The city is broadening the reach of its 9% “amusement tax” to include streaming entertainment services like Netflix and Spotify.
EBay is investing heavily in emerging markets, and it's starting with Russia.
When Wendy Jones wrapped up her presentation on eBay Inc.'s global endeavors at the company's 2013 Analyst Day on the morning of March 28, her day's work was just beginning. By Katie Deatsch Jones, vice president of geographic expansion and cross-border trade at eBay, had just thrown analysts, investors and the media a curveball when she announced a major company initiative to grow its business in Russia. And so began the onslaught of interviews for Jones, and the painstaking process of answering the same question several times over: Why Russia?
The answer, according to Jones, is to gain major market share early in a country where online shopping is rapidly picking up steam.
"This isn't the first time I've been asked this today," Jones tells Internet Retailer. "It's not the natural first pick, but it was right for us for a few reasons."
Today, Jones says 61% of eBay's business is international, but it's mainly been focused on advanced e-commerce markets, not countries like Russia that are less developed but growing more quickly. "Our past approach has been largely reactive," Jones told analysts. "Going forward we're leaning in proactively."
That shift has implications for North American eBay sellers. As the online marketplace expands to emerging markets like Russia, eBay is introducing services that make it easier for sellers to reach customers outside their countries. That's a top priority, eBay says, as one in three new eBay users are acquired and activated by a cross-border transaction. One such new program is a shipping service that handles customs documents for sellers shipping internationally. Russia isn't one of the countries on that list yet, but Jones anticipates it will be by the third quarter.
"I had never tried to sell globally on eBay before," says David Schloss, CEO of Beach Audio Inc., a retailer of audio equipment, video games and office supplies that started selling on eBay in 2011. Now he is using eBay's international shipping service, called the eBay Global Seller Program, and says 10% to 15% of his eBay sales come from international buyers. "I sell everywhere they offer the service," he says, noting eBay just extended it to China and Japan.
Russia is prime prospecting ground for eBay for several reasons. E-commerce in Russia is highly fragmented, Jones says, with the top 10 players accounting for only about 20% of online sales. That compares with about a third in the United States, by Internet Retailer estimates. Based on available data, eBay is already No.1 in online sales to Russian consumers, Jones says. Russians place an order on eBay about every three seconds, and eBay processes more than 30,000 orders by Russian shoppers each day. Russian consumers purchased $400 million worth of goods on eBay's sites in 2012—up 54% from 2011, Jones says. And the number of active Russian users on eBay sites grew 75% year over year and is accelerating in 2013.
Jones says all this happened with little effort by eBay. Until recently, to shop on eBay Russian buyers would have to shop eBay.com, eBay.co.uk and other country-specific sites that were not in Russian, and filter for items that would ship to Russia. Now that eBay is investing in Russia, Jones expects even faster growth.
E-commerce in Russia is indeed growing, analysts say. Web sales in Russia will grow from $12 billion in 2012 to $36 billion by 2015, says investment bank Morgan Stanley. Russia has the largest online audience in Europe with 61.3 million web users, or 15% of Europe's total of 408.3 million, according to web measurement firm comScore Inc. And, after Italy, it boasts Europe's fastest-growing online population, up 15% in 2012 from about 53.3 million in 2011.
To reach the growing number of online shoppers, eBay in March launched a fully localized, Russian-language marketplace. However, Russians cannot sell on the site, they can only buy. Russian shoppers type in eBay.com or eBay.ru to access the site, which lists inventory from sellers in such countries as the United States and United Kingdom who ship to Russia. The marketplace currently has about 140 million listings, Jones says, and Russian users can search in Cyrillic or English and check out using PayPal, eBay's payments service that allows them to store and use payment cards for purchases.
To help launch the Russian site, eBay moved last summer to build a local team in the country. That group, which now has 14 staff members when counting both eBay and PayPal employees, is led by Vladimir Dolgov, general manager of eBay Marketplaces for the Russian Federation. Dolgov was formerly country director for Google Russia. Before Google, Dolgov was CEO of Ozon.ru, an e-retailer that refers to itself as the Amazon of Russia.
That team has been busy working on the Russian site and also on Russian mobile offerings. 6% of eBay's 2012 Russian sales came from a smartphone or tablet, Jones says, and Russian sales via those devices are growing 200% year over year for eBay.
Part of that growth likely stems from a Russian fashion app eBay launched in November. Called eBay Moda, the app for Apple Inc.'s iPhone is already one of the most downloaded lifestyle apps in the Russian iTunes store, Jones says.
Aiming to link mobile and local shopping, as it's done in the United States, eBay also just launched a Russian daily deal app that offers coupons for goods and services that consumers can redeem in Moscow stores.
Colin Sebastian, an analyst with investment firm Robert W. Baird & Co. who follows eBay, says focusing on mobile in Russia and other emerging markets is a smart move. "Many new [Internet] users are mobile-only users," he says. "Early success in mobile is helping them fuel growth in emerging markets."
EBay in April began marketing to Russians, running a nationwide TV commercial explaining how eBay gives Russians a passport to purchase global goods, showcasing, for example, handbags from Milan and business suits from London.