Retail e-commerce is projected to continue to surge through 2017, growing 22.9% to $2.352 trillion. While growth numbers are healthy in nearly all markets, global averages hide significant differences between them.
Non-English speaking markets are driving growth
The top 6 fastest growing retail e-commerce countries (Indonesia, India, Argentina, China, Mexico, and Russia) and 7 of the top 10 (including Brazil) aren’t native English speakers. Their combined weighted average growth of 24% (19.4% w/o China) in 2017 is nearly double the 13% average of the fastest growing English-speaking countries (USA, Canada, and Australia). It is also worth noting that no Western European nations cracked the top 10.
Primary growth factors: internet, smartphones, and disposable income
In much of the developing world, growth is being driven by the convergence of reliable internet access, smartphone adoption, and increasing disposable income. Unlike North America and Western Europe, where consumers have long had high disposable incomes and reliable internet access, consumers in these new markets are seeing the growth factors come together at the same time. Therefore, many developing markets are actually growing faster than North American and Western European e-commerce markets ever did.
It’s not just growth—these markets are big
Sometimes, it’s easy to discount rapid growth because the total numbers are small. However, that’s no longer the case in these e-commerce markets. Excluding China, these markets are projected to generate $80.6B.
While it’s no surprise that China is a big market, the numbers themselves are staggering. China is projected to end 2017 at nearly 3X the size of the U.S. retail e-commerce market, and it is growing over 2X as fast. In fact, the Chinese e-commerce market is so big that its projected 2017 growth alone approaches what the entire U.S. market was worth last year.
What it all means
E-commerce retailers must act now to enter growing markets as local-first and mobile-first vendors or risk being left behind by more agile competitors.
The consumers driving growth in the developing world are primarily net-new. They are making their first e-commerce purchases, and they don’t have established brand preferences. Moreover, unlike consumers in Western Europe and North America, these consumers prefer to buy on their smartphones. Lastly, English isn’t their native language.
The winners will be those who can provide the best overall experience to establish their brands in these new markets. For example, this means treating Mexico and Argentina as different markets, despite the fact that they both speak Spanish. It means respecting their different tastes, conventions, and language subtleties to provide an authentically native experience. While delivering on local-first may seem difficult, when global brands don’t, the simple fact is that someone else will. As developing markets grow, more well-funded, local-first competitors are emerging, and numerous examples demonstrate the difficulty of unseating local competition once established.