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Day of the eReader approaches. |
eReaders are enjoying booming sales all over Russia this year, as shoppers grasp the ease and relative cheapness of reading online.
eBook sales demonstrated a four-fold growth in Russia in the first six months of 2011. Additionally, Russia's largest mobile phones and gadget chain Euroset reported sales growth of 1,379% , while Russia's second largest chain Svyaznoy reported value sales growth of over 11 times.
The principal driving force is a fall in eReader retail prices. In early 2009 when eBooks became widely available nationwide the average device used to cost over US$400 at retail. That’s dropped to just over US$100.
The price fall was caused by the application of TFT screen technology (consisting of LCD displays on thin film transistors) and tightening competition between manufacturers and brands.
That came in early 2009 when the market was dominated by three main brands. Now, at least 20 serious players are actively supplying the Russian market.
Russia's largest consumer electronics chain M-Video used to sell around 3,000 eBooks monthly in 2010. Sales have soared to 50,000 in the first quarter of 2011.
Price falls have become increasingly impressive, with average prices of eBooks dropping up to 7% monthly, with the trend continuing to strengthen.
Analysts believe the market's growth potential has not been fully realised as yet. Just 1% of people read eBooks while in the US, indicators show between 5% and 8% of consumers are using them.
Also, annual sales of eBooks in the US are of some 15 million devices. Such growth potential is easily extrapolated in Russia.
The most sellable brand in Russia is still Ukraine's Pocketbook, accounting for 40% of the market, followed only by Sony.
eInk technology is steadily giving way to TFT displays both in colour and black-and-white. TFT technology makes an eBook close to a quality printed book, with illustrations and stylish design making the process of reading more traditional and far more convenient for the users.
Indeed, turnover and sales of print literature are unaffected by eBook expansion, and publishing houses are trying to turn the trend into an opportunity, where paper books are seen as premium products.
Giants could merge
The eBook market could also develop further and faster with talk of the two giant consumer electronics chains, M-Video and Eldorado, merging. The deal would be of unprecedented size in the industry.
M-Video was established in the early 1990s as a private company in Moscow, opening up chain stores offering branded consumer electronics and household electric appliances.
It has always targeted the middle-income sector with value-for-money offerings to build customer loyalty. M-Video was the first Russian consumer electronics chain to go public.
By contrast, Eldorado is something of a maverick in the trade, taking market penetration from the provinces south of the Urals and expanding into Ukraine and Kazakhstan. It leverages low prices and very basic design.
Unlike M-Video, Eldorado has actively expanded due to a vast chain of franchisees. Unfortunately, the business model has been less than successful and the company's assets have been consolidated by the Czech PPF Group.
M-Video initiated the idea of a merger in order to add Eldorado's vast new network. But there are possible challenges, including the chance that Germany's Media Markt could bid for Eldorado to add to its 31 stores in 15 Russian cities.
Much depends on the approach taken in interpreting Russia's competition law. If the ambitious merger plan goes through Russia could have a serious player on Europe's consumer electronics market - and a larger opportunity to sell eBooks.
from Leonid Orlov, Moscow Consultant
(Image courtesy of ©iStockphoto.com/dmytro1956)
