Will Russia warm to eBay?

Marketplace Staff Apr 5, 2010

Will Russia warm to eBay?

Marketplace Staff Apr 5, 2010


Kai Ryssdal: Online shoppers in Russia have had a little bit more than a week now to get used to the latest Western import. eBay has set up shop in one of the last great untapped e-commerce markets. Russia has about 142 million people. Online sales there are worth just $5 billion a year. And there are some early signs eBay will be a hit, once it gets over the rough spots.

From Moscow, Peter van Dyk reports.

Peter van Dyk: The Russian online market offers huge growth potential. But Russia’s postal service is unreliable, and the public is suspicious of paying online, because hacking and identity theft are widespread. Even so, analysts say, eBay is wise to set up shop here.

DAVID FERGUSON: For international players like eBay it’s important to have an early mover advantage.

David Ferguson is the media analyst for Renaissance Capital investment bank in Moscow.

FERGUSON: The Russian Internet market as a whole has typically favored domestic or incumbent local companies. And the risk for eBay is that if you don’t go to the market quickly a local operator locks in the market and in the medium term it can then be very, very difficult to challenge their dominant market position.

With 200,000 visitors a day, the current market leader in online auction sales is Molotok.ru — Molotok is Russian for hammer.

Pavel Tokorov is the company’s chief operational officer. He says he welcomes eBay.

PAVEL TOKOROV: We’ll have another strong player here and the market is developing, and the interest of eBay shows that the market is in a way ready for big companies.

The relatively few Russians who do shop online also welcome eBay, but many say the new site won’t provide what they need.

MIKHAIL USPENSKY: Just translating the interface isn’t enough. eBay will have to offer the same level of service they give to buyers and sellers in the West.

Mikhail Uspensky is a project manager at a Russian IT firm. He has bought more than 100 items on eBay since 2001, mainly from the U.S., Britain and Hong Kong. He pays using Paypal with his Russian credit card, but the postal problems mean he’s not buying anything right now.

USPENSKY: Like many people in Russia, I’ve stopped buying for the moment. Sometimes, purchases are held up for more than three months. I just received something I paid for at the start of December last year.

The Russian post office blames the delays on hold ups with parcels at the border caused in part by the creation of a customs union with Belarus and Kazakhstan at the start of the year. eBay can’t do much about that, but it has a level of brand recognition that gives it a unique opportunity to take advantage of Russia’s developing consumer culture, which Molotok’s Tokorov says means more and more Russians have unwanted goods worth selling.

MOLOTOK TOKOROV: In U.S., in Europe, I think, people have enough items, enough goods, enough, I don’t know, inventory they do not need. In Russia it is not the way because the situation here was different for like tens of years, dozens of years. So now the situation is changing and people start to sell the things they do not need.

That means the market is bound to grow, and eBay may soon be in a position, alongside Molotok and several smaller rivals, to reap the rewards.

For Marketplace, I’m Peter van Dyk in Moscow.

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