In Russia, E-commerce is the use of computer networks as a medium for business transactions. Most transactions that are done electronically pass through the World Wide Web to reach the other party thus making the World Wide Web the main facilitator for E-commerce.

Development

The development of E-commerce in Russia has gotten a boost as the GDP in Russia has increased. The Moscow Times reports that the oil boom is driving the Russian e-economy as the IT industry increased 27 percent, 3 times the growth of the GDP.^1 The number of internet users is also playing a big roll. According to Comscore, Russia is ranked as the “fastest growing internet-audience in Europe” at 27 percent with 17.5 million visitors.^2 with France trailing behind. Though an impressive growth, when put in perspective with the total population of 141,900,000 it still has a long way to go.

Forms of E-commerce

B2C - Business to Consumer

The main problem with Russian E-commerce that causes many companies to be skeptical about operating within the Russian market is the lack of consumer adoption for purchases over the internet. Too many problems persist for consumers to partake in online transactions. An underdeveloped banking infrastructure which is tied to the fact that Russia has poor credit card penetration rates as well as a general distrust in retail banking. All due to the 1998 default that caused most Russians life-savings to be wiped out.^3 Most physical products that are bought from the internet and delivered to the consumer are paid for in cash at the door in order to avoid dealing with banks; However, many companies have sprungup to transfer money from parties. Another problem is that 60% of internet consumers are based in St. Petersburg and Moscow, leaving companies to neglect advertising and distribution in other parts of Russia.^4

B2B - Business to Business

Business to Business transactions are the most common form of E-commerce in Russia. Forms of Business to Business include distributor outlets and one-to-one transactions to small and medium sized businesses. The main form of B2B is online advertising. Just in the first half of 2008 online advertising grew 73% to $260 million then finishing up at the end of 2008 with $685 million.^6

Outlook

Many of the problems that persist within Russian E-Commerce are being addressed by the government. Russian E-Commerce is expected to get another boost with the advent of Electronic Russia. Electronic Russia is a program that has $2.4 billion being poured into by the Russian Government. Also coined as the Universal Telecommunications program, its goal is to provide internet access to every Russian area with a population over 500.^5 The second phase of Electronic Russia is suppose to make the government more transparent unveiling the information resources that the government has.

ZenithOptimedia predicts that online advertising spending will eventually reach $17 billion 2010 leaving no doubt that Russia will continue to triumph in the B2B sector.^6

Russian E-commerce as a whole is still considered to be an infant in its product life-cycle and the slow Broadband penetration rates and B2C adoption is proving its infantility.^4

references:

1. http://www.moscowtimes.ru/article/936/49/208369.htm

2. http://www.comscore.com/press/release.asp?press=2417

3. http://www.russiajournal.com/node/15056

4. http://www.ebusinessforum.com/index.asp?layout=rich_story&doc_id=9778&country_id=RU&title=Russia%3A+Overview+of+e-commerce&:channelid=4&categoryid=29&country=Russia

5. http://www.prime-tass.com/news/show.asp?id=425682&topicid=06

6. E-marketer report: Russia Online

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