Rapid emergence of e-commerce in Russia

Russian economic growth in recent years has largely been based on growth of industries supporting the war effort and rapid growth in household consumption. The increase in consumer shopping is clearly reflected in retail sales, which experienced soaring growth in 2023–2024. Retail sales growth last year slowed to 10 % y-o-y, and declined further to a 5.4 % annual pace in the first seven months of this year. E-commerce growth this year, on the other hand, has exceeded 30 %, while the share of traditional retail selling in market-square stalls has dwindled to just 2 %.

Figures from Russia’s State Statistics Service, Rosstat, show e-commerce accounted for 18 % of retail turnover. The estimate of Russia’s Association of Internet Trade Companies (AKIT) puts the share of online sales slightly higher, around 22 %. Two of the Russia’s five largest retailers operate entirely online. National averages can be misleading as to the regional importance of e-commerce, however, which varies greatly from region to region. In Moscow and St. Petersburg, where pick-up points are ubiquitous and home delivery services widely available, the share of online sales exceeds 40 % of total retail sales. E-commerce in some North Caucus regions is essentially nonexistent.

Nearly all of Russia’s e-commerce business is in domestic hands. Sanctions and tariff decrees have made it virtually impossible for households to order goods directly from foreign e-commerce sites. When Russia green-lighted parallel imports of foreign goods into the country without trademark holder consent in 2022, domestic online sellers quickly seized the opportunity. Today, Russia’s e-commerce platforms offer a vast range of domestic and foreign products. E-commerce in Russia today is dominated by two platforms, Wildberries and Ozon, which control a combined share of 70-80 % of all online selling in Russia. Wildberries is also Russia’s second-largest retailer, accounting by some estimates for close to 10 % of total Russian retail sales turnover.

The most popular categories for online shoppers are household goods, clothing and consumer electronics. E-commerce provides Russian consumers with a rich selection of products, an abundance of choice that has been particularly well-received by the middle class in Russia’s larger cities. Indeed, the ever-increasing supply and variety of online wares is considered one of Russia’s few success stories of recent years. As e-commerce expands, the share of food products in sales has increased (AKIT reports it reached nearly 20 % in 2025). Foodstuffs represent slightly less than half (48 %) of total retail sales turnover in Russia.

Ukrainian drone attacks rock Russia’s biggest online sellers

Ukrainian attacks have systematically targeted e-commerce logistics hubs across western Russia since late July. The first attacks targeted the major distribution centres of market leader Wildberries, and more recently those of number-two Ozon. The business of both is based on providing logistics and infrastructure to third-party vendors. While these large distribution and storage facilities are the property of the platform provider, the products kept inside are treated as seller property under a “vendor partnership agreement” rather than a traditional bailment agreement. This has exposed sellers to huge potential losses.

Publicly available information indicates that only two of Wildberries’ ten major distribution centres were still operational at the end of August. The destruction of these distribution centres and warehouses is catastrophic for both the e-commerce platforms and companies relying of online selling. While estimates of the value of destroyed goods vary greatly, several estimates put the value of damaged goods as of end-August at roughly 650 billion rubles. The costs of repairing and rebuilding the damaged logistic infrastructure is also likely to reach hundreds of billions of rubles. Wildberries was already a highly leveraged business before the attacks, and Ozon has long struggled with profitability issues. It is hardly surprising that the main players in the e-commerce space are seeking government help.

To alleviate some of the distress, the Russian government produced a signed resolution granting significant tax breaks to online sellers and platforms. The proposed rescue seeks a 12-month grace period for affected firms from value-added tax payments, income tax payments, tax audits and insurance payments. The Central Bank of Russia (CBR) has also urged credit institutions to use the opportunities to restructure corporate loans in the sector. Many regional governments have promised to provide low-interest loans to small businesses affected by the attacks.

Precise information on the effects of Ukrainian drone on domestic e-commerce or price trends of nondurable goods is not yet available. The SberIndex, which tracks retail transactions collected by Sberbank, indicates that the sales turnover on e-commerce platforms declined sharply in late July. Delivery difficulties in e-commerce and increased logistics costs, as well as higher insurance premiums, could increase prices of many consumer goods. CBR governor Elvira Nabiullina stated at the press conference following the July 24 rate meeting that unexpected supply shocks in the retail sector could fuel inflation.

Providing cover against Ukrainian drone strikes has proven challenging for Russia. The government has essentially delegated defence of civilian targets to corporations. On August 24, president Putin signed a decree creating a legal basis for government seizure of firms that fail to take sufficient precautions to deal with security threats or make progress in implementing security measures to deal with drone threats. The decree’s vague wording gives government entities the broad authority to seize companies based on their subjective appraisal of the security situation.