Sergey Podkin of Boxberry on cross-border sales: “The volume of deliveries is falling, but this will not lead our market to catastrophe”

Over the past few years Boxberry, a relatively new player on the Russian e-commerce shipment market, has been developing a competitive offer for deliveries and customs clearance from the USA and Europe to Russia. The company specializes in express cargo – sending packages worth up to 1,000 euros and weighing up to 31 kg. Part of the international delivery cycle is run out of the Boxberry office in Berlin.

In an exchange with EWDN Germany correspondent Daria Bobrovskaya, Boxberry Head of international development Sergey Podkin shared his vision of market trends during the present crisis and prospects for the future.

With which countries is Boxberry currently working with and which direction is being prioritized by the company?

At the moment, we strive to cover as much as possible of the European and American markets. In 2014, we moved about 250,000 items. The great bulk of them – about 90% – is being sent out by US online stores. European Union countries and, especially, Germany, represent around 10% of all our international shipments at present.

Today’s priority is the European Union. Here we carry out ground shipping from our warehouse in Berlin, engage in order fulfillment and customs processing.

Of course, we could not ignore the market that is so popular today, China. This country is in our plans, but talk of getting started there is premature: there are a lot of nuances of a technical nature. In particular, Chinese online stores do not always have the opportunity to translate the names of their goods, which makes it difficult for them to collect data for Russian customs clearance. As Asian sellers prefer the principle of “cheap, even if it takes a long time,” many are happy to work with the Russian Post. Whether they are willing to change this principle in favor of “faster and inexpensive” is not yet clear. Therefore, we are not in a hurry to start delivering Asian goods.

Are your direct rivals for deliveries from the European Union DPD и DHL?

I would not call DPD and DHL the competitors of Boxberry. We have different starting points, we are in different price segments, offering different methods and conditions of delivery. DPD and DHL are air-delivery premium operators with the subsequent tariffs. Boxberry offers ground delivery on a budget: inexpensive, but with predictable delivery times and the ability to keep track of the cargo on the company’s website.

Speaking of your clients, who is Boxberry betting on: on fully fledged Internet stores or consolidators like Eurosell?

In Germany and the European Union mediation services are not as strong as in the USA, so in Europe it is more convenient to work directly with online retailers. This spring, we plan to connect several major international clients. However, in the current economic climate it is difficult to predict how things will develop: it is not clear what will happen to the ruble, but an expensive dollar and euro have a very negative impact on the purchasing power of Russian consumers. People have started to save money and, accordingly, the delivery volumes are falling. Whether European online shops will enter the Russian market in such circumstances and organize a separate sales channel for Russia is unknown.

In May 2014, iHerb, a major US online store for health and beauty, began delivering to Russia via Boxberry.

What was the trend in cross-border e-commerce deliveries in 2014 — growth, stagnation or a decrease? 

Currently, the most important player in e-commerce in Russia is the government, which creates a certain political situation. As a result, the economic situation changes as well. The population starts to save, buy less, both in Russian stores as well as from abroad, so the volume of international shipping is reduced. The present indicators are not too frightening: the fall was not one of twofold or threefold, but only of around 10-15%. However, keep in mind that December is the peak season: many buy gifts for the New Year, so the decline in international shipping is not so noticeable. At another time, the effect would be more pronounced.

However, any crisis is a temporary phenomenon, so it makes no sense to radically change the policy delivery. You just need time to adapt the delivery terms and prices to fit the demands of buyers and our customers. Of course, we will continue to cooperate with Europe and the USA, even in times of crisis.

In terms of the plans to reduce the customs duty-free limit from 1,000 euros per month, does Boxberry win or lose from these changes?

It is too early to talk about it: all the changes are under discussion and the real decision is still pending. I think that in itself the decrease of the duty-free limit is unlikely to affect the number of items ordered. But if at the time the amount is agreed, the government had still not adopted a working mechanism for the payment of fees by the population (this question will be especially acute in the regions), we are faced with a serious problem. People will stop placing large orders from abroad simply because they will not understand how to pay the customs duties.

What is your most optimistic and most pessimistic forecast for 2015?

I do not believe in pessimistic scenarios such as the assumptions that “international shipping will be banned” and in addition to sanctions there will be barriers for international deliveries for private individuals from abroad. So let’s be optimistic: the ruble will stop depreciating, the exchange rate stabilizes, people will leave their saving mode, and therefore by the fall of 2015 we will restore the volume of international shipping.

Daria Bobrovskaya conducts a research project at Bundesverband für Groß- und Außenhandel (Germany’s association for wholesale, trade and services).

• EWDN has just released an in-depth study on cross-border sales to Russia. In addition to a full set of market data and forecasts, the report includes analysis and practical recommendations to e-commerce players in the fields of marketing, payments, shipment and deliveries, as well as little-known legal and HR challenges. To receive an executive summary at no charge, please email to [email protected]