October 12, 2005The Moscow Times
The long, cold winter is coming, but there is no need for panic: The Russian Internet is making trips outdoors less necessary every year.
Virtually anything in Moscow can now be ordered online and delivered straight to your door, provided your door is inside the Moscow Ring Road.
From $500 packs of sturgeon caviar to $1 books like "Winter -- Not A Time for Illness," millions of products can now be bought on Russian web sites. Nevertheless, paying over the Internet remains tricky.
While online retail turnover is set to reach $850 million by the end of the year --nearly double last year's figure -- cash is still the most popular payment option, Pavel Korotov, general director of the Internet consulting company Oborot.ru, said at a conference last week.
The Moscow-based supermarket chain Sedmoi Kontinent (http://dostavka.7cont.ru), Setbook.ru online bookstore, Ozon.ru and numerous other retailers selling merchandise over the Internet accept cash upon delivery.
Since the end of the 1990s, however, consumers have also been able to pay for many products with virtual money.
CyberPlat, E-Port and other virtual payments systems have developed along with mobile telecommunications in Russia. While originally focused on helping mobile operators manage subscriber payments, virtual money systems currently process more than $5 billion annually, said Anton Nikolsky, the managing director of the National Association of Electronic Commerce Participants, or NAUET.
Russians and foreigners alike can create accounts with these providers to pay for products at online shops, as well as utilities and cell phone bills. Yandex.Dengi and WebMoney are frequently used by individuals for Internet shopping.
However, learning the ins and outs of how to use these systems can take more time than consumers might potentially save by buying products online.
Each virtual money scheme is unique, but generally consumers are required to fill out an exhaustive questionnaire to register for the service. The actual payment platforms work through a web interface or must be downloaded as a separate program onto an individual's computer.
Commission fees for converting rubles into virtual money and transferring that money onto and off the Internet stay well below 10 percent. However, consumers must buy special cards to put money into their online accounts, use a bank transfer or an ATM, or employ another, even more cumbersome money conversion method.
"People in the regions, without access to stores with the latest books or music are, mainly, the ones using these [virtual money] systems to shop online," NAUET's Nikolsky said.
Top 10
RuNet's Most Popular Stores (by percent of Internet shoppers)
1. Ozon.ru 33.4%
2. Bolero.ru 24%
3. Dostavka.ru 8.6%
4. Aromat.ru 5.1%
5. Megashop.ru 4.9%
6. MVideo.ru 4.5%
7. Biblion.ru 4.3%
8. Colibri.ru 4.3%
9. Biblio-globus.ru 3.8%
10. E-shop.ru 3.8%
Source: Subscribe.ru, November 2004
Subscribe.ru, an online advertising company, asked 2,470 Russian Internet users to name web sites where they make purchases.
Each Internet retailer does not accept all types of virtual currency. While some can process both WebMoney and Yandex.Dengi, for example, it helps to find out which systems are used by the retailers of your choice before pouring lots of money into a particular provider.
Not everyone, however, is interested in doing the legwork.
Vladimir Fridman, 30, an IT professional working for Oracle's Moscow office, does not use virtual money systems because they are "too much of a pain." Fridman said he avoided online shopping on Russian sites, unless it was a big-name company that accepts credit cards.
"Credit cards are actively displacing all other payment methods except cash," said Andrei Travin, spokesman for Internet research company SpyLog.
A growing number of Russians are beginning to rely on plastic. Visa said its card numbers grew by nearly 6 million over 2004, to exceed 11.8 million cards in Russia by the end of the year.
Nevertheless, the threat of fraud is delaying the credit card boom from revolutionizing the country's e-commerce.
"There is one factor -- it's fear," NAUET's Nikolsky said.
An international crackdown on peddlers of credit card information and other Internet crooks has prompted the illegal activities to shift to Russian-language web sites, said Brian Nagel, director of investigations at the U.S. Secret Service, Reuters reported last week.
However, some analysts also say that the Internet is a global phenomenon, so Russia is no more prone to online thieves than any other country.
"I am not afraid to pay with a credit card, if [the online shop] is a well-known brand," Fridman said.
Web sites like Bolshoi.ru, which sells tickets to shows at the Bolshoi Theater, and Ozon.ru, one of Russia's oldest online retailers and often compared to Amazon.com, process credit card payments online.
Credit card payments account for approximately 15 percent of sales at Ozon.ru, said Leonid Boguslavsky, chairman of Ru-Net Holdings, which invested in Ozon.ru two years after the site opened in 1998. However, only about one-third of these credit card payments are made in Russia, while the rest come from customers abroad, he said.
"When people get more comfortable with credit cards in Russia, they will start using them more often," he said.
A lack of convenience is another factor that keeps some individuals from paying with plastic. Many Russian sites require credit card information to be faxed in.
Travel booking sites Infinity.ru and Avantix.ru, for example, accept credit card payments but do not process payments online.
"Technically, faxing credit card information is a more secure payment method," said Pyotr Kapitsa, director of electronic sales at Avantix.ru.
Avantix.ru plans to launch a new, fully web-based credit card payment system later this month, but the company will also accept card information by fax for those who feel more comfortable bypassing the Internet.
