A new report has revealed that over the next four years, emerging e-commerce markets will account for three billion of the world’s online shoppers. Are retailers in Australia and New Zealand ready for this shift in the digital economy?
The Boston Consulting Group’s (BCG) new Digital Consumers, Emerging Markets, and the $4 Trillion Future report suggests that shoppers in emerging e-commerce markets will shop online more than consumers in established markets like the US by 2022.
The value of the spend coming from these countries is expected to reach $4 trillion, equating to 50 percent of the total retail spend in Asia, Latin America and Africa.
According to BCG’s research, more people living in developing nations have internet connectivity than ever before. In 2010 less than a quarter of the population in these emerging markets had access to the internet, now more than half does. Over the next four years, it’s estimated that these up and coming e-commerce markets will attract 900 million people to the digital economy, while more established regions will only attract 80 million.
“Emerging markets are on the brink of a digital revolution,” Nimisha Jain, a BCG partner who specialises in emerging markets said. “The share of digitally influenced retail in total retail spending will surge from 33 percent in 2017 to 47 percent by 2022.”
However, the report does warn that there will be differences across each of these emerging markets, which means retailers will need to approach each one with a strategy that has been customised to suit the region.
“One lesson of this study is that emerging market consumers aren’t uniform in their behaviours,” said Jeff Walters, a BCG partner and CCI’s leader in Greater China. “Different markets have distinct requirements. This is something any online seller would learn if it tried to enter China without appreciating the need to create a fun experience or if it tried to do business in parts of Asia or Africa without understanding the workings of cash on delivery.”
BCG also found that China is leading the digital economy, with 20 percent of its overall retail sales coming from online purchases. This figure already exceeds other nations, like the UK, which is sitting at 16 percent, the US (13 percent) and Germany and France where e-commerce spending accounts for 11 percent of total retail spend.
By 2022, it’s believed digitally influenced expenditure in emerging markets will account for $3.9 trillion in revenue, as more consumers turn to digital channels when researching or purchasing products.
These markets, however, are still highly untapped. From a local perspective, this is because retailers from Australia and New Zealand aren’t confident in their ability to build disruptive business models that could be effective at scale in the global arena.
A recent study by Infosys, which surveyed 175 senior business decision makers from companies in Australia and New Zealand, found that only 17 percent of local businesses are digitally mature enough to successfully disrupt global and emerging markets.
“The impact of digital disruption is being felt across the industry,” Infosys said in its report, noting that 81 percent of the polled retail organisations indicated medium to high levels of disruption. “Yet leaders are encumbered by challenges to digitally transform.”
According to Infosys, the main challenges faced by APAC businesses are agility and flexibility processes, as well as organisation-level transformation.
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