Published on February 19, 2014
Global Snapshot Series: RUSSIA
RUSSIA Basic Information SapientNitro | Russia | 1.27.14 2
RUSSIA Basic Information The sheer size of Russia’s population makes it a behemoth of digital usage compared to its European neighbors. Russia can boast the largest total amount of internet users and mobile subscriptions of any European nation and is the most digitally developed of fellow BRIC nations. While size helps increase number of users it also creates large barriers to access. Many of Russia’s rural areas are still underdeveloped for high speed internet access - placing it below broadband penetration levels and internet readiness compared to neighbors. SapientNitro | Russia | 1.27.14 POPULATION 142,500,482 10th largest in the world POPULATION BELOW POVERTY LINE 12.7% 73.8% URBAN POPULATION 3
RUSSIA Basic Information There is hope for the future, though, as Russia’s government has placed priority on advancing the communication network over the next 10 years – giving the go ahead to (partly private and partly state owned) companies to develop infrastructure into rural areas – a move that could boldly increase penetration levels. Religion Ethnicity Russian 20% 15% Tatar Russian Orthodox Muslim Ukrainian 2% Other Christian SapientNitro | Russia | 1.27.14 60% 79.8% Other/Unspecified 3.8% 12.1% 2% 1.1% Chuvash 1.2% Other Bashkir 4
RUSSIA Internet SapientNitro | Russia | 1.27.14 5
RUSSIA Internet Russia’s great land mass creates barriers to high-speed internet access. 2014 estimates indicate 43% of households have access to fixed broadband, low by comparison to European neighbors. However, with a larger percentage of individuals living in urban centers with higher penetration, Russia can boast 82.9 million internet users and rising. Demand for digital equipment and surges in internet usage in larger urban centers, like the capital of Moscow, coupled with its sheer population size, makes Russia the largest market for Internet Users and Mobile Subscriptions throughout Europe. SapientNitro | Russia | 1.27.14 58% 58% of population are internet users, equaling approximately 82.9 million internet users. Russia has Europe’s largest number of Internet Users and largest number of Mobile Subscriptions. A number of initiatives are being rolled out to increase rural connectivity which should increase connectivity in the future. 62.7% of households by 2020 estimated to own a PC. 6
RUSSIA Internet Urban cities such as Moscow boost internet penetration with the help of over 16 thousand Wi-Fi Hotspots currently in place and a push to bring free Wi-Fi to Moscow’s metro and major railways stations in 2014. Female internet users, like all other measured media in Russia, have a higher percentage of usage than males at 53% to 47%. Internet usage by age is strongly focused on the 15-34 age group which accounts for almost 1/3 of internet users. However, users in the 18-24, and 35-54 age groups are well represented with close to 20% each. SapientNitro | Russia | 1.27.14 SocioEconomis Status Upper/Upper Middle Class 14.5% Middle Class 50.1% Working Class 31.5% Age of Internet Users 18-24 25-34 35-44 45-54 55-64 65+ 19% 29.8% 17% 19.3% 6.8% 3.2% 53% 47% Top Sites Visited 1. yandex.ru 2. vk.com 3. google.ru 4. google.com 5. mail.ru 7
RUSSIA Social SapientNitro | Russia | 1.27.14 8
RUSSIA Social Russia boasts a strong social network user population with the percentage of internet users using social media above European averages. The social media landscape in Russia is dominated by competitive local players in Digital Media, “Sellsumer” marketplaces, and Social Networks. Local giant Vkontakte, which offers video and streaming music along with its social platform, was the second most visited site in January 2014 according to Alexa. SapientNitro | Russia | 1.27.14 79% of the online population will use social sites at least monthly in 2014. The number of users Is growing by 8.3% annually. 2012 2013 2014 2015 2016 54.3 M 53% 60.5 M 65.5 M 69.2 M 72.4 M By 2017, 52.7% of Russia’s population will be social network users, an estimated 75 million users. 9
RUSSIA Social Russia’s social media users trend demographically towards younger (the 25-34 age group makes up almost 1/3 of the user population) middle class (almost half of users) and female (55% to 45% male). While the scene is dominated by local players, younger web users are increasing turning to the international leader. Over a third of social network users in Russia are on Facebook, and it is estimated that by 2016 Facebook will be the dominant player in the area, doubling its user base. SapientNitro | Russia | 1.27.14 SocioEconomic Status Upper/Upper Middle Class 17.2% Middle Class 49.3% Working Class 32.7% Age of Social Network Users 18-24 25-34 35-44 45-54 55-64 65-75 24.3% 33.2% 20.4% 15% 5.1% 1.9% 55% 45% Top Social Sites Visited 1. vk.com 2. odnokiassniki 3. mail.ru 4. Facebook 5. Twitter 10
RUSSIA Mobile SapientNitro | Russia | 1.27.14 11
RUSSIA Mobile Russia has the largest mobile subscriber market in Europe with 262.1 million connections estimated for 2014, or 184% of the population. Lack of high-speed Internet to more rural areas has helped grow mobile usage as Russians look to mobile devices to go online – an estimated 31% of the population went online via mobile devices in 2013. Not surprisingly, and like other European countries, smartphone ownership is dramatically on the rise doubling in just 2 years from 27 million to 34 million in 2014. 47% of mobile phone users are smartphone users, estimated to grow to 69% by 2017. 80% of the population are mobile phone users in Russia, estimated to grow to 86% by 2017. 83% browsed the Internet 82% listened to music 81% accessed a social network Mobile Operating System Share 80% took a photo or video 52% 28% 5% 4% Android SapientNitro | Russia | 1.27.14 Key Mobile Activities iOS Symbian OS Series 40 79% emailed 79% used a search engine 12
RUSSIA Mobile Females tend to be in a majority for user/ownership metrics across all media channels in Russia except for Smartphones, for which males slightly outnumber females at 51% to 49%. While Mobile Phone ownership is relatively diverse across age groups, Smartphone Ownership trends towards the younger ages – those 18-24 make up more than half of users, and 25-34 year olds just over 1/3 – as well as having increased number of owners in higher income levels. SapientNitro | Russia | 1.27.14 Mobile Phone Owners 18-24 25-34 35-44 45-54 55-64 65-75 14% 22.7% 18.1% 19.8% 14.1% 11.3% Upper/Upper Middle Class 14.9% 55% 45% Smart Phone Owners 18-24 25-34 35-44 45-54 55-64 65+ 23.1% 34.2% 20% 14.3% 5.8% 2.6% SocioEconomic Status: 49% 51% Middle Class 51.6% Working Class 32.6% SocioEconomic Status: Upper/Upper Middle Class 21.7% Middle Class 49% Working Class 28.6% 13
RUSSIA E-commerce SapientNitro | Russia | 1.27.14 14
RUSSIA E-commerce E-commerce has exploded in Russia in the last two years, growing more than 25% in both 2012 and 2013 and is the highest growth channel in Russian retail. Growth in internet retailing has been largely helped by a number of once previously brick and mortar items such as grocery, food and drink entering the market coupled with consumer awareness that online shopping allows them better insights into comparable prices and products. However, there are still barriers to internet success in Russia. Top among them may be a scattered payment environment where electronics payments tend to be expensive and complicated and where many Russian internet shops do not yet accept credit cards. Additionally, Russian consumers generally avoid paying by credit card and prefer post payments or bank transfers instead. SapientNitro | Russia | 1.27.14 Russians spent $14.8 Billion dollars shopping online in 2013. Between 2012 and 2013 Russian internet retailing grew 26%. Top Internet Commerce Sites 1. ulmart.ru 2. OZON.ru 3. KupiVIP 4. Utkonos 5. eBay 15
RUSSIA E-commerce Competition for the title of lead internet retailer in Russia is scattered between different companies, and top sellers make up no more than 3% of value shares in the market. It is dominated by leading local retailers Ulmart (electronics and computers), Ozone (multipurpose) and KupiVIP (discount club) but international giants Amazon and Ebay are not far behind, each comprising about 2% of the market. The Consumer Electronics and Apparel category, the typical internet retailing leader, leads the market in value for Russia. However, the highest growth in internet retail sales through 2017 is expected out of the Consumer Healthcare products, Food and Drink, and Toys and Games categories. SapientNitro | Russia | 1.27.14 Total Internet Retail Channel Value in 2012 25% Electronics/ Video Game 21% Apparel 8% 8% 7% Home Improvement/ Gardening Media Products Furniture 16
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