201810.10

The Birth of AliExpress Russia

For manufacturers, traders and distributors, the birth of a major e-commerce player is perceived either as a windfall or as a threat. This depends, among other things, on the risk that this new player may pose to intellectual property rights owners. The birth of AliExpress Russia inevitably provokes feelings of enthusiasm and dread.
Founded in 1998, Mail.Ru is a pioneer of the Russian Internet. Yet, twenty years later, e-commerce is struggling to take root in Russia. The penetration rate of e-commerce is low (around 3% or 4%). The causes are multiple and deep:
• limited purchasing power;
• distrust as to the safety of online E-commerce, which discourages Russians from using bank cards;
• inappropriate logistical infrastructure; or
• the concentration of retailers in Moscow.
To summarize, “The full potential of the Russian E-commerce market has yet to be fully exploited” (M. Sadyki, National Report on Electronic Commerce Development in Russia, UNIDO Working Paper Series on Inclusive and Sustainable Industrial Development, WP 13 | 2017, page 3). Nevertheless, Russian e-commerce is progressing rapidly.

M. Sadyki, National report on e-commerce development in Russia, UNIDO, Inclusive and Sustainable Industrial Development Working Paper Series WP 13 | 2017, p. 8.

Russia has adopted its digital economy program, with a projected annual budget of US $ 1.8 billion by 2025, to address current weaknesses (Bank Group World, Russia Economic Report No. 39, May 2018, page 42). It would, therefore, be legitimate to expect a speedup of the Russian e-commerce in the coming years.
Mail.ru is not the only e-commerce player in Russia (Ulmart.ru, Wildberries, Citilink or Ozon). But one of its strength is that a large number of Russians use a mail.ru email address, and Mail.ru Group owns and control Vkontakte, which is the most famous Russian social media.
The establishment of a joint venture (AliExpress Russia) by Alibaba (48%), MegaFon (24%) and Mail.ru (15%), should give a boost to Russian e-commerce. There is no doubt that Alibaba will share its experience, know-how, technologies, and means of payment (Alipay). For Alibaba’s CEO, “[b]y partnering with Russia’s leading consumer internet platform, AliExpress Russia will help digitize and transform the retail value chain in Russia, enabling a seamless and innovative experience for consumers as well as creating significant opportunities for Russian entrepreneurs and SMEs to grow in their home market and expand globally” (Alizilia.com, Sept. 11, 2018). And he continues: “[o]ur experience in China and other markets around the world makes us uniquely qualified to help build the future infrastructure of commerce in Russia and neighboring countries(ibid.). One can assume that this reference to “neighboring countries” refers to the One Belt One Road Project, which implies the collaboration of a large number of countries, including Kazakhstan, Russia, Belorussia or Poland.
The ambitious AliExpress Russia poses a new challenge to intellectual property right holders. Alibaba’s teams have made considerable and effective efforts to combat counterfeiting, often in collaboration with intellectual property rights holders and online brand protection companies, including IPTwins.com. Nevertheless, the most recent reports continue to indicate that most of the counterfeit goods come from China, on the outskirts of Russia. Without a strong customs barrier and in the absence of product traceability, monitoring of Russian e-commerce should become a necessity for intellectual property rights holders.

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