Russia’s new rules might scare eBay and Alibaba away

The authorities in Russia have recently made some changes in the customs procedures which will impact shipments sent to private individuals in Russia. The new rules require formal entry on all dutiable import shipments intended for personal use, regardless of the shipment value. Because of this, online stores from abroad might sell less in Russia than before.

Since this month there are strengthened document checks, which has led to “dramatic increase in formal customs entries, resulting in significant delays in delivery of packages to Russian consumers”, as UPS puts it on their website. The new rules even led to express-delivery operators like Deutsche Post AG and FedEx reacting by stopping all shipments to private individuals in Russia.

Local online stores might profit
But there’s also an advantage to these changed rules. Local online stores are benefiting, at the expanse of big global companies like Ebay or Alibaba. In the last few years they saw the number of shipments to Russia expand, but now there are some rigorous changes in the customs procedures, these growth could be affected. Local online stores like Ozon.ru or Lamoda don’t have to struggle with all these formal customs entries, which could give them the lead with delivery times.

But Boris Ovchinnikov, co-founder of Russian market research company Data Insight, tells Bloomberg a lot of Russian consumers who bought something online in those global online stores aren’t eager to switch to local stores. The effect of the new rules for the express-delivery operators will probably be limited, because more than 90% of international package is B2B. Cross-border ecommerce in Russia doubled last year to 2.3 billion euros, while the domestic ecommerce market rose 26% to more than 10 billion euros, data from Data Insight shows.

In the annual Presidential Address to the Federal Assembly, president Putin told lost month that at the tax authorities’ initiative the Government is drafting proposals on bringing “order to online trade”, meaning more tax could be collected from it. The Finance Ministry of Russia also proposed to lower the threshold for tax-exempt online purchases to 150 euros from 1000 euros.