Lands of opportunity

turn-on-2923047_960_720.071335.064531.jpg

Increased online penetration and smartphone ownership in the world's emerging markets has created potentially lucrative opportunities for e-commerce operators.

Indonesia, Mexico, the Philippines, Colombia and Saudi Arabia are all among the top ten countries for annual e-commerce growth.

We believe there are three key areas that brands must address in order to benefit from these opportunities:

Payment
Arguably the most crucial consideration for retailers looking to drive conversion on an overseas selling platform is the provision of a customer-friendly payment process.

In emerging markets, cash often remains king. In an attempt to adapt its payment processes to new markets, Amazon offers a cash-on-delivery service in India, while shoppers in Mexico have the option to pre-pay in cash, where they can deposit money into their online accounts at convenience stores around the country.

Despite the barriers to online sales in cash-based economies, the rising popularity of e-commerce can drive consumers to adopt new payment behaviors. In the Philippines, where e-commerce is growing at an annual rate of 51%, fewer than 2% of adults possess a credit card. The emergence of new online payment solutions leads some, including Filipino fintech CEO, Kacper Marcinkowski, to believe that the Philippines may ‘skip the phase of credit cards' and directly embrace online payment solutions such as e-wallets.

Online traffic
It is important for e-commerce players operating abroad to understand how to attract consumers in new markets to their sales platform. In the US and UK, ‘free shipping' is the most commonly used keyword in online advertising, with ‘big selection' occupying the top spot in Germany, and ‘best price' and ‘official website' appearing most frequently in Spain and Italy, respectively.

These divergences between countries highlight the need for retailers to gain a deep understanding of the customers they wish to target, and subsequently execute a suitable marketing strategy to drive visits to their platform.

Earning clicks from consumers in emerging markets is only half the battle; the website experience must be regionally optimized to generate high conversion rates. Mobile internet traffic in the US typically represents 40% of all web traffic, but this rises to 75% in many countries in Southeast Asia, where e-commerce growth rates are among the highest in the world.

The increased emphasis on shopping from smartphones and other mobile devices in high-growth regions requires retailers to ensure their online experience caters to this as intuitively as possible, with mobile-enhanced platforms and efficient checkout options.

Logistics
Many emerging markets currently lack the infrastructure or population distribution to facilitate rapid and consumer-friendly logistics solutions. Indonesia, the world's fastest-growing e-commerce market, is spread over 15,000 islands and covers an area larger than the EU.

Chinese online giant Alibaba invested $4 billion into Indonesian e-commerce company Lazada to address the difficulties presented by this challenging geography. It opened five warehouses across the country, granting access to its own inventory management systems, and partnered with ride-hailing companies to address the need for at least two transport modes to ship from DCs to locations in the archipelago.

At every stage of the cross-border online purchase journey, online retailers must understand how to make their services as unobtrusive and seamless as possible, allowing customers to shop like a local while gaining access to an entire world of products and offers.

Dan Stolarski
Managing Director
Pragma Consulting