Russia

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Payments

One of the most important points to note from the outset is that - in contrast to many other markets- within the Russian Federation cash on delivery is by far the most commonly utilised payment method for ecommerce transactions involving physical goods, though its proportionate share is slowly decreasing. Though estimates vary, some 80-95% of all such transactions are paid for using cash on delivery, and putting mechanisms in place to facilitate this is a must when trading online in Russia. This can seem something of a headache for purely off-shore retailers; the absence of a local agent on the ground in the territory can significantly restrict the potential reach of an online shop’s appeal, particularly if that shop has no brand recognition in Russia. Despite some initial hesitancy, overall many retailers into Russia report that they have discovered more or less satisfactory ways to cope with the demands of cash on delivery, unhindered by the method’s reputed negative effect on returns and extra resource strain. With sufficient attention and understanding, then, this peculiarity of the Russian market should not dissuade a digital entrepreneur.

Cash on delivery has retained its foothold in the Russian market for a variety of reasons, both historical and current. A long-standing wariness of distance sellers, electronic payment mechanisms and providers and financial institutions persists – particularly in the regions- meaning that Russians are very hesitant to disclose personal and financial information online for fear of being defrauded. Russia additionally still suffers from a relatively undeveloped interbank network and a somewhat precarious supply chain, and it is not uncommon for packages not to arrive at their destination, lost among the sheer volume of dispatches. Added to this is a perceived lack of transparency with regard to the actual availability of a product, which can entail long waiting times and/or the sending of goods not matching original product descriptions. For these reasons, it is not difficult to see why Russian citizens choose cash on delivery as their payment option of choice. These considerations are also important when it comes to examining other popular online payment methods in Russia, many of which have been developed with these consumer concerns in mind.[1]

Domestic and Preferred Card Schemes

The most commonly used electronic money service in Russia was reported to be Yandex.Money, with 22% of survey participants reporting the use of this digital wallet in the allotted timeframe. This was followed closely by Qiwi with 21% participant use. The study examined studied brand awareness amongst respondents of these same e-Wallet providers, and Yandex.Money again came out on top.[2]

Credit card penetration in Russia is fairly low, and consumers prefer to use e-wallets such as Yandex or WebMoney which can also be topped up at cash terminals such as Qiwi. A popular payment method is the Virtual Visa card from Qiwi. The service allows customers to deposit cash at any of Qiwi’s terminals all around Russia and receive an SMS with Visa card details that can be used online to make a deposit. [3]

Alternative Payment Methods

Despite the high penetration rate of debit cards in the Russian Federation, as a whole bank cards are not used overwhelmingly either online or of ine for making purchases. Instead, a significant proportion of card holders essentially use them to withdraw cash from their bank accounts after receiving their salary; this activity accounted for an astonishing 92% of bank card transactions in 2013. TNS’ 2014 study (see above) recorded that 56% of respondents surveyed had used bank cards as an electronic payment method in the six months preceding the survey – not a particularly impressive statistic in itself when compared with other European markets – but this figure does not paint an entirely accurate picture as it is common knowledge that bank cards are more frequently used for transactional purposes in larger Russian cities (the homes of TNS’ survey respondents). The proportion of Russian consumers using bank cards to make purchases online in the country at large, then, is much lower than this figure, and when considering the purchase of physical goods it is lower still. We have also seen that Russia’s credit card market remains largely underpenetrated.[4]

Digital Invoicing and SMS Payments

SMS payments – where products or services can be purchased directly via a text message sent from a mobile phone- are another popular method of conducting online transactions within the Russian Federation, and many large Russian mobile operators such as Beeline, Megafon, MTS and Tele2 offer their subscribers the option to make online payments via this method. SMS payments work much like standard SMS: to make a purchase of a product or service, the buyer will sent a text message to his mobile payment provider. This provider will then clear the transaction between the buyer and seller, and the cost of the purchase will be added to a monthly phone bill or deducted from a pre-paid balance. By using SMS payments, mobile phone users can securely, quickly and safely pay merchants for the provision of goods or services, whether they be physical or virtual.

It is again important to note, however, that SMS payments are still used relatively infrequently for the purchase of physical goods; trust in electronic payments is low when compared with other areas of the world, and in no area is this wariness more pronounced than in mobile. Despite this hesitancy, though, such purchases are growing. Experts in the industry have reported certainty that these payments will become an ecommerce standard, and they will be an important factor contributing to the increase in the volume of purchases made through mobile terminals.[5]

Cash Payment Terminals & Mobile Point-of-Sale

Cash payment terminals are and will remain incredibly popular in the Russian Federation, especially when it comes to payment for services and virtual goods. However, again this payment method is underutilised directly for the purchase of physical goods. In 2013 alone, non-banking payment terminals handled RUB 850 billion (USD 18.6 billion) in payments. Importantly, however, the use of these payment options in Russia is declining to make way for more convenient options, and the number of installed terminals has actually fallen. These terminals are touchscreen ATM-like self-service devices installed throughout Russia, and are easily accessible in public places. They provide users witha simple and safe way to deposit money into their e-Wallets (Yandex Money, Qiwi, etc.), pay mobile phone or utility bills and pay for purchases. The largest non-banking payment terminal providers in Russia are QIWI, CyberPlat and ElecsNet. Interestingly, even PayPal - an international online payments company that launched in Russia in 2013 - now gives Russian customers the opportunity to pay by cash as well as card.

A mobile point of sale (mPOS) is a compact device that receives payments made by bank card at any place or time, and is a mechanism that can be used by a courier to receive cash on delivery – an important consideration for any e-Retailer into Russia. To receive a payment, the courier presents a smartphone, tablet or dedicated wireless device programmed with a special payments mechanism to the customer, who will insert a bank card into the device to facilitate payment. The programmes and mechanisms necessary to receive payments via mobile terminals can be supplied by companies such as 2can, Lifepay and Yandex Payment Solutions.[6]

Customer Experience

Unquestionably, when expanding into Russia an e-Retailer should examine and provide for the payment method most commonly used by consumers for the purchase of goods in the location. Ultimately, the payments market in Russia is still developing and great change in the area is inevitable. Providing popular options will allow you to meet the payment expectations of any Russian consumer. The more payment methods you allow for, the more success you will have in this location. Indeed, according to Yandex.Money, the use of popular online payment methods helps e-Shops to increase successful orders by 10-15%.

The use of electronic payments systems will continue to increase in Russia, particularly with government encouragement favouring the development of ecommerce in the country. Online payments systems are integrated by State institutions, such as the Tax Service - , public transport providers and law enforcement (enable users to pay taxes, travel cards and nes), with increased frequency, and these projects help to increase the number of Russians who are aware of online payment methods and enhancing their overall con dence in these systems. New payment methods (such as recurring, one-click and mobile acquiring) - now just emerging – will likely develop and improve exponentially as a result of increased demand and knowledge.[7]

Payments Regulation

Research should be done well in advance of launching a digital shop - the facilitation of payment is an area which can make or break success in a region and as an online merchant, one cannot just enter the Russian market with a ‘basic’ web counter and a Russian bank. It is important to offer a tailor-made solution. Should it be required, varying degrees of third-party assistance, for example through the services of a specialised payments service provider, are available.[8]

Local entities

The foundations of the Russian banking system are provided by the territory’s federal laws, and the banking sector is subject to stringent regulation, though this has been relaxed somewhat in recent years. Financial institutions in Russia have to meet mandatory legislation requirements, as well as comply with numerous CBR instructions and regulations.

Butt the Russian banking sector is dominated by State-owned financial giants such as: • Sberbank; • Vnesheconombank (VEB); and • VTB Bank; • Rosselkhozbank • Gazprombank

Russian non-residents have the ability to open and operate ruble and foreign currency bank accounts in the Russian Federation, so long as this is done with an authorised bank. Payments in foreign currencies are generally permitted without restriction between non-residents, though payments in rubles between such parties are only permitted through accounts opened in Russian banks. Transactions between residents and non-residents involving payments in rubles and foreign currency can currently be conducted without limitation, though there are procedural requirements for such operations. Foreign currency can be imported freely into the Russian Federation by residents and non-residents alike. In the case of individuals, both categories must le a written customs declaration when importing currency in cash, travellers’ checks or securities if the value is more than USD 10,000.

The situation when it comes to exporting foreign currency in this location is a bit more restrictive. Both resident and non-resident individuals can export foreign currency up to a value of USD 3,000 without a customs declaration, and up to USD 10,000 with a declaration. Exports of currency over this amount are additionally permitted, though further procedural and documentary requirements must be adhered to. It should be noted that the CBR closely monitors currency transactions involving the import and export of goods between residents and non-residents using transaction passports. Thus, certain documents relating to such transactions must be filed with the bank. This is quite a complex area and is subject to frequent change, particularly in light of the 2014/2015 economic crisis which has made stricter currency controls a definitive possibility. It is thus recommended that professional advice is sought in this area.[9]

Mobile payments

Overall, mobile device traffic only constitutes around 7% of all traffic to Russian websites, and so far only 21% of surveyed smartphone users living in Russian cities with a population of 100,000+ have made purchases via their phones, although the proportion increases in Russia’s largest cities, Moscow and St Petersburg, to 23.6% and 23.9% of smartphone users respectively. Interestingly, at present Russian consumers spend a comparatively small proportion of their mobile browsing time shopping online. TNS in their 2013 research discovered that most people in Russia use their smartphones for social networking, messaging and search, whereas only around 10-15% of surveyed respondents used their smartphones for buying or ordering products online.

It is important to note, however, that almost 40% of Russian respondents surveyed by TNS stated that they researched information about products using a smartphone before buying the products offline or via another device, and so –even without the promise of dramatic future m-Commerce growth – this is a channel that shouldn’t be ignored by a prospective e-Retailer into Russia. A report entitled ‘The Russian m-Commerce Market in 2014’, presented by the marketing agency, has additionally indicated that those Russian consumers who have purchased tablet devices are much more likely to complete the online order process using those devices than those shopping on smartphones. The report stated that around 48% of tablet users made purchases of goods and services via these devices in 2014. Sales of tablet devices are increasing dramatically in Russia, so m-Commerce sales in the territory will certainly increase as a result. Of course, as is the trend across the globe, a main driver of m-Commerce in Russia will be an increase in smartphone and tablet penetration amongst Russian citizens, and we can only expect order numbers to increase as a result.[10]

Logistics

One of the more frequently cited concerns amongst international e-Retailers looking to expand into Russia centres around the physical delivery of remotely purchased goods to Russian consumers. Russia certainly boasts a force to be reckoned with, even when it is only its sheer expanse being taken into account. A population of 143.7 million people spread across a surface area of 17,075,000 km² presents a daunting task both in time and expense, particularly when 11 time zones, two continents, and a diverse range of consumer expectations for delivery are adding to an e-Merchant’s complications. Russia is the largest country in the world, its European and Asian portions individually still dramatically outranking their continental counterparts in size. In 2014, the World Bank allocated Russia 90th place out of 160 countries in its International Logistics Performance Index, a relatively poor score even when a surface area the size of Pluto is taken into account. The ranking - which includes customs, infrastructure, international shipment, logistical competence, tracking & tracing and timeliness - certainly reflects Russia’s overall status as a nation whose ecommerce market is still in its infancy, though it is important to note that it is developing quickly. Progress is aided by the fact that many regions of Russia have excellent access to sea, road and rail routes, and the territory is home to several major airports. The spectacular growth of Russian ecommerce has created increased demand for suitable B2C logistics providers -not in the least as an alternative to the Russian Post. At a minimum, an e-Retailer should scope out a suitable partner who can effectively cope with Russia’s vast distances and climate and temperature changes.[11]

Shipping Considerations

Shipping costs within the Russian Federation can be noticeably higher than those encountered in Western Europe, largely due to the reality that goods must often be transported over long distances. Where goods are made available for purchase in the Far East of Russia, they must almost exclusively be delivered by airfreight, and temperature-proof packaging will in many cases be required, particularly at certain times of the year. Indeed, parts of Siberia are recorded to be some of the coldest continually inhabited places on Earth, with temperatures dropping as low as -60oC in the winter. The proper packaging of goods can thus be a major consideration whether goods are coming from overseas or from a warehouse within Russian borders.

As would be expected, the costs and timeframes associated with delivering consumer goods in Russia differ depending upon the logistics solution selected by an e-Retailer. The Russian logistics market has some key and dominating players, and one of the major Russian natural monopolies is the Russian Post. During the first six months of 2014, the most popular delivery method in the territory was courier delivery, 33% of which was carried out by the Russian Post. Despite its market share, however, the Russian Post leaves something to be desired both in service and reputation. One of the major stumbling blocks identified with the Russian delivery system as a whole is the immaturity of the working process of the Russian Post, which does not meet world service and delivery time standards despite being one of the more popular logistics solutions.

Although historically alternative logistics providers in Russia had been somewhat unappealing as viable delivery options for distance sellers, this area of industry has developed impressively in recent years, undergoing competitive modernisation. Indeed, in 2012, of the 108 million packages shipped across Russia, half were shipped by alternative companies to the Russian Post network. A variety of new providers have appeared on the market, offering a higher quality of service and shorter delivery times to large and mid-sized cities than those offered by the Russian Post. Fees charged for the use of such services - which used to be signi cantly higher than those charged by the Russian Post - now tend to be competitive, though it is important to note that they are by no means negligible. The Russian Post’s offering has thus become less popular in those areas that are also covered by its competitors.

One alternative commercial end-carrier operating in the Russian Federation is certainly worthy of note here. SPSR covers deliveries to around 98% of the Russian population, and the remaining 2% is serviced by EMS, the premium service of the Russian Post (though, impressively this 2% of the Russian population is spread around roughly 30% of Russia’s landmass). SPSR offers competitive delivery times and enhanced parcel tracking mechanisms to its consumers, as well as up to three delivery attempts in total. After an initial failed delivery attempt, a calling card will be left at the specified delivery location, explaining the process for re-arranging delivery or picking up the parcel from a customer’s local SPSR office. [12]

Russia’s more remote regions

It is no secret that the problems associated with delivery in the Russian Federation are greatly exacerbated when it comes to delivering goods to Russia’s more remote regions – areas which consist of all locations not covered by the underground zones of Moscow and St. Petersburg. On the whole, the further away from these ‘capitals’ a customer lives, the more likely it is that an e-Retailer and/or their delivery partners will have to contend with ailing road and rail infrastructures, as well as a host of other problems often related to weather condition and temperature. Fortunately, however, consumer expectations for delivery in the regions of Russia do not directly correspond to those of their counterparts in these capitals; Russians outside of Moscow and St. Petersburg are willing to wait extra days or weeks for their deliveries, though it is important to note that as infrastructure improves and delivery options expand, their patience and flexibility is sure to decrease. As has been noted elsewhere in this Passport, whilst historically the highest volume of ecommerce orders have come from e-Shoppers living in Moscow or St. Petersburg, this is now starting to change and the regions are coming out on top. Adapting delivery options to cater for these [13]

Infrastructure

Whilst the economic recession in Russia has unquestionably made this market a complex choice for an e-Retailer at present, this financial cloud certainly has a silver lining for international retailers into the territory. Though the fall in value of the ruble and associated increase in exchange rates have made foreign products more expensive for Russian consumers to purchase, many costs of broaching the Russian digital market have correspondingly decreased for a foreign e-Retailer. Web development, localization, PPC and SEO – amongst other things – are all offered in rubles by Russian companies, and these services now cost a fraction of their former price for international companies. What’s more, PPC rates have dropped even in RUB prices as competition in the market has decreased. Those who make timely use of these opportunities to establish a presence in the Russian marketplace will likely reap the bene ts of expansion once the Russian economy has stabilised. After all, prior to the financial crisis, Russia’s personal consumption levels led the BRIC countries, with 60% of pre-tax income being spent on shopping - the highest rate in Europe.

Overall, though some ecommerce companies have reported their sales volumes stagnating or decreasing as a result of the economic downturn in Russia - a trend which might continue in the short-term - experts forecast that impressive ecommerce growth will resume after the crisis. It is, after all, undeniable that the full potential of the Russian ecommerce market is yet to be tapped. As highlighted elsewhere in this Passport, in the middle and long term, growth will be fuelled by: - Growing broadband and ecommerce penetration in Russia’s regions; - The increased knowledge and use of a variety of digital payments methods; - The Russian fulfillment infrastructure reaching maturity. With reduced delivery costs, the scope of ecommerce in Russia will extend to cheaper product categories and will be made a viable option even to small cities and remote areas.

[14]

Setting Up Physical Warehouse

A physical presence in Russia allows for cheaper delivery, more favourable returns options and shorter delivery times. Establishing a physical presence in the country can take place in a variety of ways, and some popular methods with regard to logistics are set out below.

1. A retailer can set up a warehouse in Russia in which to store his products. This cuts down on lengthy international delivery times and avoids the cost and procedure associated with shipping individual units through customs. Should he choose this option, an international retailer should ship his items to the Russian Federation in bulk, though in this case a range of separate complications and considerations arise. This option - of course - doesn’t make financial sense if only small quantities are being exported cross-border, as the costs will outweigh the benefits. A retailer can also contract with a third-party warehouse within Russian borders, which bypasses the need to set up a Russian legal entity.

2. Manufacturing facilities can also be established within Russia if consumer demand grows to this level, though the precise details of this are beyond the scope of this Passport. Should resources allow, an e-Retailer into Russia additionally has the option of investing in his own logistics system across the territory. Many pure play online retailers such as Enter.ru, Lamoda.ru and Ozon.ru have deployed their own warehousing and delivery processing facilities and others, such as multi-channel retailers Otto and Svyaznoy, have developed existing logistics systems to serve the growing needs of their commerce branches. Ozon, colloquially known as the Russian Amazon, is a good example of a company that has developed its own, complete logistics network. Indeed, the reluctance of Russian consumers to make online payments has required Ozon and many others to invest in company-owned fleets of delivery trucks to deliver goods, from which the drivers then typically collect payment on delivery. The company KupiVIP takes this a step further, waiting until the customer has checked his purchases and, where necessary, taking the goods back if they are rejected. An online retailer looking to target Russian consumers should ultimately take note of how similarly-placed companies organise their internal Russian delivery infrastructures, and attempt to adapt to this market accordingly. Establishing a physical presence in Russia can be game-changing for an international e-Retailer into the territory; the associated logistical advantages can give a retailer a much-needed edge against his competitors, and mean the difference between Russian consumers buying from an intentional e-Shop or abandoning his basket in favour of cheaper, local options. [15]

Import Duties

VAT

VAT is imposed on all goods imported into Russia and is also applied to the sale of goods, work and services. According to recent amendments to the Tax Code the same VAT regime applies to goods and services that are sold in or imported into territories under Russian jurisdiction e.g., artficial islands and drilling platforms on the continental shelf. Under the new rules, certain types of works (services) provided for the purposes of geological study, exploration and development of hydrocarbons on subsoil plots located on the continental shelf, exclusive economic zone of the Russian Federation and (or) the Russian sector of the Caspian Sea bed are subject to Russian VAT.

The tax period for VAT for all taxpayers and tax withholding agents is a calendar quarter. Starting from 1 January 2015, as a general rule taxpayers must pay VAT in equal instalments not later than the 25th day of each month following the reporting quarter. Current legislation imposes a VAT rate of 18% on the sale of most goods, work and services. A lower 10% rate is applied to limited types of goods, such as pharmaceuticals, medical equipment, and certain food products and periodicals.[16]

Recent and Upcoming Economic and Political Events

The official rejection of the initiative to change threshold limits for duty-free trade. It had been anticipated that from January 2015, a new, lower, duty-free threshold would be put in place on imports into the Russian Federation, ultimately negatively impacting many foreign distance selling companies. At the date of publication of this Passport, the threshold of €1,000 PCM remains in force (see Customs Clearance Procedures).

As of 1 July 2015, the cities of Moscow, St Petersburg and Sevastopol are anticipated to have an additional trading fee imposed for traders who operate in stationary trade facilities. After this date, this trading fee may be imposed in additional municipalities.

The EEU will continue to have in uence on import tariffs to both Russia and other Union member States, and changes in this area are anticipated. Importantly, the Union’s commission is currently working on the introduction of harmonised de minimis duty threshold limits for its member States (see Customs Clearance Procedures), an action which could not only reduce the frequency of more expensive Russian consumer purchases from foreign online shops, but also remove the possibility of a non-member international entity bringing goods into Russia through one of the other member States, ultimately benefiting from a nation’s formerly more- favourable threshold limits.

Russia is additionally a member of many international treaties that regulate cross-border trade, including the Vienna Convention, which governs buying and selling between its signatories. In accordance with Russian legislation, if an international norm and a local norm conflict, the international norm prevails. [17]

Marketing

The mobile advertising market in Russia is growing quickly — according to data from eMarketer, in 2015 its growth increased by 120% to total $430 million. The numbers are impressive and totally predictable — of the 82 million internet users in Russia, 50 million are mobile internet users, and 11.8 million only go online from their mobile devices (10% of the country’s population and 14% of Runet users).

Despite these impressive statistics, the mobile advertising market in Russia is lagging behind the global market: as of the end of 2015, global investments in mobile online marketing totaled $50 billion, and by 2018 they will reach $114 billion and make up 50.2% of all investments in online marketing (according to data from ZenithOptimedia). [18]

Analysts are continuously emphasising the importance of content marketing in the Russian Federation, indicating that it is the most effective tool in bringing a retailer’s website to the forefront of organic searches, helping them and new customers and build a loyal audience. As the Russian internet age moves forward, the market will continue its shift to digital marketing tools as they have proven more measurable and easy to manage than their traditional alternatives. The 2014-2015 Russian nancial crisis will additionally drive the prices of advertising and internet service agencies down, so it’s a great time to test the water. Overall, internet marketing in Russia will likely prove to be a relatively cheap and profitable investment.[19]

Effective Approaches to Digital Marketing

In terms of visibility to consumers, the three most effective and popular methods of improving an online shop’s digital exposure in the Russian Federation are:

Organic search via search engine optimisation (SEO)

Of the three approaches listed above, directing organic traffic to an online website via keyword advertising is a financially appealing and decisively targeted option, and it has proved successful in practice. In terms of overall return, however, it is slower and arguably less effective than the stated alternatives, and the risks associated with this option are greater due to frequently changing web algorithms. There are essentially two major players in the search engine market in Russia: Yandex and Google, which boast market shares of 60.5% and 29.7% respectively. Importantly for an online retailer into this territory, in recent years Google has been increasing in popularity and Yandex’s market share has been declining as a result.

Both of these search engines operate in Russia via very developed algorithms, and a prospective e-Retailer into this territory should plan accordingly and expect the same level of SEO sophistication as would be encountered in Western markets. If your website is in English, the chances of your online shop or product appearing in an organic search in Russia are low unless you have a very niche offering and there are no or few corresponding links in Russian. This is a particularly important consideration as appearing organically on search engines is a huge driver of Russian customers to foreign online shops.

Website analytics play an important role in an e-Retailer’s marketing strategy generally, but it is also worth highlighting that these same analytics contribute to a website’s positioning on domestic search engines. These Search engine algorithms are designed to display a hierarchy of websites with particular preference for pages that attract more consumer time, and e-Retailers looking to improve their digital visibility in the Russian Federation should make use of Yandex’s ‘Yandex Metrica’ and Google’s ‘Google Analytics’ to evaluate their search engine performance. These analytical tools further allow retailers to examine the performance of their online shops by providing a means to analyse customer behaviour, allowing an e-Shop owner to see his webpage navigated by consumers through the consumers’ eyes. This allows him sight of what his customers are clicking, which areas of particular pages attract the most interest and typical customer scrolling habits. Yandex additionally has several unique features for SEO specialists that can prove invaluable when building digital strategies in Russia. WORDSTAT - a word selector tool - will not only help e-Retailers and the right keywords for their SEO activities, but will also display the number of search requests for that specific word/phrase by region and time period.

Organic search via SEO undeniably offers a valuable driver of website traffic, both within Russia and abroad, and it’s important to remember that search engine trends in Russia are consistent with global ones. e-Retailers should therefore take note of certain occurrences across their international expansion initiatives, for example the fact that search engines favour interactive websites - those that engage consumers through mechanisms like commenting upon or ‘liking’ aspects of webpages, or through the embedding of videos. Ultimately, the hierarchy of search engines is dif cult to manipulate, so fresh, multimedia and interactive content in Russian, as well as content relevant to search requests, are vital component of any e-Retailer’s offering.[20]

Pay-per-click (PPC)

As with many jurisdictions, within the Russian Federation Google AdWords is a well-known and commonly-used marketing tool. Yandex offers a similar PPC marketing option - Yandex Direct - which together with the reputation of the search engine has achieved considerable success and popularity. These two major tools can form the backbone of an e-Retailer’s PPC strategy in Russia, though there are additional options on the market. Competitors, however, play a comparatively minor role. When putting together a PPC strategy for Russia, an e-Retailer looking to launch a brand presence in the location should always check the price and competition of his selected keywords in both major search engines in order to get the most from his marketing budget and PPC campaign.

Prices and customer conversion rates vary across both tools, and the extent of this largely depends on the state of the market and consumer preference. Often, an e-Retailer can make signficant savings on one specific keyword simply by relocating his PPC budget from one search engine to the other. There are additionally solutions on the market that allow for automatic management of a PPC campaign with several search engines; these can often maximize the benefit of such endeavors, but come at an additional cost. Pay-per-action (PPA), retargeting and other digital tools are also available options, and Yandex leads the way in contextual advertising in the Russian Federation in terms of overall spend.[21]

Media advertising, including digital media

Shoppers At present, there are only around 8.5 million mobile shoppers in Russia, and Russian consumers spend a comparatively small proportion of their mobile browsing time shopping online. Instead, social networking, messaging and search functions are typically preferred, though Russian consumers often research goods online using smartphones before making purchases via alternative means. [22]

When broaching any market, it invariably makes sense to examine your newly targeted customers: what are their particular preferences and behaviors? How do they compare to your home market and other consumers around the world? Russian consumers are typically regarded as young and impulsive shoppers, who, on the whole, were exposed to international brands fewer than 20 years ago. They are largely very brand- oriented, especially when the brand in question is reputable, luxury and international. Despite this prevailing reputation, however, it is important to note that Russian consumer demographics are changing somewhat. As the digital age moves forward, the typical Russian internet user is getting older – in fact, Russian broadband penetration rates grew in 2013 largely as a result of Russian citizens aged 55+ beginning to access the technology. This is at present the largest age group, making up 37% of the Russian population, though currently only 8% of them are using the internet. It seems likely that as time goes on, an increasing proportion of this age group will be purchasing products online, both due to the internet generation growing older and older generations adapting to changing technologies. Prospective e-Retailers should take this into account when planning longer-term marketing and branding approaches.

When compared with their European neighbors, Russian consumers of various income brackets are inclined to spend a much larger proportion of their disposable income on high-end clothing, travel, and food. This is partly due to the fact that Russian citizens are typically less willing to invest and save than their European counterparts, as Russian history has taught them that these are potentially risky options. In recent decades, modern Russia has felt the strain of a number of economic crises that have devastated the personal savings of families and engendered a general mistrust of banks. Any surplus income is thus generally spent on consumer goods. Russian consumers are also, on the whole, very hesitant to provide credit/debit card information and other personal details online for fear of being spammed and defrauded. This is due to a number of factors, not least of which is past experience; history has witnessed a culture of Russian citizens feeling cheated – not just out of funds for sub-standard or non- existent goods, but by social and nancial institutions. Trust in the Russian infrastructure is severely lacking, and the Russian legal system is not regarded as robust enough to protect the consumer, through actions are being taken to improve this and heighten trust in the domestic market, as well as in State protection. During the 1980s and early 1990s – following the Soviet Government but before the real emergence of the Russian market economy - counterfeit products held quite a substantial market in Russia. Consumers were frequently fraudulently parted with their money, and repercussions for selling imitation products were negligible; consumers constantly had to be cautious about all aspects of a transaction – from quality to price and return - or they would be vulnerable to suffering losses.

This atmosphere of mistrust still exists within Russia today, with the counterfeit market by no means extinguished. Any retailer looking to trade in Russia should understand this enduring apprehension on the part of the consumer. The more indication of security and safety a retailer offers on their website, the more success they are likely to have. Reassurance of security can be more important than price, and at any rate, if goods imported into Russia are judged to be counterfeit and without proper documentation or licence, they will be con scated on the border by the Russian customs authorities. Russian consumers, like those in most markets, are price- conscious, not wanting to pay out unduly for any one item. These behaviours have been reinforced by the internet making it far easier for consumers to compare prices online, something Russian consumers were historically less likely to do in bricks and mortar shops. These customers are, however, willing to pay premium prices for quality brands and items. [23]

Social Media Utilising the marketing opportunities afforded by social media platforms in Russia is a very important consideration for any online retailer looking to trade in the territory. As displayed in ‘Online and Mobile Statistical Overview’, Russia has a variety of popular social media channels, the largest of which is VK (originally VKontakte), a site similar in structure to Facebook which has far surpassed it in terms of popularity and usage in this location – though it is worth noting that Facebook is closing the gap and boasts a more worldly user base. VK hosts a variety of communities and groups, including business and brand pages where consumers can review and show their support for speci c products and/or brands. Marketing strategists in the region report that a successful marketing strategy within Russia necessities a presence either on Facebook or on this social networking site, depending on your target audience.

Despite the success of social media as a vehicle for exposing specific brands and products to consumers, however, it’s important to note that the overall revenues derived from marketing on social media platforms are negligible compared to other, more conversion-ready marketing methods; consumers largely ock to social networking sites to communicate with peers – not buy products. That being said, if the products on offer are unique and strongly desired by Russian consumers, and retailers invoke strategies which allow them to locate whole communities of their targeted customers on social networking sites, it’s entirely possible that these websites can form the entirety of a business’ marketing strategy; they alone can generate enough brand awareness and website traf c in Russia.

YouTube is also showing dramatic growth in popularity across Russia, despite historically being an underutilised tool in ecommerce. As mentioned previously, search engines express a preference for websites displaying videos and - as a result - many Russian e-Retailers have begun to embed media content into their pages; videos increase the amount of time a consumer spends on a particular page, and retailers are consequently being rewarded by search engines with a higher rank in a relevant organic search. Retailers who successfully embed such videos are thus seeing a greater degree of competitive advantage, particularly in crowded sectors such as apparel or cosmetics – categories where PPC can be very expensive and successful SEO is more competitive due to the oversubscription of the marketplace. Many retailers are additionally building their own YouTube channels where they explain and conduct demonstrations of their products, and there is a growing trend for customers to review products via YouTube videos; these reviews can hold a lot of sway with peers.

Regardless of your product, it’s always important to examine what your competitors are doing in the Russian marketplace. Taking such action will help dictate your marketing strategy, as well as help you decide which mechanisms will best improve your online shop’s performance: if all your competitors are communicating to consumers in Russian, for example, this is what the Russian market will expect of your online shop.[24]

Major shopping categories

Russian consumers display a clear preference for certain categories of goods when shopping online, and three in particular take up a signi cant proportion of this online marketplace: consumer electronics and white goods (42%), clothing and footwear (13%), and car parts (10%). Digital sales of clothing and footwear have seen dramatic growth over the past few years, partially due to the fact that consumers are getting used to using the free returns option offered by many e-Retailers in this location.[25]

Major retail holidays

December 31st - New Year's Eve Shopping, January 7th - Christmas Shopping, March 8th - International Women's Day [26]

Legal / Regulatory

At present, the political and economic landscape in Russia is unquestionably tense, and - despite prompt action on the part of Russian authorities - the atmosphere in the territory won’t change overnight. Any retailer would be right to exercise caution in making the decision to enter this tumultuous marketplace. However, whilst the economic recession in Russia has unquestionably made this market a complex choice for an e-Retailer at present, this financial cloud certainly has a silver lining for international retailers into the territory. Though the fall in value of the ruble and associated increase in exchange rates have made foreign products more expensive for Russian consumers to purchase, many costs of broaching the Russian digital market have correspondingly decreased for a foreign e-Retailer. Web development, localization, PPC and SEO – amongst other things – are all offered in rubles by Russian companies, and these services now cost a fraction of their former price for international companies. What’s more, PPC rates have dropped even in RUB prices as competition in the market has decreased. Those who make timely use of these opportunities to establish a presence in the Russian marketplace will likely reap the benefits of expansion once the Russian economy has stabilised. After all, prior to the financial crisis, Russia’s personal consumption levels led the BRIC countries, with 60% of pre-tax income being spent on shopping - the highest rate in Europe.

As is the case with many aspects of e-trading explored in this Passport, Russia sets itself apart from much of Europe and the rest of the world in its customs clearance procedures. Due to this likely unfamiliarity, an e-Retailer into the territory would be well-placed to educate himself on any existing regulatory and practical differences before he commences trading in this complex location. In any case, seeking professional advice is recommended at this stage of an e-Retailer’s international trading experience. In Russia, customs clearance is strictly exercised and always occurs before goods are released to a purchaser. This advance declaration dictates the procedure of Russian customs clearance; goods need to be cleared either on the Russian border or within specially designated Russian customs clearance centres. Correspondingly, all associated duties and taxes need to be paid in full either before the product crosses into the country, or in advance of it leaving a designated warehouse. Responsibility for paying customs duties and taxes for goods always rests with the buyer of goods. All supporting documentation - for example, certificates for certain types of goods, confirmation that such goods can enter Russia, as well as confirmation of product prices - must also be presented for customs clearance, though responsibility for such presentation varies with the clearance method adopted.[27]

Foreign vs Domestic Legal Entities

A vital point should be made at the outset of this section, before the intricacies of applicable Russian legislation are explored. That is, that - practically speaking and with few exceptions - Russian legal norms and domestic laws are not actually enforceable against foreign legal entities targeting Russian consumers. Though the Russian Civil Code dictates that a physical person in Russia is entitled to defend the rights he is granted in accordance with the legislation of the Russian Federation, from a practical point of view, this course of action is infrequently attempted, and an e-Retailer will simply be bound by the rules of the jurisdiction in which he has established a legal entity and by the rules of international law; a local Russian court will largely be unable to enforce its decision against a foreign-established international retailer with any degree of success.

Where an international retailer establishes a legal entity within Russia, however, the applicable rules and associated obligations and benefits can change, and a Russian consumer’s protections, in some circumstances, become more easily enforceable. For more information on Russian legal entities, please see Corporate Forms and Incorporation. There are, of course, courses of action for foreign international retailers that enable them to establish a physical presence in Russia without actually setting up a Russian legal entity, however, these establishments are somewhat limited in their operations under Russian law. Some detail relating to two of the most popular options when it comes to e-Retail - representative offices and affiliate/branch of ces – is set out below.

A representative office cannot conduct any transactional or commercial activity in its own right; it is simply established to represent and promote the interests of the foreign international company selling to Russian consumers, typically undertaking marketing and other information-gathering operations. Legally speaking, a representative office is not subject to as much regulation as an affiliate/subsidiary branch, and they are generally easier to establish. Importantly, most legal norms and domestic laws of the Russian Federation are not enforceable against a representative office.

An affiliate/branch office may undertake all the activity available to a representative office (see directly above), but additionally can engage in many commercial activities, performing many of the functions of its establishing foreign company on its behalf. An affiliate/branch may, however, find that it is subject to an increased level of Russian regulation as certain responsibilities within the legislated remit may be delegated to the branch by the organisation’s international head office. Applicable rules depend upon the activities conducted by the local office, as it will be the legal norms and rules relevant to these areas that are enforceable. Importantly, neither a representative office nor an affiliate/branch of ce is regarded as a separate legal entity from its establishing foreign company; it is seen as an agent under Russian law. Whilst both representative offices and branches can import goods into Russia, these goods can be used only for internal purposes – neither of these bodies can sell products on their establishing companies’ behalf in the Russian Federation. Should an e-Retailer wish for his Russian contingent to sell goods with Russian borders, he will need to set up a Russian legal entity, though this is only the case when it comes to physically selling goods to the end customer – a retailer can distance sell into the territory from anywhere in the world without establishing a legal entity of any form in Russia. International retailers establishing legal entities within Russia for the purpose of conducting commercial activities, i.e. selling to Russian consumers, will have to comply with stringent Russian legislation relating to these goods, including those laws relating to the category and quantity of goods that can be imported into Russian borders by a physical entity without incurring duties and taxes.[28]

B2B Customs Clearance

B2B customs processes in Russia will be relevant to some e-Retailers during their trading experiences into the country – either at the outset of slightly later on. Establishing recognition and demand in the Russian marketplace will lead to an increase in order volumes, and eventually there will come a time when a distance seller should optimise his expenses by shipping in bulk. Should necessity dictate, there are myriad advantages for both retailer and consumer in this approach, i.e. cheaper delivery costs and enhanced speeds for the consumer, as well as less onerous labelling and customs requirements for the retailer. Where a merchant elects to establish a physical presence in the Russian marketplace – for example where he sets up or contracts with a local warehouse - the customs procedures and rules directly below may apply. There are three broad methods of customs clearing goods bound for Russia that are to be received by businesses in the territory, all of which require preliminary customs notification.

1. The first option is for all process and procedure to occur directly on the Russian border. Goods are brought to a customs post located on territory lines where they will remain until the purchaser sends all relevant documentation for inspection and pays any associated duties. In this instance, the responsibility for documentation and payment are entirely placed upon the buyer. After clearance, the goods are transported to their subsequent destination. Significant risks include delays with information delivery, especially due to time zone differences. 18% of B2B goods are customs cleared under this scheme.

2. Businesses also have the option of using customs clearance centres located within the territory of Russia itself. Goods can move directly to these internal centres, but in such a case will require specific transit documents that allow them to cross into the territory without immediate clearance. In this case, it is the carrier who has responsibility for presenting the relevant documentation at the customs clearance centre – including these transit documents - though it is the purchaser who must prepare this documentation and pay applicable duties for goods already within borders. 80% of goods are customs cleared under this scheme.

3. The third option when it comes to proceeding through Russian customs clearance necessitates the use of electronic declaration. With this method, though goods and their transportation vehicles are physically present on the Russian border, customs clearance itself takes place in one of the centres of remote declaration located within the territory. All relevant documentation is sent to this centre, and is usually presented in electronic format. The two customs points will then communicate electronically with each other with the aim of clearing the goods, and - should the goods require inspection - the internal centre will give the order to the customs post on the border to carry this out. Cleared goods can then be shipped to different destinations within Russia right from the border.[29]

B2C Customs Clearance

From July 2010, a unified customs scheme was implemented for all goods delivered to individual customers in Russia from abroad; these rates are equivalent whether a package is delivered by a commercial carrier or the Russian Post, the national carrier of the Russian Federation. If the total value of a particular purchase is less than EUR 1000 and the full weight does not exceed 31 kg, this purchase will be exempt from customs duties altogether. It is important to note that a customer can only receive a particular purchase from abroad customs duty-free in the case that the total value of online purchases received by this customer during any one month does not exceed a limit of EUR 1000 (including cost, freight and insurance). If they do, this customer will be required to pay customs duties of 30% on the amount exceeding this limit. Customers who purchase in excess of 31 kgs per month (combined) will be charged a duty rate of EUR 4 per kg on any excess. If the customer’s monthly orders exceed both maximum weight and value, a greater charge is applied.

Whilst during 2014 the Russian Government had approved the lowering of this duty-free threshold for cross-border trade from January 2015 – legislation which could have had a negative impact on ecommerce orders in the territory by increasing the number of orders subject to customs duties, in the wake of economic recession in Russia, no further action has been taken. However, with Russia’s ascension into the Eurasian Economic Union, it seems likely that the issue of harmonised thresholds will be reconsidered as soon as economy is back on track. A specific figure has yet to be publically disclosed, and opinions are divided, but it is anticipated that this new tax-free threshold will be around EUR 500. It is important to note that even this threshold is substantially higher than the average price of cross-border shipments, so the actual impact on cross-border ecommerce will be limited. In 2014, Greenway estimated that with the introduction of the new limit, every 100th shipment would require the payment of customs duties, as opposed to the current threshold which subjects one out of every 500 orders to the tax. Retailers selling luxury goods to Russian consumers, however, might suffer from the introduction.

As has been highlighted elsewhere in this Passport, there are strict limitations on certain categories of good when it comes to import into the Russian Federation. For example, some goods can be carried only by commercial carriers, and some only by the Russian Post. Some goods are prohibited from shipment into Russia altogether, and there are some products that are always considered by Russian customs to be products for commercial – as opposed to personal – use, even when a consumer has stated otherwise. An e-Retailer into Russia should thus be vigilant in checking which categories the goods he is offering fall into before offering the products to Russian consumers. For instance, medical and photo laboratory equipment are always considered to be commercial products, and thus need to be customs cleared in accordance with B2B procedures. Additionally, video and audio CCTV surveillance products, live plants and seeds are prohibited from import for personal use, whilst cultural valuables can be carried only by commercial carriers and not by the Russian Post.

Importantly, a different customs declaration procedure is followed depending upon whether a parcel goes through the Russian Post or a commercial carrier, though the duties paid are the same in either case. • If the product is shipped by a commercial carrier, the carrier prepares the declaration and presents a list of the items transported to customs. This will include such details as value, contents, country of origin and details of the buyer for customs’ inspection. If the shipment requires the payment of customs duties, a carrier will notify the customer regarding the payment of this duty. • If the parcel is transported by a national carrier in the Russian Federation, i.e. the Russian Post, then the national carrier of the shipment in the goods’ country of origin puts forward the customs declaration, and a CN22 form- a declaration created in accordance with international postal agreements – is issued to customs authorities. Russian customs accepts this CN22 as a declaration. If Russian customs authorities don’t agree with the specifics of a declaration, i.e. if they think that the value has not been correctly stated, then customs can approach the end consumer directly and require them to present additional documentation. [30]

Taxation Policies

Starting from 1 January 2015 foreign companies may be recognized as Russian tax residents (and become fully taxable in Russia on their worldwide income) if they are effectively managed in Russia. The company is deemed effectively managed in Russia if at least one of the following criteria is met: (1) the majority of board of directors’ meetings are in Russia; (2) management of the day-to-day activities takes place in Russia, or (3) executive bodies’ management decisions are made in Russia. There are also certain secondary criteria which may impose an even higher compliance burden in order to avoid Russian tax residency. The secondary criteria for foreign companies to be recognized as Russian tax residents include: (1) accounting and management accounting is performed in Russia, (2) document (records) management is performed in Russia, or (3) operational HR management is performed from Russia. There is an exemption for companies with strong substance, i.e., local qualfied staff and assets in a State which has a tax treaty with Russia. This may be helpful to protect bonafide companies registered in tax treaty jurisdictions.[31]

Government Interference in Business

Russia is a territory notorious in reputation for the level of governmental regulation and red tape that accompany business transactions, and it is undeniable that the Russian Government exercises strict control over commercial procedure and infrastructure, as well as the economy at large. Natural monopolies, for example, are severely restricted through legislation and government bodies, in particular the Federal Antimonopoly Service (FAS). Forbes magazine, in its ninth annual ranking of the Best Counties for Business in 2014, allocated Russia 91st out of 146 countries for its business environment, and 30th for government interference in business. It is easy to see why Russia’s business environment might not be perceived to be particularly inviting for a foreign e-Retailer into the territory. Russia’s recent macroeconomic policies, however, suggest future progress in this area, and long-term initiatives have been put in place with the aim of creating a nurturing and progressive environment for international and domestic enterprise. Advancement in this area is therefore eagerly anticipated for coming years; organisations can expect to see the lessening of government supervision of businesses, as well as a reduction in administrative hurdles related to day-to-day practice. Plans additionally include the unification of the regulatory powers of State authorities.

Over the next few years, a goal of the National Association of Mail Order and Distance Selling Trade is the establishment of a State program aimed at Russian distance selling development. Unfortunately, however, despite goods intentions, actions of Russian authorities are still somewhat uncoordinated and inef cient and - whilst ministries and departments are trying to launch several stimulating programs for business development - difficulties are complex and must be solved systematically. It is possible that focus on schemes to nurture enterprise and promote investment will be lower on the Government’s agenda whilst Russia is in the midst of international dispute and domestic crisis.

Overall, it is well-acknowledged amongst Russian authorities that the territory’s regulatory and supervisory practices require improvement, and in some areas are archaic. There are additionally important steps to be taken with regard to the cultivation of commercial enterprise. As indicated above, however, reform and public discussion are underway, and approaches are likely to change as tensions reduce. Coming practices in this area will likely be a compromise between the interests of the Russian Government, businesses and citizens. As mentioned elsewhere in this Passport, the administrative procedures and regulations applicable to foreign legal entities trading in Russia differ to those applicable to domestically incorporated bodies, though a foreign company choosing to establish a Russian legal entity will be subject to the same standards and requirements as its Russian counterparts. For distance sellers looking to expand into the Russian market, it is important to note that there are minimal differences in the level of official intervention and regulation between domestic and foreign retailers. [32]

Social Inequalities and the Russian Middle Class

The social demographics of a targeted e-Market are an important consideration for any e-Retailer looking to sell to international consumers, and the Russian Federation is certainly no exception to this rule. The social structure of Russia is undeniably unique, and historically has been known to attract some fairly negative press. On the whole, however, the Russian Federation has made progress over the last decade in improving the quality of life of its citizens. Throughout his time in power, Vladimir Putin has promised to level the socio-economic playing eld, and has placed emphasis on growing the Russian middle class.[33]

Technology

Methods of accessing the internet in Russia also vary according to geographic region. For example, mobile internet users in this location are most likely to be residents of economically advanced regions. Indeed inhabitants of Moscow and St. Petersburg, are 2 to 3 times more active in their online presence than the country average, and are more likely to use smartphones than their counterparts in less advanced areas of Russia. [34]

Security

The Civil Code

In the Russian Federation, the Civil Code is the primary source of civil law. Importantly for a prospective e-Trader into Russia, this law governs – amongst other things - civil relations between Russian citizens, the purchase and selling process, intellectual property rights and the rules relating to identifying which jurisdiction’s legislation is applicable in a particular international transaction. In contrast to Russian consumers, domestic Russian legal entities encounter very onerous procedures and processes when it comes to purchasing products from foreign online shops, as legislation regulating the international economic activities of Russian legal entities imposes very strict documentary rules for such purchases, both for the transaction itself and for the associated customs clearance procedures.

Because of these rules, where avoidable few internationally-based companies sell to Russian legal entities; it is much easier for a Russian legal entity to make online purchases from other Russian- based internet shops, or otherwise make international purchases as individuals where processes are simpler. Where a foreign online retailer does choose to sell to a Russian legal entity, this legal entity can only refuse a product and demand a refund where there is a significant problem with the quality of the product purchased; i.e. where it is not fit for purpose and/or the cost of repairing the product is higher than its original price. Individuals are thus afforded much greater protection than legal entities when it comes to product quality.

Whether a Russian individual or organization is buying from a foreign internet shop or a Russian one depends upon the status of the owner of the venture – i.e. whether it is a Russian or international legal entity. In accordance with Russian legislation, it is the responsibility of the seller to inform a buyer of the pertinent details of a transaction, i.e. who is offering the goods for sale and the conditions of sale, and penalties are imposed for the breach of this duty. Where an international e-Retailer wishes to operate via its own warehouse within Russian borders, it first must establish a Russian legal entity, though it is possible to contract separately with a third-party Russian commercial warehouse. In such cases, goods must move from an international legal entity to a Russian counterpart; foreign legal entities are unable to declare goods in Russia for the purpose of customs clearance procedures. A Russian legal entity, whatever the form, will then be able to sell goods to consumers. As stated previously, a foreign legal entity’s affiliate/branch office can clear goods from abroad, but only if they are for the office’s internal use. [35]

Mobile appetite

In Russia, mobile penetration closely echoes the average of the global percentages (50% smartphone ownership, 17% tablet ownership within Russia versus the 51% and 21% global average). Shopping with these devices is less popular however, as only 13% purchase with smartphones and 7% with tablets. Positively though, 57% of Russians intend to use smartphone and tablet technology to purchase goods in the next year. [36]

Recently, Google has been picking up pace, according to TNS. Google has become the most popular internet service in Russia (taking into account all devices). Google websites and applications are used by 20.5 million Russians per month. Yandex performs slightly less – 20.4 million, Mail.ru – 19.3 million. However, Yandex is the daily audience leader with 12.3 million uses, while Google is 3rd place with 11 million. [37]

Internet users in Russia lead Europe in time spent online, with users spending an average of 4.8 hours on the internet every day. When an individual in Russia owns a desktop/laptop/notebook computer and two or more mobile devices, 50% of their time online is spent on a mobile device as depicted below. E-Retailers looking to target Russian consumers should take this into account when developing their digital strategies. [38]

Popular Domains

By far the most popular domain names in Russia are .ru and .com, and where available these will almost certainly be the best choice for your e-Shop in this location. All other zone names will sound exotic and strange to Russian consumers, though .net and .org are certainly acceptable alternatives for IT or non-commercial organizations. The .рф domain is growing in popularity in Russia but its usefulness is limited as it is very inconvenient when it comes to organic search results. The SEO rule-of-thumb is that if you plan to promote your website, don’t use .рф - go for .ru. Administrative control and technical support of the .ru/.рф domain has been assigned to the Coordination Centre for TLD RU/ рф. The Coordination Centre for TLD RU/ рф, does not, however, perform a registrar’s functions. Registration of second-level domain names in .RU/. рф is available only through accredited registrars, a list of which is displayed at http://www.cctld.ru/en/registrators/. All geographical regions of Russia have their own second-level domains, as do many speci c sectors, and there are a number of pre-set second-level domains designated for third-level domain registration (some of the most popular of which are included in the previous table). There are currently 133 active second-level domains available for registration in Russia. Domain names are registered for a period of one year. To keep an allocated domain name for an additional year, the registrant must go through a re-registration procedure. [39]

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