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Internet Shopping
April 27, 2006 11:51

Internet shopping emerged in Russia around 1995 and developed very slowly for a couple of years. In the year 2000, there were just 5 million Russians living in the virtual village, and just $260,000, or 5.20%, actually buying things via the Internet. Daily attendance stood at 80,000 people, with just a dozen sites clearing the 1,000 visitors a day hurdle.

Back then, in 2000, the market totaled 40.3m but was predicted to reach some $671m in 2005 generated by 2.36 million people out of a 10 million population of the Russian part of the web.

The turnover forecasts were one year behind, with 2005 grabbing as much as $1bn, according to the data provided by some of the shops to the National Electronic Commerce Association. Independent polls by the association return a higher figure, $2.6bn.

Other stats were even less accurate. Last year, 10 million Russians, or half the Internet audience, benefited from Internet shopping, each spending some $634 on average.

In terms of product categories, the 2000 figures give the lead to PCs and PC-related products (55%), followed by books, CDs, DVDs (28%), foodstuffs and household appliances (17%).

Back into the future. The 2005 tally indicates the sharpest demand for consumer electronics (39%), whereas PCs are only second (14%), followed by games, toys, children's goods and presents (10%). Home goods have an even share of 8% with spare car parts. Trailing one percentage point behind are books, newspapers, magazines, CDs, DVDs, etc. Cosmetics were given the biggest boost soaring 1,000%, from $0.8m to $8m over a year.

Internet shopping blossomed not only in the Business-to-Consumer sector (B2C), but also in the Business-to-Business (B2B) segment. In 2005, this market tripled to $1.3bn, with 62% taken up by energy companies.

The main motivation for the Internet shoppers lies with a cheaper price, in most places, and less fuss. A thirty per cent difference in price may prove a better driver than all the ads by the traditional retail stores.

Many customers, previously put off by numerous scathing reports allegedly sponsored by traditional stores, have now taken a fancy to an easy and comfortable way Internet shopping offers.

Of course, there are goods you would never buy by a picture on a site, such as a car or perhaps clothes, which you have to try anyway. But there are still, and there will be more, benefits for purchases done via the Internet.

Meanwhile, analysts say it is none the less expensive to run a web shop. Software, promotion will cost you hundreds of thousands dollars, leave alone traditional expenses, like salaries, couriers' transportation, etc.

Despite the toughening competition, Internet shopping is likely to continue to grow. Leonid Reiman, Russia's Minister for Informational Technologies and Communications, expects new services, like selling information or entertainment might come around in 2006. Mr Reiman pins his hopes on new legislation to be enforced soon regarding digital signature, e-commerce, etc. 



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