ELECTRONIC COMMERCE in RUSSIA

1. ELECTRONIC COMMERCE in RUSSIA (the very brief survey)

2. Moscow Russia Kazan 800 km

3. Kazan State University (Russia) • Department of Economic Cybernetics • The subject of education: • application of mathematical methods and IT • towards the economic problems • The main components of training: • Economics • Mathematics E-commerce • Information Technology Law Ethics ...

4. Olga A. Kashina • (ak@mi.ru, okashina@mail.ru) • Subjects of interest: • technological aspects of e-commerce: • Principles of distributed systems organization • Web technologies (client & server side) • Security issues • Disciplines taught: • Web technologies and their application in business and education • Scientific applied software for economic solutions Electronic Guides Development http://kek.ksu.ru http://kek.ksu.ru/okashina.html

5. Some Statistics: • According to the analitical digest (www.zametki.ru) of the Russian Internet marketplace activity: • $60 mln was the total amount of sales (B2C) in 2000 • $100 mln was theexpected amount of sales (B2C)in 2001 • In October, 2001 • 500is theamount of large e-shops (www.magazin.ru: February, 2002:936) • 500 000 is the amount of the active Internet-buyers. • 90% of the assortment: computers, books, CD, video 36 / 47 - there is enough space for growth. According to the report of the METAGROUP company (www.metagroup.com) that had conducted the comparative analysis of the state-of-the-art in e-commerce in 47 countries: in October 2001 occupied the 36-th place. Criteria, that were taken into consideration: The total amount and the security level of financial transactions (47) The market potential (living standard & products competitiveness ) (43) Technology: investments in technology improvement (44) number of computers per capita (12) number of Internet-connections per capita (47) number of credit cards per capita (45 / 0,0012)

6. Some More Statistics • According to the report of the Russian Center of Public Opinion Research • (www.wciom.ru) overwhelming majority of Russian residents has never used computers • 16% of population use them regularly • 9% – every day • 4% – weekly • 1% – monthly. The Acсenture company (www.accenture.com) in summer 2001 has conducted the poll among the heads of the largest companies in 21countries, including Russia. Here are some figures: 37%of Russian companies are actively involved into e-commerce 60%of respondents intended to increase the investments intoB2B sector (in Russia this rate is 67%) 83%intended to increase the investments into new IT(mainly, m-commerce) (in Russia - 90%) absolute majority of interrogated officials believe that the Russia’s well-being depends on this sector of economy. • American Chamber of Commerce in Russia (www.AmCham.ru) • Informational support • Investments into Russian economy • In 2001 the American investments to Russian e-commerce: $50mln • (To compare: the total amount of foreign investments to Russian economy in the first half of 2001: $6,7 billion )

7. Beyond the figures: The agents of the Russian e-market: Internet front-stores: www.ozon.ru, (books, video & music production, software, works of art, rarities) www.megashop.ru(computer hardware &software, office equipment & accessories , digital cameras, games) books.ru (all kinds of books in Russian and in English) www.StroyShop.ru (B2C+B2B: 1 000 000 items of construction materials & equipment, free delivery, 4 types of payment (no e-payment yet))www.aromat.ru (perfumery) www.bolero.ru(books, software) www.cue.ru (billiard equipment) www.cup.ru (tea, coffee, equipment) www.dostavka.ru (computers,...) www.kenga.ru (goods for children) www.tito.ru (toys) www.softline.ru (software, books)

8. Beyond the figures (continued): The agents of the Russian e-market: Trade systems: www.EcomAport.ruwww.otvet.ru www.ematrix.ru variety of specialized shops, services, news 2 catalogues: goods & services, companies Hi-Fi tech • www.StroyShop.ru(vertical portal) • Wholesale service • Internet-auction • portal of news at the Russian • market of building materials • encyclopedia on web-resources • Individual order service • www.torg.ru (horizontal portal) • variety of front-stores • (from real estate to rattle toys) • variety of services • (law, insurance, delivery, publishing, advertisement, • design) • Holding companies: • www.eHouse.ru • the open system of (11) most popular e-shops • transportation company (www.skorohod.ru) • reference system (www.pricematrix.ru) • trade system www.ematrix.ru (for both agents of the Hi-Fi technology market), • advertisement company (www.manifest.ru) • service of banner exchange (www.bannerbank.ru)

9. What than? The tendencies of e-commerce in Russia • ( According to www.zametki.ru) • Expanding of the supply assortment, development of B2B section(automobiles, building materials, raw materials, consumer goods) • Focusingof the assortment, development of e-shops specialized on definite goods (stamps, seeds of garden plants, goods for pets, fishing &hunting facilities) or services (esp.related to the digital information retrieval and processing) • Development of marketing activity • Development of the delivery services(up to the moment it s the most weak звено) • Development of the supplementary services(consultations, delivering of more detailed consumer information, e-facilities for making the choice (design of a house interior, virtual fitting-rooms, virtual techniques for make-up selection) • Expenditures reducing via cooperation(web-server hardware & software acquisition and maintenance, IT and accountancy staff salary, products delivery, ...) • Integration of markets(B2C+C2C, B2C+B2B), development of Internet-auctions • Development of Internet-advertisement • m-commerce development • Development of e-payment systems

10. E-money vs ususal one The e-payment systems used in Russia Due to www.zametki.ru it is expected that by 2006 e-payment will be almost total. CyberPlat(www.cyberplat.ru) Assist (www.assist.ru) PayCash (www.paycash.ru) WebMoney (www.webmoney.ru) Russian Shopping Club (www.russianshopping.com) Elit(www.elit.ru) instant!(www.paybot.com/defaultrus.asp) interRussia(www.interRussia.com) • e-cash – a technology, having 2 principle features: • the possibility to conduct the payments without transferring funds from one bank account to another • the anonymity of the payments.

11. Coming back to figures… CYBERPLAT GOES TO SPACE www.cyberplat.ru December 2001.CyberPlat System Processed First Payments Made on Board a Space Orbital Station.Russian spacemen Vladimir Dejourov and Michael Tiourin have purchased flowers and gifts for their relatives in he Internet shops, where spacemen. All purchases were delivered to their destinations at the time. According to the annual report of CyberPlat 2001 was extraordinarily eventful and effective from both the system development point of view and in view of the financial targets attained. The company has not only preserved but actually consolidated and strengthened its grounds in the B2C market and has turned into a leader of B2B market. 2001: number of e-shops: 177 (60 new in 2001) (now: 186) number of goods & services: > 1 million turnover: RR1.68 billion ($57.4 million) (8 times larger than in 2000) number of purchases: 600 000 (now: 650730;daily: 900) market share (in the segment of the on-line card-based Internet- payments): 90-95%.(twice larger than in 2000). The "Dealer On-Line" project is being implemented together with the Vympelkom company operating under its trademark - BeeLine . 22 dealers involved. It has monthly doubling turnover. (In June, 2001 = 300% ). • Main features: • multibank operations strategy (13 banks) • wide spectrum of payment tools One more important event of 2001 is the company's entry into American Chamber of Commerce.

12. Coming back to figures… 2001: Turnover:WMR – RR 53 466 618; WMZ - $10 774 412;Number of transactions: WMR - 58 050; WMZ - 348 606;New registrations:90 953Amount of unique hosts connected to the system: 173 876 www.webmoney.ru 1) monthly amount and number of WMZ transactions 2) monthly amount and number of WMZ transactions 3) number of connected hosts and newregistrations www.assist.ru ASSIST is a leader at Russian Internet- market and conducts more than 80% of the total amount of Internet-transactions. (???)

13. E-payment systems: what is the difference? (www.i2r.ru) I. type of e-payments (type of participating agents): Participants Type Traditionalanalogues Examples Clearingbetween organizations CyberPlat Juridical ps. B2B Cash& fundstransfer Consumers(buyers), Juridical ps. (sellers) WebMoney С2B Cash, postalorders, cabletransfer WebmoneyPaycash C2C Consumers Eaccess Phonepay The very low value of the bargain (ex: jokes: $0.01/unit) Consumers (sellers), Juridicals (buyers) B2C bank- bank Banks - SWIFT

14. E-payment systems: what is the difference? (www.i2r.ru) I. type of e-payments (type of financial operations ): Type Application Examples Card account control Plastic cards (credit or debit type) Cyberplat (Cyberpos) e-checks & other payment obligations Self-contained systems of inter-corporative payments Cyberplat (Cybercheck) e-cash Payments to consumers, e-analogues of tokens and cards, paid in advance Paycash Webmoney Bank accountcontrol Systemsof "client-bank" type with the access via modem or cellular phone Telebank ("Gouta-bank") AnelikWestern UnionMoney GramContact Funds transfer without bank account opening Funds transfer via computer networkssimilar to post or wireless transfer Internet-banking service: 100 commercial banks; 10 e-payment systems.

15. E-payment systems: what is the difference? II. technological principle Security principle Type Examples Telebank ("Gouta-bank") "Internet Service Bank" Systems with central server Secretaccesskeys Mondex, ACCORD-card Smart-cards Hardware techniques Client-side e-wallets Secure data exchange protocols, reliable cryptography algorithms PaycashWebmoney Paid telephone call Eaccess, Phonepay Secure central database with PIN-codes, hardware techniques, reliable telephone networks • Other criteria: • Currency types(only RR, only USD, both of them...) • Targeted market of goods and services (physical, digital,both of them) • Volume of transactions www.emoney.ru

16. Latest Events “E-Russia in 2002 - 2010” (the Federal Targeted Program) was signed by Russian prime-minister Michail Kasianov on January, 30. It is aimed on the development of IT and its implementation to the state management and economy. The total amount of finance involved in implementation of this program is RR 76 billion, including 51% – from the State Federal Budget, 30% – from the Local Subjects of Federation Budgets, 19% – from non-state sources. In 2002 the RR 600 mln are allotted from the Federal Budget. V Conference on E-Commerce in Russia (October, 31 – November, 1, St.-Petersburg) • “Internet & Investments” (the International Forum, April, 25-26, St.-Petersburg) • The state-of-the-art in IT-investments in in the world and Russia • The prospect of e-commerce in the world and in Russia • The fund-rising issues • The specific features of e-commerce development in Russia, America and Europe, … “Secure IT for business, government and civil interaction”, (March, 28 – 29, Moscow)

17. Online resources • WWW.MAGAZIN.RU: • catalogue of e-shops(936) • catalogue of on-line auctions(13), • catalogue of books and periodical press on e-commerce in Russian • links to the payment systems sites www.emoney.ru • announcements of events • materials of seminars and conferences • links to the news spiderslordtime.com.ua/news/

18. P.S. You are welcome: http://uwphoto.ru E-shop of computer hardware & software, books, peripheral devices .