China’s second largest online retailer JD.com (Jingdong Mall) and Russia’s biggest delivery company Russian Post have signed a deal making it the first Russian firm with authority to directly deliver Chinese goods inside Russia.Russian Post will deliver goods from en.jd.com to locations within Russia, according to the company.
“The addition of Russian Post, the largest logistics company with the widest network of branches across the country, as a JD.com authorized carrier will allow us to ensure prompt and reliable delivery of goods to Russian customers,” said Victor Xu, CEO of JD.com’s international business unit.
Russia is the New Frontier For China’s Ecommerce Expansion
Russia is an important market for JD International and the new agreement will “highly improve the shopping experience of Russian customers on en.jd.com,” the Chinese retailer says JD.com has unveiled plans to become an e-commerce leader in the Russian market within five years. It has already launch a Russian-language website and has already signed a delivery contract with the Russian logistics operator SPSR Express.
“At the beginning we plan to provide Russian consumers with the best Chinese goods. And later we want to present Russian goods to the Chinese and other markets, which we will gradually conquer,” said Xu.
Russia’s Domestic Ecommerce Industry is not as Developed
A report by East West Digital News titled “E-Commerce in Russia,” found that in 2014, total domestic market size for Russian online physical goods reached 560 billion rubles ($14.5bn USD) and that 26 million Russians shopped online at least once, generating an estimated 148 million orders.
Total domestic market size for Russian online physical goods reached 560 billion rubles ($14.5bn USD)
Although Russia’s e-commerce industry is growing, it still has not reached the level of development that China’s online retailers have and would seriously benefit from the variety and quantity of new products made available from China. According to the report, only 8 retailers generated more than 10 billion rubles (approximately $314 million) through online sales in 2013. The biggest of Russian online retailers included Ulmart.ru, Svyaznoy.ru + Enter.ru, Otto Group (otto.ru, bonprix.ru, quelle.ru and others), Wildberries.ru, Citilink.ru, Exist.ru, Ozon.ru + Sapato.ru and IQ One Group (e96.ru + sotmarket.ru + utinet.ru). Those companies’ combined net revenue made up 64% of all sales of the Top 25 market players.
Chinese Products are Already Being Sold in Russia
Many of those online retailers already sell Chinese electronic goods such as Huawei phones and Xiaomi tablets. For instance, on popular Russian ecommerce site Ulmart.ru, the Huawei Ascend Y550 is sold for 7,550rubles or $118 USD and the Xiaomi Mi Pad 16gb is sold for 15,990 rubles or $249 USD.
JD.com is not the only Chinese ecommerce retailer to reach Russia; Alibaba, China’s largest ecommerce retailer, has also announced plans to sell Russian goods in the Chinese market through its online store AliExpress. in June of 2015, Alibaba opened an office in Russia to get closer to one of its strategic global markets. AliExpress is currently the most popular online shop in Russia with an estimated 15.6 million customers each month. They also sell Chinese premier high-tech products like Huawei and Xiaomi and ships to internationally to countries like the US, Russia, Australia, Brazil, etc.
The extension of Chinese online retailers in Russia, which will soon include the influx of Chinese high-tech goods on the Russian market, may be the first step to China’s ascendence to international ecommerce and high-technology dominance. China may have found one way to conquer the world–one online purchase at a time.