What does Growth in Emerging Markets mean for E-commerce?

When considering how to get ahead as an e-commerce business within an increasingly saturated market, the first logical notion that comes to mind is to target a market that holds the greatest potential for growth. Considering that e-commerce is wholly dependent on Internet users, the continuing rise of Internet access in emerging markets situates it as a mecca for both present and future e-commerce activity.

Emerging Markets are Poised for More Growth than Developed Countries

In fact, “E-commerce as a share of total retail sales may soon be larger in emerging markets than in developed countries,” according to a report by Credit Suisse. This is owing to the fact that emerging markets, as they develop, are seeing an increase in Internet access, and as the economies see revenue growth, these markets are also seeing an increase in job availability and income.

All of these growth aspects position emerging markets as optimal e-commerce markets because they now have the access and disposable income to engage in online shops, some for the first time ever. In 2010 only 3% of India’s population made an online purchase, whereas the number rose to 34% in 2014, and China – the largest e-commerce market in the world – saw an increase to 64% within this same time span and is expected to reach $540bn in 2015 (Credit Suisse). Put simply, the populations within emerging markets are seeing a growth of a new middle class with a recent stream of consumption demands that can be easily met through accessible and efficient online platforms.

Emerging Markets are Predominantly Mobile

It should be noted, however, that Internet usage and e-commerce activity within emerging markets is going to be predominantly mobile. In India, “two-thirds of the Internet access is through smartphones and, in China, nearly three-fifths” (Credit Suisse). So not only does this mean that e-commerce businesses need to focus on emerging markets, then, but they also have to have well-thought-out mobile strategies through which to engage these customer bases.

The success of e-commerce in emerging markets is in direct correlation with the surge of smartphone sales. In 2014 alone, the mobile market in India grew by 84%, according to The New Economy, and this growth is far from over since the population of India is 1.25 billion and currently only 167 million have smartphones. However, with more and more smartphone options flooding these markets, some as economically priced in India as 5000 Rupee or lower (between $40 and $80), this gap between those who own a smartphone and those who do not is likely to close quite quickly.

As the sale of smartphones increases exponentially each year, Asia Pacific is optimally positioned to surpass the U.S. in e-commerce by 2017. So as this gap closes and more and more of the previously unengaged population begins to have access to the Internet through mobile, the potential for profit in this emerging market is almost unimaginable.

The Increase in Online Shopping Generates Demand for Online Payment Systems

With the rise of online shopping, there has also been an increased demand for online payment methods. First and foremost, e-commerce checkouts need to be optimized for mobile, there is absolutely no way around this for engaging emerging markets. Second, checkouts will need to offer more payment options to give consumers trusted methods that they feel familiar with and most secure using. Paysafecard in particular, is rapidly becoming a safe option for the user, who can purchase the item with cash, and are then given a PIN to use for online transactions.

Again, though, it is worthwhile to point out that the online payment methods that will perhaps become the most popular, will be mobile payment options, such as like Apple Pay or Google Wallet; although we are sure to see new methods arise that will be more accessible and better developed than these mediums. This stands to reason, then, that not only are e-commerce companies positioned to gain significantly from the Internet access and online shopping boom in emerging markets, but also companies developing secure online payment methods as well.

The future is indeed bright in emerging markets; the opportunities are there, they simply must be tapped into with the right approach and strategy.