Tag: internet

Russian web shoppers : the relative absolutes

Quintura blog has this nice post with some statistics of Russian online shoppers – how often they buy, what they buy, and how they pay.  As any other bit of statistics, it’s rather interesting.  However, I think there is more to it than the article covers.  Here are my random thoughts in a bullet list format.

  • “85% of Russian Internet users shop online”.  It would be extremely interesting to see at least some approximation of country population to its Internet users.  According to Wikipedia, Russian population is about 142,000,000 people.  How many of these are online?  According to some resources, such as, for example, Public Opinion Foundation Database, it’s somewhere between 18% and 25%.  And then again, it’s depends a lot on where you are looking at.  Moscow and surrounding areas have a much higher Intenret penetration than Central and Eastern Russia.  Moscow can have as much as 56% of its population online, while less than 20% of the Urals and the Siberia population are connected.
  • “The Russian e-commerce market has doubled to $3.2 billion in 2007”. Sounds huge, doesn’t it.  But let’s see. I’ll pick 28,000,000 people or 25% of connected population as per Public Opinion Foundation Database for the calculations.  85% of these are shopping online.  That’s about 23,800,000 people.  $3.2 billion market devided equally between all those people comes down to $135.  So, the market is huge, rather because there are so many people around, as opposed to how much those people buy. If you need more numbers to explain you the situation, have a look at the state of the Russian economy at Wikipedia.
  • “However, it’s yet to become a habit because only 16% of users shop online once a month”. Sounds like the other 84% shop less than once a month.  Why?  Maybe because it isn’t so easy to find a few people to batch into a single order.  Or maybe they just don’t have time to, between the two jobs or something.
  • “Most of the shoppers or 70% paid for online goods in cash upon delivery while only 12% of responders used bank cards in online transactions and another 10% used online payment systems”.  Internationally recognized credit cards, like Visa or MasterCard, are probably either expensive to have or difficult to get or both.  Personally, I don’t have much experience in this area, but I’ve heard a few of my Russian friends complaining about the state of the banking system in the country.  Also, there is another thing to remember – language.  I don’t have any numbers at hand, but I’d say that people who can at least read and understand at least one foreign language are a minority in Russia.  With no credit card and foreign language knowledge, most of the purchasing activity would stay within the country.
  • “The most popular shopping items included books (51% of responders), computers (43%), home appliances (42%), software (31%), movies (26%), beauty products (25%), and music (23%)”.  It looks like the majority of Russian online shoppers are rather young, tech-savvy people.
  • All of the above make it sound like a lot of marketing opportunities – large number of people, who are roughly in the same age group, with somewhat poor geographic distribution and limited access to credit cards… And with that, it’s interesting to see at the advertising channels.  TV, radio, Internet itself.  And then, which Russian sites with some sort of ad campaigns are the most visited?

Feel free to throw in your thoughts and more numbers via comments.

It is NOT the end of the world, as we know it

Web Worker Daily links to the article titled “AT&T: Internet to hit full capacity by 2010“. Here is a summary:

Speaking at a Westminster eForum on Web 2.0 this week in London, Jim Cicconi, vice president of legislative affairs for AT&T, warned that the current systems that constitute the Internet will not be able to cope with the increasing amounts of video and user-generated content being uploaded.

Well, thank you for pointing out the obvious, Mr. Jim.  The current systems that constitute the Internet will not be able to cope indeed.  That’s why they will be upgraded, updated, redesigned, and multiplied to cope with the increasing amounts of video and user-generated content.  That’s how it was before and that’s how it will be in the future.

There is this nice concept that I’ve learned about back in the college days.  I don’t remember how it’s called, but it is very related to three terms: “supply”, “demand”, and “equilibrium”.  I’m sure that current economics aren’t as simple, and that there are many better concepts to explain things, but I liked the simplicity of it.  I am also a big believer in the ultimate power – natural balance.  Things can be pulled a little bit left and right, and that’s possible, but in the long term, everything will balance out.

Looking through that prism on the problem of ever increasing Internet traffic, that seems to be like a lot of demand.  If big companies, such as AT&T won’t be able to supply enough, it doesn’t mean that the Earth will stop revolving and wait for them to catch up.  This has been proved before and will be proved again, if needed.  If it will come to the worst, ISPs can be decentralized by self-managing network units (individual or small networks) that interconnect with each other.  That’s actually what happens in areas which are not covered by major Internet Service Providers.  People install their own wireless networks, connect to each other, and between those who can connect them further.  If there will be too much demand for solutions like this, they can be rather easily automated with hardware units and simple software packages.

As to the claims of how fast the traffic will rise, I don’t quite agree.  It will continue to rise at dramatic rates, but not as dramatic as:

“In three years’ time, 20 typical households will generate more traffic than the entire Internet today.”

That’s just insane.

Cicconi added that more demand for high-definition video will put an increasing strain on the Internet infrastructure. “Eight hours of video is loaded onto YouTube every minute. Everything will become HD very soon, and HD is 7 to 10 times more bandwidth-hungry than typical video today. Video will be 80 percent of all traffic by 2010, up from 30 percent today,” he said.

HD is a promising technology, and it has its niche, but saying that everything is will go HD very soon, well… It reminds me of all those claims about radio disappearing when TV came along, and TV disappearing when Internet appeared.  HD will be pretty popular, but there are many areas where it is not applicable.  For example, it will take a long time before mobile phones will learn how to create HD content.

And not to forget the money issue, people are prepared to pay today than they used to before. And they are paying more.  Think about it.  Ten years ago not a lot of people had a dial-up account.  Which was a really crappy way to connect to the Internet.  And it was priced at about $20 USD a month.  Today I pay about $60 USD a month to my ISP, which brings me Internet, television, and telephony through a single cable.  And guess what – I am prepared to pay more.  And guess what – I am by far not alone.  I know more people today who pay $60 USD for their Internet connectivity than I knew before paying for their dial-up connection.

The Internet is changing.  If before it was mostly good for checking email and reading an occasional web site, today it is a powerful tool that solve a whole range of communication and entertainment problems.  Make it better and we’ll pay more.

Oh, and you’ll get paid from the other side too – web services, and the rest of the crowd who make a lot of money on the Internet.  10 years ago a service such as Flickr would be possible.  Or it would have been rather useless.  Today I now more people paying for a Pro account to Flickr than I knew before paying for their dial-up connection.  How’s that?  I’m sure Flickr is ready to pay more for better connectivity.

So, Mr. Jim, stop whining.  It’s not the end of the world.  It doesn’t even look like it. Quite the opposite.  It’s the golden time for the people who work in technology.  Let’s get back to work and make the world a better place.

PrimeTel submarine fiber landing station

(Can you pack any more technology terms into that title?)

Apparently, PrimeTel is working hard on improving broadband connectivity on the island of Cyprus.  In this blog post, Vladimir Ivaschenko links to this article, which explains:

PrimeTel is building a new, independent, privately owned Submarine landing station in Yeroskipos, Cyprus as per the global specifications of Reliance Globalcom. It aims to gain access to new international cables and capacity, and has secured 5Gbps of capacity globally with an option for further upgrades in the future. The project is expected to be completed by 2009.

This sounds very cool, and I hope that the project will be completed on time and that we all, broadband users, will benefit from it. (Not that it will stop any of the local forums whining about Cyprus connectivity options or anything.)

Question: Fuel vs. Internet

What do you spend more more on: your Internet connection bills or your car’s fuel?  Use monthly periods. How does that change if you consider all extras for your Internet connection (web hosting and other web services, extra services from your ISP, extra bandwidth utilization charges, etc) and extras for your car maintenance (oil, service, car wash, etc)?

(I came up with these questions while reviewing my spending statistics at Wesabe, which is an excellent service.  The basis for comparison of fuel to Internet connection lies in both of these being vital for many modern citizens, while they are currently mutually exclusive – you don’t use Internet while driving and you don’t use your car while using the Internet.  Not just yet.) 

Marketing social objects

There are a couple of interesting posts (part one, part two) at gaping void on how the Internet (particularly, its social side) is changing marketing. As often with such analysis, the matters could be a little exaggerated and examples somewhat simplistic.  However, if you can handle those, you’ll sure find a few interesting points raised.

Let me get you started with a quote:

Now, when you buy something, you don’t phone up the company and order a brochure. You go onto Google and check out what other people- people like yourself- are saying about the product. In terms of communication, the company no longer has first-mover advantage. They don’t ask your company for the brochure until your product has already jumped through a series of hoops that SIMPLY WERE NOT there twenty years ago.
YOU NO LONGER CONTROL THE CONVERSATION. THEN AGAIN, MAYBE YOU NEVER DID.