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The market for online trading equipment in Russia

In today's issue of "Money" my article appeared on the market for online trading of appliances in RuNet. In addition to market research, this article describes the business of online stores that sell appliances - from the cost of creating your online store to what problems online retailers face, what “rakes” are in their way and how many This business can earn. This market turned out to be very interesting - first of all, it fits perfectly under the definition of “perfect competition” , secondly, the players on it are mostly very small and, thirdly, online stores start earning virtually from the first day of their opening (usually - from the second, because it is on the day after the order that they deliver the goods to their customers and receive money for it).
The assessment of the size of the e-commerce market also turned out to be interesting - no one could give me exact figures until I met Mikhail Ukolov, general director of the Utinet.ru notebook store, who defended his thesis on the e-commerce market. He developed a simple, but extremely interesting method for assessing this market, which is given in the article, and according to which the market for online trading accounts for 10-11% of the total volume of trade in equipment in Russia.
ABC e-merchant
The volume of the retail market of electronics, household and computer equipment in Russia is $ 30 billion a year. Moreover, the share of online retail, according to some estimates, reaches 10% here. In general, this business is close to the people: the product is clear, the entrance is easy, the rules are simple. In addition to the very large turnover, Internet commerce in home appliances is interesting because (rarely) represents an almost perfect picture of market competition.
Permanent sale
In the b2c segment of online trading, audio, video, household and computer equipment, as well as cell phones, provide the largest volume of sales. The buyer is always looking for where to buy goods cheaper, and high competition among online stores provides a much better price than offline retailers. For example: most recently the 46-inch LCD TV Sharp LC-46XL2RU in the stores "Technosila" cost 109,990 rubles. In the online store "Technosila" he also pulled 99,990 rubles. And his minimum price found through the service price comparison price.ru, was only 72 500 rubles. with delivery within the Moscow Ring Road. Such a difference in cost (34% in our case) is a weighty argument for buyers, and the growing interest in online shopping is easily explained. Even the giant MediaMarkt, which is positioning itself as a discounter, is not able to compete on prices with online stores. MediaMarkt declares that if the buyer finds the goods purchased by him in another store cheaper, he will be reimbursed 110% of the difference, however, in a note to this statement it is said that it does not apply to goods in online stores. That is, MediaMarkt, maybe a discounter, but only in comparison with other offline stores.
A huge advantage of retail appliances online is that the product is standardized. The Nokia N95 is everywhere Nokia N95, so with a guarantee, a certificate and a cash receipt, the consumer doesn’t care where to buy it - at the Nokia branded center or on the Internet, the price of goods and the convenience of making a purchase come to the fore. In addition, the technique is usually not bought impulsively, and after a rather long process of selecting the desired model. That is why the first place in terms of sales in the network is precisely different kinds of devices and electrical equipment, and not, say, food, which, as a rule, is needed "here and now", or clothing that you should definitely try on before you buy. In large cities, many people select the necessary equipment in offline stores - evaluate it "live", and then go to the network, go to price.ru or Yandex.Market and order the selected product from that online store, where it is cheaper.
In the late 90s of the last century, many analysts predicted a difficult fate for online stores in Russia because of the underdevelopment of payment systems. Our payment systems have not evolved to a decent level, but the Russian online trading feels good. Its engine was the practice of paying for goods after they were delivered and checked by the buyer. In this simple way, Internet merchants have solved the problem of trust in the network.
Fight for $ 3 billion
According to the company Tekhnosila, the volume of the market of household appliances and electronics, including cell phones and computer equipment, in 2005 was $ 23.7 billion, in 2006 - $ 27.45 billion, and in 2007 it should exceed $ 30 billion. Anton Guskov, an analyst at the Russian Association of Trading Companies and Manufacturers of Household and Computer Equipment at RATEK, cannot yet accurately determine the share of the Internet in sales of core products in 2007, saying that, "by feeling, this is a few percent."
The head of Yutinet.Ru, a large laptop online store (utinet.ru), Mikhail Ukolov , who defended his thesis on this topic, believes that the traditional method of estimating the volume of online sales of laptops by polling large distributors and manufacturers gives understated numbers due to that many online stores buy goods not from them, but from their dealers, and such sales by distributors count as offline. In addition, this method does not take into account the number of sales of laptops by traditional retailers (such as Technosila, M.Video, Ultras, Oldie, etc.) through its internet storefronts.
Mikhail Ukolov: In January 2007, we attempted to more or less accurately estimate the volume of retail sales of laptops via the Internet. To this end, we daily monitored the attendance counters of more than 400 online stores selling laptops. In cases where they traded in other types of goods, we took into account the attendance of only their laptop parts. The total average daily attendance in mid-January was 65 thousand. Knowing the average industry conversion rate of visitors ( number of purchases made per 100 visitors. - "Money" ), we estimated the number of purchases. Taking into account the fact that the attendance of online stores on weekends is lower than in working days, and there are more weekends in January than usual, we reached the figure of online retail sales of laptops in January - 9,500 pieces. The most optimistic estimate of the total January market (according to aggregated data from Asus, Toshiba, IDC and a number of distributors) is 100 thousand. It turns out that the share of online laptop retail accounts for 9.5%. This is noticeably more than the 1-2% that vendors give. Approximately the same share, in my opinion, is occupied by online retail in the sales volumes of plasma and LCD TVs, LCD monitors, a little less - projection TVs, audio and video equipment . This year, I believe, the share of online laptop sales will be 10-11%.

According to one of the largest Russian distributors of computer components and laptops ELKO Russia, its sales to online stores account for about 5% of the total sales. However, it should be borne in mind that a significant part of the company's sales comes from PC assemblers, who sell their products via the Internet, as well as resellers and dealers, therefore, ELKO Russia confirms the results of the 10% share of the Internet rather than refutes.
According to the Discovery Research Group, in 2006, Russians bought 9.7 million TVs, 2.44 million DVD players and 3 million mp3 players. J`son & Partners forecast for 2007 sales of cellular phones - 31-32 million units. At the same time, Internet buyers tend to buy more advanced and, therefore, more expensive models: for example, the average price of a tube purchased over the Internet is almost $ 100 more than the price of a device purchased offline.
Competition in online retail in the market of household appliances and electronics is rabid, with the bulk of this retail accounted for many small players. According to Arkady Moreynis, head of the price comparison service for price.ru , as of December 19, 2007 only in Moscow TVs offered for sale through price.ru 342 online stores, 566 video equipment, 628 audio equipment, 567 photo equipment, and 477 laptops. Such market tightness, coupled with the ability for the buyer to move to another outlet with one click of the mouse, forces online stores to work with a minimum wrap, earning on the back. Another objective reason for the low prices of online stores is the lack of rental costs for retail space and numerous staff.
The Internet market of various kinds of home appliances is characterized as "completely competitive." This is an economic term describing an idealized market condition, when there are so many buyers and sellers that, individually, they cannot influence the price of a product, the products sold are homogeneous, entry into the market is easy, and access to information is equal and complete. Any buyer, using the services such as price.ru, receives information about today's price for the product of interest to him from 95% of online retailers.
The first steps
One of the main reasons for the rapid growth of Internet commerce in home electronics, computer and household appliances is a very low threshold for entering this business - according to experts, you can meet 500 thousand rubles. In addition to registering an LLC and removing an office, this amount includes the costs of creating the site, staff and advertising on price comparison services in online stores. If you wish to sell large-sized goods like projection and plasma TVs with a large diagonal, you will need to spend another few vehicles for couriers (from 200 thousand rubles, depending on the "coolness" of the fleet).
It is recommended to not skimp on the website of the online store - this is his face, and if the site makes the buyer think about whether the shop is a sharashkin office, then it is likely that the buyer will go to a competitor. The site must inspire confidence among potential buyers, must be convenient for finding the right product according to different criteria, the store’s phone numbers must always be visible to the visitor, and the site must have information about the company, including its actual address. Prices should be indicated in rubles including all taxes, and the buyer should not search for information about the cost of delivery. Of course, it is necessary for the site to withstand the planned number of customers, be accessible and work "without brakes" around the clock, customers must dial into the store on the first attempt even at rush hour, not languishing in anticipation of the manager's response. Plus, the buyer should know without a call to the store, what product is in stock, and which is available only for the order.
Mikhail Tokovinin , director of QSoft (development of online stores): Creating a high-quality online store will cost $ 6-10 thousand, the development will take 3-3.5 months. It will be integrated with the program "1C-Accounting", in addition to the other functions necessary for the website of the online store, it will have a section for managers to manage orders and if there is a properly configured dedicated server, it can withstand about 50 thousand visitors per day, which is more than enough for an average online store. It will be a non-exclusive solution based on the 1C-Bitrix system, which includes a set of functions sufficient for operation. You can also turn to freelancers ( independent lone programmers .- "Money" ), but this can be both cheaper and more expensive and will require the customer to control the timing and quality of the contractor. To those who turn to freelancers, I would advise not to pay them the full amount in advance or to use the services of guarantors, which are usually the administration of the freelance community on the Internet. They take an advance payment from the buyer and give it to the contractor only after completing the order, withholding their commission.

The operation of an online store is simple: the store places goods in its warehouses from the suppliers it works with, attracts customers, consults them, accepts the order, and then sends the courier to the warehouse so that he can pick up the required goods and bring him to the client. The check for the goods delivered to the customer is usually knocked out in the morning when couriers are collected at the office for distribution of orders, in connection with which most online stores deliver on the day after the order.
According to Aleksey Smirnov , manager of the 1gbit.ru online store, suppliers are easiest to find at exhibitions - at one time and in one place. They are willing to make contact, since many of them have already optimized their business for the features of working with online stores.
Dmitry Rastatuev , head of e-commerce and development department at ELKO Russia: We consider working with online stores a very promising area, we have a separate department involved in this. Through our eCom e-commerce system, an online store can see up-to-date information about the assortment in our warehouse and reserve a product for up to three days without an obligation to buy it back. If the packaging has not been opened, the online store can return the goods to us without giving reasons within three days, we also replace the marriage.

The first time with suppliers will have to work on a prepaid basis, but after a couple of months, online stores, as a rule, receive a commodity credit from suppliers for a period of 3 to 14 days. Unlike offline stores, online retailers do not need to keep the product "for the storefront", and this significantly reduces both the costs and the risk that the goods on display are outdated and will need to be discounted to sell - the period of active sales technical innovations are usually about 6 months, and then manufacturers produce to replace the latest models.
Much more headache brings recruitment. A beginner online store should have at least three sales managers who can competently advise a customer. One of the managers in new stores usually assumes the functions of a cashier. You will need an accountant, or accounting is transferred to outsourcing. You will also need a programmer, site administrator and optimizer - a person who optimizes the site for its high position in the search engines. However, the last two posts are also often outsourced. The functions of a marketer, as a rule, are assumed by the owners of an online store at the first stage - in this business it is necessary to constantly monitor the prices of competitors and adjust their pricing policy accordingly. Another person must check daily whether suppliers actually have products in their warehouse that are marked as “available” in the storefront of an online store - customers are always very angry when such goods are actually absent and this may cause a shaft negative reviews on the Internet about the store.
Another very important task, one of the key points is the search and selection of couriers. An online store entrusts them with an expensive product, it depends on their accuracy and decency whether the goods will be delivered safe and sound to the customer, and the money received for the goods will be delivered to the office. If the courier turned out to be a fraud, a stolen hundred thousand rubles can be a very sensitive loss for a newly-minted online store - just like a device broken on the way, for which the client will refuse to pay.
Alexander Krynsky , general director of the ON NO online store (onno.ru): We pay couriers from 15 thousand rubles, if they are still on probation, to 25 thousand rubles, if he already works in the state. This work is quite dangerous - they carry expensive equipment and significant amounts received from customers, which attract the attention of criminals. In addition, we need to be sure that the courier is an honest person, so we check all applicants for this position through a security agency for criminal record, against alcohol and drugs. I think that saving on couriers is more expensive. The number of couriers depends on the number of orders served. I would advise the novice store to have five to seven couriers (depending on whether the store delivers the goods to customers on the day of the order or the next day), and that at least two of them were in vehicles.
Mikhail Zinchenko , general director of the NEOzon.ru online store: For Peter, a small online store needs three couriers in cars: one for the northern part of the city, the second for the south, and the third for the center. Plus a couple of hiking. On average, a courier delivers three to four, maximum five orders a day. You can, of course, get along with one machine - today it rolls around the northern part of the city, tomorrow - along the southern, but then you need to specify a longer delivery time, but not all customers are willing to wait.

Go to battle
The peculiarity of online retail appliances is that new stores from the first day of operation can have quite decent sales. There are several price comparison services in online stores (for example, price.ru, Yandex.Market, torg.ru, marketgid.ru) in which online stores place their price lists, and customers can enter Search for the name of the model of interest to them and sort the offers by price and availability of goods in stores. Such advertising brings returns instantly. In fact, on these sites, stores are fighting for the buyer, however, their visitors, as a rule, are people who are largely ready to make a purchase.
According to Mikhail Ukolov, who conducted a survey of his visitors on the site of his store at the beginning of the year, the price of goods is a critical factor for 31% of visitors to the site. Given that utinet.ru focuses on quality of service, and not on the lowest possible price, which means the site’s audience is appropriate, it seems that the real percentage of users who monitor the Internet for the greatest benefit when buying goods is actually slightly higher. For example, Mikhail Zinchenko believes that the majority of shoppers moving from offline to online are primarily looking for low prices, and the convenience of buying is a myth, in his words, "in fact, almost no one can deliver on time." Nevertheless, even a third of potential buyers, searching on the Internet first of all for the opportunity to save as much as possible and using appropriate services for this, are a very significant audience. For example, the average daily attendance of Yandex.Market is about 250 thousand people. These people have mostly already decided on the product and now compare prices to determine the place of purchase.
Any new online store has a direct road to these sites, but you will have to trade with a minimum markup, looking back at the prices of competitors.
Alexander Krynsky: All newborn stores start from these sites, and we, when opened a little over a year ago, also. A novice online store that tracks competitor prices for running positions and adjusts its prices depending on them can be obtained from all these sites about 1,200-2,000 transitions per day. The average conversion of visitors from them is 1 to 100, that is, out of every hundred visitors, one buys a box from you (a unit of large-sized goods, for example, a TV, a laptop, etc. - “Money” ) . Accordingly, with the help of these sites you can get sales of 12-20 boxes per day. But when working on these sites, the margin from the sale of one box will be minimal.
Yury Zuykov , sales manager of the online store 1gbit.ru: We sell about 10-12 boxes a day. In principle, we are limited by our logistics - if we have a large delivery department, we can sell up to 25-30 boxes a day through price comparison sites in online stores.

The cost of attracting one client through price comparison services in online stores ranges from 1,000 to 1,300 rubles. Mikhail Ukolov agrees with these figures, but he says that in utinet.ru the cost of attracting a client is $ 22-25, since the store has been working for a long time, it relies on building a brand and quality service and it has a large number of repeated purchases of customers who go directly to the store website . Accordingly, utinet.ru pays nothing for such clients. However, it’s difficult to call his shop small and beginners - he sells more than 100 boxes a day, and his target customers are those who are looking not for the lowest price, but for the best combination of product price and quality of service.
Profitability per unit of goods in the retail e-commerce technology is rather low, especially when receiving visitors from price comparison services. For laptops, the margin is 7-10%, for plasma and LCD TVs - also about 10%. Projection TVs trade with a margin of about 12-15%, and the highest yield takes place in the online trade of expensive brands Hi-Fi-audio and DVD-equipment - up to 40%. However, as far as audio is concerned, only devices from the price segment of less than $ 5,000 can be traded via the Internet, says Yuri Zuykov, who works at 1gbit.ru, which, although it sells laptops and video equipment, focuses on the sale of audio equipment. The fact is that a potential buyer of expensive audio equipment should be allowed to listen to how it sounds in a specially equipped room. Yes, and vendors put a condition to retailers of their equipment - they are obliged to buy a sample for demonstration to customers. Therefore, 1gbit.ru plans to open an offline store soon, where there will be a properly equipped listening room.
Already fed up online stores can further develop through product diversification, expansion in regions where competition is lower and margins are higher, as well as sell franchises and buy promising competitors. Mikhail Zinchenko considers betting on trading at minimal prices justified, since this is the main incentive factor for online purchases. His store aims to be in the first positions on the most popular models in price comparison services. On its website, neozon.ru reports that if the buyer finds the same product in the stores of Tekhnosila, M.Video, Eldorado and other large chain retailers of St. Petersburg within seven days after making a purchase, the store will refund it is 100% price difference. Other retailers focus on improved service, raising prices slightly compared to competitors. For example, onno.ru offers free delivery in Moscow and St. Petersburg on the day of the order, and utinet.ru, as already mentioned, increases the number of repeat purchases at the expense of better service than competitors, reducing the cost of attracting customers. In turn, a consistently high level of sales gives an increase in profitability. If a store selling 10-12 boxes per day is required for normal operation by three sales managers, then 10 managers deal with the implementation of 100 boxes - accordingly, the cost of selling the box is less. However, price comparison services in online stores are neither forgotten by Ukolov nor Krynsky (formerly engaged in marketing in the store of Ukolov) - no one wants to refuse customers from these sites, they simply don’t pay the basic rate. Moreover, many manufacturers are ready to incur part of the costs (up to 50%) for advertising their products on alternative advertising sites in the case when retailers reach a certain sales volume. Thus, it is possible to promote your brand, increase sales, and share advertising costs with a supplier.
Unexpectedly
In addition to the trivial e-commerce stores have other sources of income, which, however, should not hope. Alexander Krynsky says that about once every three to four months a wholesale client falls on his online store onno.ru - the last such client was a holiday home from Ufa, who ordered 54 laptops at once. In the fourth quarter of last year, utinet.ru won a couple of tenders from the Ministry of Education for 1,000 laptops each.Alexey Smirnov also notes the likelihood of an unexpected appearance of a wholesale buyer, especially in the spring, when government agencies close budgets. In addition, a supplier, when an online retailer reaches a certain volume of sales on some models, can return to him as a bonus some part of the amount received when purchasing goods. Thus, the profit of the online store can be divided into two parts: the front-part - directly from sales, the back-part - bonuses and rebates from suppliers. As the store grows, the share of the back-end profit may increase to 15-20%.
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Original article: Journal "Money" â„– 2 (657) from 01.21.2008
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Source: https://habr.com/ru/post/19067/


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