The most popular niche for online Russian buyers is apparel and footwear. That is according to East-West Digital News, which covers technology and innovation in Central and Eastern Europe. But there are niches that are underdeveloped online. One of them is alcohol.
In this post, I will attempt to explain the status of online alcohol sales in Russia.
By the numbers
First, let’s review the numbers. According to the Association of Internet Trade Companies, a Russia-based trade association, online sales of alcohol in 2017, excluding beer, amounted to 3.2 billion rubles (around $55.3 million) and 1.4 million liters (roughly 370,000 gallons).
This is an increase over 2016 of 18 percent (money) and 42 percent (volume). According to AITC report, the most popular beverages ordered online in 2017 were whiskey, cognac, vodka, tequila, and wine. The average order was approximately 5,700 rubles or roughly $100.
Seventy-five percent of all online alcohol sales in 2017 were to Moscow residents. Twenty percent went to Saint Petersburg, the second largest city. Surprisingly, 52 percent of the buyers were women aged 21-31. According to the AITC, these women are not necessarily consumers; they are mostly personal assistants or secretaries of business executives.
These numbers are amazing because selling alcohol online in Russia is illegal.
The law of the Russian Federation “On the Protection of the Consumers’ Rights” No. 2300-1 on February 7, 1992 was confirmed by the Decree of the Government of the Russian Federation No. 612 “On Approval of the Rules for Sale of Goods by Remote Means,” dated September 27, 2007, which governs the selling of goods and services on the internet. Point 5 of the Decree states:
It is not allowed to sell distilled alcohol products, as well as goods, the free sale of which is prohibited or restricted by the legislation of the Russian Federation.
Major retailers are attempting to persuade the government to amend the law and allow the online selling of alcohol on at least certain days or time. But other less prominent sellers claim to have found legal methods to consummate the sales.
Some online stores sell “reservations” for alcohol and not the actual product. In this case, the customer pays money electronically, but for a service. The buyer will then travel to the store to get the reserved product, as the delivery will be treated as a part of the selling process.
Another way is to give away alcohol (for free) when purchasing other items, such as cigarettes. This a common tactic among online retailers to offer prohibited products.
The demand for ordering alcohol online is high, and the market is growing, notwithstanding the legal restrictions. There are two reasons for this.
First is the price. Alcohol is much less expensive online. Second is the variety. Physical retailers cannot match the range of alcohol products from online sellers.
As for customs clearance from cross-border sellers, Russian citizens cannot receive via customs more than five liters of alcohol in one calendar month. Moreover, only three liters out of five are free of a customs declaration — if they cost less than €150 ($184) in total. The fourth and the fifth liter will be assessed a €10 duty each. Some cross-border online stores that deliver alcohol to Russia do not allow purchases of more than three liters to avoid the complexity.