The world if eCommerce is growing at the speed of light. Last year, according to data from the market research firm eMarketer, consumers around the world spent more than $1.6 trillion online, which amounted to around 7.3% of total global retail sales.
What’s more, much of this growth comes from developing economies in Africa, Asia and South America. And this brings us to the following question – why are people from developing countries clicking “buy” more than ever?
Well, it seems like people from these countries are actually tapping that “buy” button. You see, smartphone usage in markets like Kenya and India is also growing faster than ever before, as companies such as Xiaomi offer more affordable mobile devices, aimed at people in developing countries.
As a matter of fact, between 2013 and 2014, smartphone usage has more than doubled in India. According to Deloitte research, the number of users jumped from 51 million to 104 million in just those twelve months.
So, as it seems, this is a great time to open up shop and start selling online. The market is certainly there. But how can you reach it? And how can you stay competitive on such a turbulent market? Read through and find out!
Now is the Perfect Time to Start Investing, and Here is Why!
· The Market is Finally There
Over five years ago, a small startup called Mall for Africa, emerged in Nigeria with the idea of shipping American brands to Nigerian consumers. Three years later, as Fortune reports, the startup managed to gross over $17 million in revenue.
The same year, another African eCommerce platform, Konga, saw their revenue grow more than 450%. And that is why researchers are optimistic about African countries like Kenya and Nigeria, whose middle classes now have the capital to spend on foreign services and goods.
What’s more, McKinsey’s Global Institute predicts that spending in Africa is going to exceed $1 trillion annually by the end of the decade. Africa isn’t even the fastest growing eCommerce market in the world – Asia is. While currently, only around 10% of people in India have an Internet connection, in the next couple of years, the number is going to grow rapidly.
Recent studies have also shown that India’s eCommerce sector is going to grow to around $80 billion by the year 2020. Moreover, Indonesia is also going to become another major player in the market, with a growth rate of three times from its current online transactions.
· Finding Funding is Easier than Ever Before
According to the Wall Street Journal, a new Dubai-based startup focusing on the continent’s eCommerce called Mara Group in funding for their revenue. Even though we see ambitious US and European startups practically every day, what sets Mara Group apart from the rest, is the fact that they are likely to accumulate that money very soon.
This is because over $300 million worth of venture capital funding was pumped into African eCommerce platforms in the last couple of years.
On the other hand, you have Lazada and TokoBagus – two of the leading eCommerce platforms in Indonesia. The latter received funds from the MH Group, while Lazada is being funded by a number of companies, including JP Morgan, Rocket Internet and the Summit Partners.
And the things are also going smoothly in Japan, where, according to a 2015 SparkLabs report, an eCommerce giant called Tokopedia managed to grant almost $100 million VC funding from the famous Japanese SoftBank Corp and Sequoia Capital.
· Secure a Market Before it Becomes Oversaturated
Internet usage across underdeveloped countries is also growing rapidly, and startups are now jumping to get a head start and get a piece of the market share. Startups like Mara are already competing against several local brands and large international organizations like Amazon. But the growth doesn’t only represent a great chance for well-financed startups and huge corporations to make a profit. It also gives an opportunity for all online retailers to expand to new markets.
For example, there is a huge demand for US products overseas, and only 41% of the companies from the US are actually selling their goods across the border.
But did you know that you can set up a cross-border eCommerce shop within 20 minutes? Companies like Alternative Payments allows merchants to service millions of customers around the world who don’t use credit cards and usually prefer to pay online via different payment methods. Even if you are using WooCommerce, the latest plugin from Alternative Payments can help you to present your prices in local currencies, offer local support, and make an entry on the foreign market with little to no effort, and start accepting global payments today!
Global eCommerce Challenges
· Sourcing from Multiple Countries
Even though eCommerce has become a booming market worldwide, there are still some challenges that are preventing faster growth. For instance, every eCommerce business has to pick between domestic and overseas sourcing. A vast majority of consumers in developing countries wants luxury goods produced both in their region and in North America, and gathering these goods to ship to a number of countries is a big challenge.
· Last-Mile Logistics
Infrastructure is one of the biggest obstacles in the expansion of online commerce. In most cases, platforms hire outside companies to handle their logistics management and product delivery, and by doing this, they risk losing control over their own inventory. When it comes to global shipments, retailers also have to worry about international regulations, import taxes and tariffs. Not to mention, if a customer is located in a hard-to-reach town, last-mile deliveries can be quite costly and timely transportation is not guaranteed.
· Consumer Trust
We all know that consumer trust is a key factor in the success of any eCommerce business, because it encourages the shoppers to buy a product from a new seller and sustain a long-term relationship with the seller. However, many consumers are reluctant to give out their personal information to foreign companies, especially in regions plagued with criminals and scammers. So eCommerce businesses have to work even harder to earn the trust of their customers and build a lasting relationship.
All things considered, the future development of eCommerce in the emerging markets boils down to the rate of development in their infrastructures and middle class. But as we’ve seen, companies who are investing in the emerging eCommerce markets are now seeing a healthy growth, and from the look of things, it’s not slowing any time soon.