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Russia’s economic downturn leads to rise of group buying websites

15 January 2015

Russia’s economic instability leads to consumers being more careful about their expenses. However, they still want to treat themselves, pushing group buying sites* such as Groupon or Biglion.ru in the spotlight, argues Veronika Zhupanova, analyst at Canadean.

Consumers are trying to save at all costs

Consumers are trying to save at all costs: According to a VTSIOM’s (Russian Public Opinion Research Centre) survey from December 2014, 56% of Russian consumers constantly limit their expenditure, compared to 13% in 2012, and 21% have only started to do so recently. Veronika Zhupanova, analyst at Canadean says: “This reflects how the rouble devaluation and recent political and economical events have made consumers thriftier with their expenses, as many of them are unsure of how much they will be able to afford tomorrow.” 

Group buying sites offer better prices 

Despite the tough economic situation, consumers still want to treat themselves, and seek for opportunities to do so at better prices. Group buying sites, such as Groupon or Biglion.ru, that offer discounts on products and services, have more opportunities than ever to respond to this need. Launched in 2012, Repka.com – a group buying  site where consumers get better prices due to bulk buys – reports a sales growth of 300% between September and December 2014. Repka.com's revenue stood at 150,000 - 180,000 RUB (2,298 USD - 2,758 USD) per month in autumn 2014, and the site's turnover is expected to increase to up to 50 million RUB (766,079 USD) in 2015.

Zhupanova says: “While consumers refrain from big-ticket purchases, such as holidays and new cars, they will continue to want to treat themselves in these tough economic times. This presents a great opportunity for group discount sites offering indulgent products and services.”

Quality is key to customers’ satisfaction

Group buying sites are fairly new in Russia, which means that a number of consumers will be sceptical about the quality of products and services, as well as discounts being genuine. To fix such perceptions, the sites have to ensure that suppliers keep the quality of their products and services consistently high and verify that consumers are getting a proper discount.

Zhupanova adds: “When customers are not 100% satisfied, they will associate group sites with poor quality products. Thorough selection of manufacturers or service providers and excellent customer service will benefit the sites, suppliers and consumers.”

 

Groupon Russia

Groupon.ru offers red caviar from Kamchatka.

 

NOTES

*Website that offer consumers goods and services at discounted prices that suppliers are able to provide due to shifting large volumes

All numbers used in this text are based on RBC Daily and a VTSIOM’s (Russian Public Opinion Research Centre) survey, conducted in December 2014.

Please get in contact if you have any questions to this or other Canadean insights. Analysts are available to comment. Contact the Canadean press office on +44 (0) 207 936 6536 or email press@canadean.com

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