Understanding online consumers

The emergence of online marketplaces has upset several established conventions about consumer spending and shopping habits. In its White Paper Strategies for expanding into emerging markets with e-commerce, Euromonitor forecasts that global e-commerce will grow at a compound annual growth rate (CAGR) of 12 per cent while store based retailing will grow at just two per cent (2015-2020). It lists five strategic dos for all e-tailers tapping into emerging markets

Know your target market

• Millennials, Generation Y or the "Echo Boomers" will take centre stage; they represented over 1.5 billion people in emerging markets in 2015
   
• China and India represent the biggest markets of millennials, twice the size of the total US population
   
• China has aggressively grown its average disposable income (from $2,337 to $9,532) in the decade till 2015
   
• Huge income disparities within the emerging economies imply that companies cannot have one strategy for all

Consider the digital landscape

• Access to the internet varies significantly across emerging markets; in 2015, the United Arab Emirates topped the charts with 92 per cent, while India had just 30 per cent
   
• Many consumers are first time users of the Internet; they fear payment frauds, poor product quality when shopping online and retailers need to build greater trust
   
• Online retailers need to ensure a very strong mobile experience

 

Assess the strategic status quo

• Identify factors that have limited e-commerce development: for instance, beliefs that it is risky, or existing companies shipping only to consumers in tier-I cities keep shoppers away
   
• Marketing campaigns must educate consumers; for example, Amazon India has an alliance with Vakrangee to educate and offer additional security to consumers who are not heavy online shoppers. It provides pick-up services for purchases made on Amazon India's website, performs follow-up on orders and offers other services

Understand payment preferences

• Cash payments are by far the preferred method across most emerging markets
   
• Cash payments cannot be processed for online transactions, posing a dilemma for internet retailers-especially purely online players

Adapt to the logistics environment

• Reliable shipping is a key part of a retailer's strategy in markets where e-commerce is underdeveloped
   
• Rural areas across the emerging and developing countries are more challenging, but these are also high-opportunity areas as these areas are often underserved