'Online food trading is actively growing in key markets'
Ministry of Agriculture intends to bring Russian food producers to the markets of China, India and Germany through marketplaces
With the beginning of the coronavirus pandemic, the e-commerce market in Russia has made a significant breakthrough. The total volume of e-commerce increased by 26% last year, and online sales of food products — by 40%. The most promising countries for the development of Russian exports in the field of agriculture are now China, India and Germany. At the same time, in Russia, as in the whole world, there are practically no specialists in working with marketplaces, and some economists see this as a serious problem. The discussion on this topic began at the open conference on the export of Russian agricultural products through electronic sales channels, which was organised by the federal centre Agroexport together with the Ministry of Agriculture of Russia. Read the details in the material of Realnoe Vremya.
Situation with e-commerce of agricultural products in the world
The conference participants gathered to discuss the main trends in the global e-commerce market and the most promising areas for the development of sales of agricultural products through electronic trading platforms (ETP). Specialists shared their experience of working with global marketplaces. The representatives of foreign trading platforms and service companies discussed the most promising categories of Russian goods, requirements for suppliers of products and gave recommendations on the organisation of logistics.
We were talking about the rapid growth of online food sales indicators. Although e-commerce in food is not the largest segment of the market — it accounts for about 17%, but this industry received the greatest development last year due to coronavirus restrictions, said Deputy Minister of Agriculture of Russia Sergey Levin. The total volume of online trade in 2020 increased by 26%, and online sales of food products — by as much as 40%.
“This is a very significant advance of general trend. This situation, of course, opens up new opportunities for our exporters of agricultural products. And what is especially important for us, online food trading is actively growing in the most important key markets for us. For example, in China, which is the leading e-commerce market in the world, e-sales cover about 850 million people, of which two-thirds buy food online. Last year, the volume of online sales of these products amounted to about $ 25 billion," said the deputy head of the Ministry of Agriculture of Russia.
Another promising direction for the export of Russian agricultural products, according to the speaker, is India. Although its market is not yet as developed as the Chinese one. Online sales of products are also going well in Germany. Therefore, according to Mikhail Magrilov, the head of the practice for providing services to state bodies and public sector of PwC Russia, these three countries — China, India and Germany — are going to become the main directions for exporting agricultural products in the near future.
“This concept of export development through electronic platforms was developed jointly by the federal centre Agroexport and our company. Three countries were chosen as introductory ones — China, India and Germany. All these countries are record holders in some form in their parts of the world. At the same time, they are very different in terms of electronic commerce — different populations, different solvency, and so on," Magrilov said. “We believe that these countries are good examples to do such work for other countries later. They are different in culture, in integration into global economy. But these are some of the largest markets in the world economy with a high percentage of electronic channels penetration. That's why we've started with particularly these countries.”
The most promising of them is considered to be the Chinese market, it is called the locomotive of e-commerce, but at the same time, unlike India, it is not a poor country, experts say. The level of income of the population in the largest cities (followed by medium-sized cities) shows a comparable average receipt for electronic purchases. The specifics of China are e-commerce through social networks, which have become the fastest growing sales channel. Investments and a breakthrough in the logistics infrastructure, which included rural areas in the online turnover, are another feature of the country, the speaker noted.
The German market is the largest e-commerce market in the European Union. There is a very dense and competitive delivery network that guarantees quality and speed. Compared to other countries, the share of agricultural products in Germany is small, but it is growing faster than the market. It gives a high potential for entry in the coming years.
When developing the concept of Russian agricultural exports, 5 categories of products were selected — sweet and dry cookies, waffles, vodka, potato chips, canned peas, and corn. The analysis of the landscape of foreign electronic trading platforms in the three named countries has been carried out. The products of the target categories presented in them have been analysed. The variants of placement and structure of potential costs for placement and sale of products on electronic trading platforms have been considered. Consumer preferences in the target countries have been studied. And the existing channel for promoting Russian products has been analysed.
Problem with marketing
In his report, Magrilov also mentioned the main measures to support agricultural exporters that are used in the world:
- Information support.
- Cutting through export channels through online stores or through the support of logistics infrastructure.
- Marketing support.
- Financial support — grants and subsidies.
Entrepreneur Fyodor Virin noted that in Russia, as in the whole world, there are practically no specialists working with marketplaces. The reason for this situation is partly that SMEs simply cannot afford to have marketers. But large companies also have problems. They hire such specialists who “die” in a year, because they are simply not given the opportunity to show what one can do. However, according to other experts, there is no such urgent need for this and every manufacturer should not pay a lot of money to a marketer.
Some economists see a big omission in the fact that now in Russia there are no such special associations of large companies engaged in the development of competencies in the market, which were created in the early 2000s.
Meanwhile, there are several large marketplaces operating in Russia, such as Wildberries, Ozon, and Sbermegamarket, between which a tense competitive struggle has unfolded.
Online sales volume is going to double soon
Electronic trading platforms occupy an increasing share in the total global trade volume. Internet commerce began to develop most actively with the beginning of the pandemic and with the introduction of self-isolation regime. For example, in 2020, 11% of consumer spending on purchases fell on electronic sales channels, and this amount amounted to almost $2,5 million. Today, more than 2 billion people in the world are buying goods online. By 2024m the volume of online trade is expected to double to 22%, and in China this figure to exceed 50% of total sales.
Experts predict the continued growth of e-commerce after the end of the pandemic.
“The pandemic and restrictions have lasted too long, and the habit develops much faster. Most people, including those of age, have managed to enter this zone of the unusual and unknown and understand how convenient and comfortable it is. Eighty-six percent of respondents in the world say that they will continue to buy online after the restrictions are lifted," Magrilov concluded.