Population of Russia exceeds 144 million in 2017 and GDP reached USD 1.5 trillion. Russia’s share in the world economy is 2.54% and in terms of GDP size, Russia is the sixth largest economy in the world after China, USA, India, Japan and Germany. Per capita GDP reached 25 thousand dollars in terms of purchasing power parity (Tradingeconomics.com). Russia, which ranks 38th in the World Economic Forum’s 2017-2018 Global Competitiveness Index, is grown by 2.2% in 2018 and shown its best performance since 2012. However, this year and in the coming years, the Russian economy is expected to contract as in other economies. The IMF estimates for 2019 and 2023 for Russia are 1.8% and 1.72%, respectively.
In Russia, solution for the problem of growth can be a digital economy. Digital economy has been developed very rapidly in the last few years. According to the Boston Consulting Group’s survey, Russia ranks 39th among the world’s economies in terms of economic digitalization. 80% of the population is an internet user, the number of online shoppers has reached 63 million and this number is increasingly rising. Additionally, the increase in the number of online consumers encourages the use of smartphones.
E-commerce revenues in Russia were $ 17 billion in 2018, and online retail sales are estimated to rise to $ 52 billion by 2023, according to the Morgan Stanley projection. Although it has a high penetration, the ratio of online retail sales in total sales varies between 3-4%. However, considering that the online consumer potential is increasing rapidly, it can be foreseen that this ratio will increase in the coming years. Although the development of e-government services is in its infancy, the proportion of those using public services has reached 14% and the percentage of those using electronic signatures has reached 4% (Rosstat, 2015).
Online consumers spend about $ 750 per year, and the most spending goods are home appliances and electronic tools. In home appliances and electronic vehicles, the percentage of online spending is 35% of total online spending. Clothing and shoes come in second place with 27%. Other products that consumers spend online in Russia include sports equipment, household products, health and care products and car parts. The rate of expenditures on these products ranges from 3 to 4% (ystats.com).
One of the problems encountered in digital economy in Russia is the problem of trust in e-commerce transactions. This causes 80% of consumers to pay in cash for online transactions. A very small percentage of online consumers prefer to pay by credit card (UNIDO, 2017). The top ten sites visited by consumers are Aliexpress.ru, Ozon.ru, Eldorado.ru, Dns-shop.ru, Mvideo.ru, Ulmasrt.ru, eBay.ru, Lamoda.ru and Citilink.ru respectively. The top 10 most popular sites are wildberries.ru, Ulmart.ru, Citilink.ru, Mvideo.ru, Eldorado.ru, Lamoda.ru, Ozon.ru, Exist.ru, Svyaznoy.ru and Kupvip.ru.
Additionally, cross-border e-commerce has developed very rapidly. One of the most important reasons for this is that international products in cross-border e-commerce are cheaper than the domestic market. Price differences push Russian consumers to make online purchases from abroad. In addition, the contraction in the Russian economy in 2015 and 2016 has been influential in the development of cross-border e-commerce. The share of cross-border e-commerce is estimated to be 14% in 2018. China, the European Union and the United States are the most preferred e-commerce places (E-commerce Foundation, 2017).
One of the disadvantages of Russia in terms of e-commerce is the lack of logistics services. Inadequate financing of e-commerce prevents the delivery services reach to economies of scale. At present, Russian postal services perform more than 50% of deliveries, but they do not have a service quality as developed countries. Companies are trying to solve the logistics problem by developing their own infrastructure (Morgan Stanley Research, 2018).
Foreign trade between Russia and Turkey gives more in favor of the Russian economy. The development potential of e-commerce in both economies is quite high. In this respect, the development of cross-border e-commerce transactions will benefit both countries. With Trade Action Plan between Russia and Turkey, cooperation/collaboration can be strengthened and cross-border e-commerce can carry advance levels. The most prominent pioneers of cross border trade will be SMEs and entrepreneurs who are passionate about e-commerce.