a pricey pair of boots online, knowing that they may be unrecognizable by the end of the winter.
Predictably, flip flops purchases spike in May, which is historically the time when Russians make their summer travel reservations. Are these Russian customers making clothing purchases in preparation for a holiday in Egypt or Turkey, perhaps? (These are two popular international tourist destinations for Russians due to among other things comparably relaxed visa regulations.)
Headwear & Accessories
Due to climate realities and cultural norms, it’s unthinkable to brave a Russian winter without a hat. Indeed, our data shows Russians are extremely likely to buy knit hats in the fall and winter (between September and December, specifically), with the average of 5 different such products appearing in each sites’ Top 30. Here’s curious side note: holiday-themed hats are a big hit with Russians.
Russian shoppers also often buy inexpensive add-in items, with such products appearing in our sites’ Top 30 an average of 4 times each month. Lip balm is the most common of these accessories. It’s consistently one of the most frequently purchased items, regardless of season.
Here’s an interesting plot twist: Russians show little interest in buying expensive winter jackets online, even in the cold months of January and February. Instead, they show a much stronger preference to buy sweatshirts between July and September, and light jackets between August and November.
Why aren’t Russians keen to purchase winter coats from online retailers? Perhaps their higher prices are too steep for cost-sensitive consumers already choosing to spend less on themselves.
Further examination reveals that winter coats are among the most expensive products on these e-commerce sites. The ruble’s currently-weakened purchasing power may make such high prices for a single item unattractive. There might be retailer-specific factors contributing to this dissonance, too. An example: for one retailer, the majority of prices for winter-styled jackets fell into what the European Fashion and Textile Export Council calls the “premium” pricing segment (15% of the market). This pricing is in conflict the rest of the retailer’s offerings, which are positioned in the “medium” segment (25% of the market).
Alternately, shoppers could have trust issues with foreign products not proven for the colder Russian winters. This later point may be further strengthened by the growing preference for “Made in Russia” gifts (up from 62% to 68%, according to Deloitte).
Key Takeaways: Lessons for Retailers
As this market intelligence suggests, e-commerce companies aiming to launch Russian retail sites—and be successful in the region—must know such nuances of the market, and determine the proper times to promote the proper products. Special campaigns for trendy summer-style sneakers should be timed for the Russian summer. Campaigns for the fall and winter should also shift focus toward appropriate products (such as holiday-themed hats!).
And recall that Russians celebrate Christmas later than other countries, so time those holiday sales accordingly! (Note: We’ve seen that the Dutch and Germans do their holiday shopping the earliest of all Europeans.)
Companies should also optimize their conversion funnels to feature inexpensive add-in items throughout the checkout process. Special care should be made to make sure these products are also seasonally appropriate.
Many international companies have been successful in penetrating the attractive Russian market, with MotionPoint’s help. Understanding the seasonality of this market—and other global markets—is part of the larger solution MotionPoint provides.