As we prepare to kick off this year’s World Cup in Russia, a new study from ParcelHero reveals Russia has the largest online population in Europe; but Customs rules mean EU traders are being rolled over by China. Contributor David Jinks MILT Head of Consumer Research – ParcelHero.
As final preparations for the 2018 FIFA World Cup get underway, all eyes are turned to Russia. It’s also a potentially world beating e-commerce market, but the international delivery expert ParcelHero has revealed that the entire EU wins just 4 percent of Russia’s $5.1bn overseas e-commerce trade.
ParcelHero’s Head of Consumer Research, David Jinks MILT says: ‘Our new Study Kicking Off Shipping to Russia reveals that, just like football, trading with Russia is a game of two halves. In terms of business to business (B-2-B) trading, Russia is a great market. Around 600 UK companies have a physical presence in Russia and over 5,800 UK traders export goods there worth over £7.6 billion. But in terms of its fast-growing business to customer (B-2-C) e-commerce market it’s a far tougher game because of the draconian Russian customs checks on all courier shipments to private addresses.’
Says David: ‘It’s frustrating for UK online traders looking at this potentially fabulous post-Brexit market. British goods enjoy a real cache in Russia; but UK traders cannot get into the game. Almost any product subject to tax and duties being shipped by courier to a private individual in Russia from the west will be held and inspected by customs. This can take days and even weeks – even if it is not eventually rejected and returned to the UK at the trader’s expense.’
In contrast, sitting comfortably at the top of the table, China now accounts for 90 percent of cross border parcels, and China’s AliExpress has become the number one e-commerce platform in Russia – with twice as many visitors as the next major site. eBay trails behind in 8th and Amazon still further down the table.
Explains David: ‘The most popular goods bought online in Russia are clothing, footwear, tablets and mobiles – all of which are produced in China and a bargain in Russia. But, the ultimate nutmeg for UK traders is that China’s shared land border means about 95 percent of AliExpress’ packages to Russia can be sent by ordinary mail, escaping some of the most vigorous Customs checks on couriered international shipments.’
David adds: ‘In contrast UK courier shipments to private addresses in Russia face exacting checks because Russia’s tax system sees import taxes slapped on any individual in receipt of goods worth more than €1,000 or weighing more than 31kg in any one monthly period. When fully enforced the private importer must provide (deep breath): their full name; passport number; tax ID; address; purchase order; brokerage agreement; proof of payment; a guarantee letter that their monthly threshold is not exceeded, and any duty and taxes.’
Comments David: ‘That is an awful lot of red tape and a tight defence against western imports. It means while most couriers are happy to ship to Russian business addresses (though not to private buyers at a business address) they may well not ship to private households. Check with your chosen delivery company.’
David concludes: ‘Perhaps the final straw is that Alibaba has caught everyone offside by opening its own Russian-based Tmall B-2-C e-commerce site, thereby avoiding Russian customs duties and checks entirely. It’s a result that means British traders may legitimately claim ‘We was robbed’.