How emerging markets will transform the future of online shopping

Jun 25, 2018

This is a preview of a research report from Business Insider Intelligence, Business Insider’s premium research service. To learn more about Business Insider Intelligence, click here.

Emerging markets are going to be essential for e-commerce growth, as retailers in developed markets may soon reach saturation in terms of consumer growth.

For example, almost half of US households now have a Prime membership, diminishing Amazon’s growth potential in the country. Meanwhile, in China, the world’s largest e-commerce market, nearly half of the population is actively making online purchases, leaving little room for growth.

However, India, Southeast Asia, and Latin America are worth keeping an eye on. E-commerce penetration rates in these areas hover between 2-6%, presenting a huge opportunity for future growth as online sales gain traction. Moreover, these regions are expected to grow at compound annual growth rates (CAGRs) of 31%, 32%, and 16%, respectively, through 2021.

This report compiles several e-commerce snapshots, which together highlight the most notable emerging markets in various regions. Each provides an overview of the e-commerce industry in a particular country, discusses influential retailers, and provides insights into the opportunities and challenges for that specific domestic industry.

Here are some of the key takeaways:

• Emerging markets are going to be essential for e-commerce growth, as retailers in developed markets may soon reach saturation in terms of consumer growth.
• India is the clear overall leader in e-commerce potential, but countries in Southeast Asia and Latin America are also worth keeping an eye on. Within Southeast Asia, Indonesia shows the most promise for retailers, as the government is loosening restrictions on foreign investments, and its massive population is gaining spending power and more access to internet. Meanwhile, Mexico is a retailer’s best bet for expansion in Latin America, due to its stable economy and rising middle class, but Brazil may be gearing up to steal the top spot.
• However, doing business in these regions can be difficult. In most of these emerging markets, infrastructure is underdeveloped and the population is largely unbanked, making digital payments a challenge.
• If retailers can build a brand presence in these markets while online shopping is still in its nascent stages, they may become market leaders as e-commerce takes off in the regions. Moreover, these markets could provide new sources of growth for companies that would otherwise stagnate in more mature e-commerce markets.

In full, the report:

• Explores the e-commerce industry in India, Southeast Asia, and Latin America.
• Highlights the leading country in each region, as well as key e-commerce players there.
• Outlines the challenges and opportunities each region faces.
• Gives insight into how these emerging markets may shape the future of e-commerce.

Source: Business Insider