Doing Business in Russia: Why Brands Fail Online
Doing business in Russia could be an invaluable opportunity for brands seeking to expand their online presence overseas.
With approximately 83 million people already enjoying Internet access, Russia is the 6th largest Internet market in the world – and the largest in Europe. Yet it has a significant growth potential, because only 53% of the population are currently online.
Although the number of digital shoppers is still below the European average relative to the country’s total population, B2C e-Commerce sales are expected to reach $2.5 billion in 2015 (source: WebCertain) and to keep growing over the coming years.
The growth rate itself has been impressive. In fact, 93% of online purchasers – mainly young women living in the West of the country – made their first online purchase last year.
While these are just some of the reasons why doing business in Russia is potentially a gold mine, there are a few major challenges brands need to address when planning to invest in Russia, in order to increase the prospects of success.
1. Logistics / Territorial Dispersion
Russia is the largest country in the world. It is divided into 9 federal districts and 11 time zones. For online businesses, this could mean challenges in terms of shipment / delivery infrastructure (for e-commerce sites). Online advertising and customer care are also areas that need addressing, because brands must be able to reach and support their customers in their local time zones.
However, despite Russia’s vastness, 80% of the population live in the west of the country. There are 12 cities with over a million people, which means that brands can target those instead of focusing only on Moscow and Saint Petersburg, where competition is much fiercer.
2. English into Russian: The Linguistic Challenge
Russian is an agglutinative language, which means that words are formed from combinations of morphemes to express compound ideas. Furthermore, each noun can have up to 12 variations (6 cases plus singular and plural forms). Even Yandex, the Russia’s leading local search engine, features special algorithms in order to be able to handle this linguistic complexity.
Overcoming language barriers is therefore key. As only 5% of the Russian population speaks English, localising website, advertising copy and other marketing materials is essentialfor brands that aim to do business in Russia.
Moreover, when translating into Russian, it is crucial to turn to a language service provider that works with native Russian-speaking linguists who live in Russia and have a significant experience in translating marketing copy.
3. Cultural Blunders
For ‘traditional’ as well as online companies, the cultural dimension may have a significant impact on best practices for website content, design and usability.
Furthermore, Russian customers seem to have a cultural preference for home-grown brands. According to a recent study by Landor, Western brands are well advised to invest in local firms. However, for luxury goods in the automotive, electronics and fashion industries, international brands are still synonymous with prestige and value.
4. Online Payment Systems
Research shows that Russians do buy online. However, they have a strong preference for paying cash on delivery. In fact, 69% of the population surveyed chose this option as their favourite payment method ahead of credit cards (20%).
Since the vast majority of people in Russia do not trust credit card transactions, e-commerce sites should always provide offline payment options alongside electronic ones. This lack of trust in online payment security might also have other implications for how brands promote and sell their products to the Russian online market.
5. Russian Advertising: Rules and Regulations
When it comes to online advertising, brands need to comply with some country-specific regulations. For instance, there is an advertising ban on some product categories such as alcohol, tobacco products and smoking accessories, gambling and weapons.
Other products and services, such as lotteries, medications and even financial services may only be advertised subject to the provision of approved documentation. For further details, please refer to the full list of products and services that are subject to advertising restrictions in Russia.
6. Search Engine Marketing Strategies on Yandex
Last but not least, brands need to be aware of the social and search marketing landscape when planning their online strategy in Russia. Yandex, Russia’s leading search engine, holds 62% of market share and requires specific expertise, especially from marketers who are planning to run paid-search campaigns.
Brands should know that superlatives such as “the best” or “the most used” can be used for text ads as long as the landing page provides information from an independent source. Otherwise, these ads would be rejected.
Furthermore, CTAs (calls-to-action) used by Russian brands are usually longer than those used in the West. They are, for example, not as direct as “Buy now!” or “Learn more”. Brands should therefore never translate CTAs literally, but transcreate instead.
In conclusion, brands that are planning to invest in Russia must research the market beforehand, in order not to miss out on opportunities and to overcome the most common challenges of competing in this market.
To keep up with the latest news and strategies about how to do business in Russia, please refer to useful online resources such as the WebCertain Blog, Russian Search Marketing and Russian Search Tips.
To find out how Creative Translation can help you localise your marketing materials into Russian, visit our website.
Topics: Export Planning, Getting Started, Localisation, and Market Research