Within the next five years, eCommerce growth is predicted to become the largest retail channel globally. This rise in eCommerce sales will impact retailers on many fronts, from organisation and store planning, to investment in inventory control systems, and selecting the appropriate digital platform.
eCommerce is a low risk, fast way to enter, test and penetrate international markets. While certain markets present the obvious potential for online expansion, it is important to target those markets that will provide the greatest opportunities specific to your business. It is equally important to recognise and understand how eCommerce growth will evolve at different speeds, by country and category type.
For example, fashion represents the single largest category globally and the UK which is currently the third-largest retail market, the biggest spend per shopper. The category driving eCommerce growth is in the UK is online grocery and meal-kit home deliveries.
Growth by region
eCommerce is an important growth driver for businesses wanting to reach new markets. It allows retailers to engage with new customers and provides a low risk, low cost opportunity to gain insights into new digital markets.
The United States is a world leader in digital activity with online commerce across all digital platforms accounting for one third of the country’s GDP. In China, easily the world’s largest market, almost half of the country’s vast population is actively making purchases online.
While already representing half of online shoppers globally, the Asia-Pacific region has experienced the fastest regional growth and strongest market base over the past three years. They are looking poised to continue leading eCommerce growth in the immediate future.
Emerging digital markets
While it is tempting to target large established digital markets, emerging markets may provide the greatest opportunities for eCommerce. Markets in Asia, Eastern Europe and Latin America continue to outpace the established eCommerce markets of the United States and Western Europe.
These markets may also provide new sources of growth for companies that would otherwise stagnate in more established eCommerce markets. India’s massive population is gaining spending power and greater access to the internet makes them a certain front-runner for potential in eCommerce growth.
Indonesia also shows considerable promise for eCommerce retailers due to the relaxing of government restrictions on foreign investments. While in Latin America, Mexico’s stable economy and rising middle class provides opportunities for retailers looking to expand.
Together, these digital markets represent an unprecedented surge in internet use. Retailers who manage to establish a brand presence in these markets while online shopping is still in its infancy could become market leaders as eCommerce takes off in the regions.
Challenges to eCommerce growth
Although they may present the greatest growth potential, there are many challenges to consider when looking to do business in emerging eCommerce markets. Infrastructure is often under-developed, government compliance can be complex, and cultural differences may pose problems.
You may have the most secure payment systems in place, but the population in many of these emerging markets largely have no access to banking services, making payments a challenge regardless of the digital platform you choose.
How will you manage order fulfilment and returns processing? What are the roles, entry methods, regulatory obligations and operational considerations necessary to build a global eCommerce presence? Taking time to understand these challenges and how to overcome them can ultimately return greater long-term success and ongoing opportunities for growth.