Emerging economies with a growing middle class and access to the Internet offer new opportunities for U.S. merchants who sell products online, e-commerce experts say.
Worldwide, e-commerce sales grew 21.1 percent in 2012 over 2011, topping $1 trillion for the first time, according to global estimates by eMarketer, which tracks trends in digital marketing and e-commerce. The firm estimates that worldwide sales this year will grow 18.3 percent over 2012 to $1.298 trillion, as the Asia-Pacific region surpasses North America to become the world’s No. 1 market for business-to-consumer (B2C) ecommerce sales.
The advent of smartphones and improvement in broadband access and online payment platforms are driving Internet shopping in developing countries. Marcia Kaplan, a contributor to Practical Ecommerce’s Insights for Online Merchants, notes that while many people in developing regions may not be able to afford a home computer, they do buy smartphones with Internet access.
In Africa, which has the fastest-growing middle class in the world and where smartphone usage has increased by 43 percent every year since 2000, e-commerce appears poised for take off as Internet connection and business infrastructure improves. Experts predict that 69 percent of mobiles in Africa will have Internet access by 2014.
“The new middle classes have access to the Internet and are eager to buy discretionary goods that may not be readily obtainable in their home markets. It is often easier to sell via one of the local platforms to gain a foothold in these markets and to allow for sales in the local currencies,” Kaplan writes in an Aug. 13 Practical Ecommerce article titled “Cross Border Ecommerce Booming.”
E-commerce in the United States has grown at least twice as fast as total retail sales over the past five years, and that trend is expected to continue over the next five years. In 2012, e-commerce grew 14.8 percent over 2011, eclipsing total retail sales growth of 5.3 percent, according to Forrester Research. By 2017, the Internet will account for 10 percent of all U.S. retail sales when online sales will reach $370 billion, up from $231 billion this year.
“As populous countries such as Brazil, China and India develop increasingly acquisitive middle classes, opportunities for online sales to these countries are growing. Except for small mom-and-pop outlets, the brick-and-mortar retail sectors are poorly developed outside of major cities,’ Kaplan argues. “Consumers in these and many other developing countries are looking online for more choices in apparel, electronics and luxury goods.”
In a survey of online shoppers in Australia, Brazil, Britain, China, Germany and the United States who purchased goods from overseas vendors in 2012, researchers at The Nielsen Co. found that clothing, shoes and accessories were the largest cross-border online shopping category in five out of the six markets, with Brazilian shoppers opting for computer hardware. Nielsen predicts that cross-border shopping will contribute 16 percent of total global online sales in 2013. In the six countries it surveyed, mobile shopping revenues in 2013 have already reached $36.4
billion, more than a third of all cross-border online shopping in these markets.
Nielsen’s report “Modern Spice Routes — The Cultural Impact and Economic Opportunity of Cross-Border Shopping” is based on responses from more than 6,000 online shoppers in the six target countries. The report was commissioned by PayPal.
“Prior to 2010, international e-commerce consisted mainly of foreigners buying goods from American and European online sites. Now cross-border shopping is becoming more balanced, with Americans and Europeans buying goods from websites based in countries where manufacturing takes place, such as India and China. Some of the sellers are the manufacturers themselves, but often individuals are selling to overseas customers on eBay,” the report says.
Even with China closing the gap, the United States remains the single country with the largest share of worldwide e-commerce, capturing an estimated 29.6 percent share in 2013. U.S.-based online merchants can increase that share by taking advantage of the popularity of U.S. brands and the made-in-America label among consumers in developing countries. “Emerging economies offer new opportunities for American e-commerce merchants,” Kaplan affirms