where the new generation of shuttles has landed
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The principle “they don’t let you in the door, go through the window of opportunity” has become key for Russian business over the past year. One of these windows opened after the destruction in 2022 of the schemes for supplying various goods to Russia, which had been established by more than one generation of importers, which led to the revival in an updated form of the shuttle operation scheme that was well known from the 1990s. In 2023, just like 30 years ago, it went through another stage of rebirth, becoming the basis for a much more organized system – not only in the supplies themselves, but also in sales, including retail.
History often goes in circles, which is also true for business processes. Conditions change, but the principles by which people and companies act in difficult times remain the same. For example, the shake-up and complication of trade flows, which was an immediate and obvious consequence of border closures, changes in transport routes and massive sanctions since February 2022, has given rise to a new generation of intermediaries.
Shuttles were already one of the symbols of Russian trade in the 1990s: after Boris Yeltsin’s decree “On Free Trade,” a flow of foreign goods poured into the country. Citizens brought densely stuffed checkered bags from abroad—shuttle bags. And if at first such deliveries amounted to only tens of kilograms, by the mid-1990s the weight had already reached hundreds.
The distortion of customs codes became a craze back then: no matter what was being brought into the country, the documents that came out of the terminal were “table salt” or “green peas.” If you believe the statistics, then in 1997–1999 almost no electronics were imported into the country and were not cleared through customs. As a result, according to documents, Russia ate more green peas in a year than Europe grew in several years.
The largest distributors of electronics and household appliances in the Russian Federation grew from suppliers of peas.
This time, it would seem, everything was supposed to go a different way. After all, the reason for the changes was not a total opening, but, on the contrary, the formal isolation of the Russian market. But the old horse fit perfectly into the fresh furrow.
New distributors
The emergence of a huge number of nimble intermediaries has become a necessity to satisfy the demand for products from brands that, due to sanctions or to preserve their image against the backdrop of a hectic campaign to combat the global evil in the person of Russia, have officially stopped supplying goods to the country. As befits a flexible and agile small business, they were ready to provide for everyone – both retailers and the old “decent” distributors, importing everything from toothpaste to trucks and spare parts. And even developing the market, picking up something new here and there: brands appeared in the Russian Federation that no one here had even really heard of before.
The peak of demand for the services of intermediaries, notes the president of the customs and logistics broker KBT Yulia Shlenskaya, occurred in the third quarter of 2022, when a very high share of supplies, for example, electronics, went through them.
And just at this peak, the system began to change, stabilize, and structure. During 2023, many of the sporadic supplies have become fairly reliable, resilient channels. Shuttles grew and consolidated.
Some of them originally arose on the ruins of representative offices of departed Western companies, maintaining contacts and opportunities to receive goods. For example, it was former employees of large telecommunications equipment manufacturers who largely organized the delivery of base stations to the Russian Federation, including brands and models that were quite familiar to operators.
The number of individual entrepreneurs has stopped growing. Yes, a large number of intermediaries are still needed due to their flexibility, speed of response and ability to deliver goods at low costs. Especially one that remains under strict sanctions, when a complex scheme with delivery through two or three countries is needed, confusing the tracks.
However, the newly minted suppliers have already acquired contacts and contracts, warehouses and offices, employees and desktops.
Many have expanded the range of products they work with. “The market has reassembled,” says one of these players. The former large distribution business was surprisingly almost unaffected. That is, the supposed isolation of the Russian Federation from developed markets actually led not only to the reorganization, but also to the expansion of the cross-border trade market.
New sellers
Moreover, thanks to the development of e-commerce, “shuttles 2.0” received a much simpler opportunity to penetrate the retail market than “shuttles 1.0” had – and they took advantage of it. Marketplaces, whose popularity among buyers is rapidly growing, have actually removed barriers to entry into the market for small companies and individual entrepreneurs. There is no longer any need to enter into lease agreements for commercial real estate or negotiate with local bandits for a place on Cherkizon. Yes, electronic platforms are not always super loyal to sellers, but organizing sales through them is much easier than offline.
But, of course, “shuttles 2.0” also have plenty of difficulties.
Digitalization, which opened the way for them to reach customers, has largely closed the possibilities of the pea trick.
Meanwhile, not all brands and goods are allowed for parallel import. And Western manufacturers, having left the Russian Federation, did not stop trying to defend their brands in the courts.
Controllers and regulators, of course, could turn a blind eye to “gray black imports”; in the end, the copyright holders themselves left. But the activity of fraudsters is growing along with any market, and real fakes or substandard goods have flowed into the country through “parallel imports.” In “Marvel Distribution” they talk, for example, about the problem of the appearance in the Russian Federation of Samsung TVs with non-working smart-TVs and a mass of counterfeit headphones: “When parallel imports were launched, chaos arose for some time with pricing, guarantees and certification, the consequence was tightening of control , which also affected bona fide importers.”
There are problems with certification of “parallel goods”, confirms Alexander Kirilchenko, head of customs law and international trade practice at BGP Litigation. To obtain a full-fledged certificate, support and documentation from a foreign manufacturer are required, and “in the current conditions, in most cases they refuse to cooperate.”
It is the problem of interaction with manufacturers and the implementation of support, service and warranty functions previously performed by them that can significantly restrain, or even negate the attempts of “shuttle 2.0” to become serious players. It is extremely difficult to achieve adequate warranty support from small sellers who set up business after foreign brands left Russia and have never had experience in servicing, for example, electronics, emphasizes Irina Abdeeva, teacher of the educational platform Moscow Digital School. This, one player adds, worsens the image of the entire market.
As a result, the next stage of system development may be the reassembly of sellers. Control measures regarding goods and transactions carried out by online platforms and the system of customer reviews directly affect sales. As Western brands return—if and when they do—their products will be excluded from parallel imports. The market was thoroughly shaken, a suspension arose in which many things were not obvious. Now the heavy fractions settle and form stable bottom sediments. Probably, in the next two or three years we will see a new Russian supplier market. Unless, of course, something shakes him up again.
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