F-Commerce: Boom or Bust?

 http://www.ecommercetimes.com/story/F-Commerce-Business-Boom-or-Bust-76280.html

 F-Commerce: Business Boom or Bust?

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By Mark Venezia
E-Commerce Times
09/29/12 5:00 AM PT

Not every e-commerce company should try to use f-commerce, but consider whether yours should. Are most members of your target demographic active on Facebook? If you're simply looking for another environment to market your goods, critically consider whether it adds anything to sell through f-commerce. Does it change the user experience?

Discussions on Facebook's IPO and inability to market successfully have been a topic of discussion for months. Sure, Facebook has a reach of nearly a billion users, but until it can be successfully monetized, is investing in Facebook commerce a boom or a bust?

The real discussion is not about Facebook's IPO or current trading price, but rather whether Facebook is a good vehicle for marketing and, if it is, if businesses understand how to harness a vast pool of potential customers that normally takes years to accumulate.

What It Is

So, what is Facebook commerce, or f-commerce?
"F-commerce denotes the use of Facebook as a channel to monetize social media. It is one facet of a larger genre referred to as social commerce," wrote Paul Chaney, author of the Digital Handshake on Small Biz Survival.
Think of f-commerce as any sale that takes place on Facebook with the help of applications on Facebook business pages. To aid f-commerce, businesses may seek to take out Facebook ads posted on potential customers' pages as a way of driving traffic.
F-commerce is expected to become a US$30 billion industry by 2015, according to analysts at SocialMediaAdd,
So why are businesses hesitating?

Reasons for Holding Off on F-Commerce

Your target audience isn't there.
If your target audience consists of children under the age of 13 who are unable to influence their parents or siblings, stay away from f-commerce. Facebook is available only to those over 13 years of age.
You're a large business marketing many different products traditionally.
We've seen large businesses try and fail to profit from a move to f-commerce. Taking a traditional e-commerce approach, a business is destined to fail selling through Facebook.
Large businesses fail with f-commerce, notes Brian Solis, by using it as "yet another digital catalog for selling products and not as a platform for activating new experiences based on the nature and the psychology of the relationships that define the network."
The reason for the failures of Nordstrom, Gap, Gamestop and JC Penney can thus be related not to the failure of f-commerce, but to strategies for using it.
If online shopping is already convenient, attempting to use traditional marketing methods will be unsuccessful -- and being too quick to pull the plug may add to the failure.
You expect immediate results.
Starting with f-commerce takes time and resources. It requires investment in a Facebook API developer and requires outreach to current and new customers.
It will take a while to grow organically, but Facebook advertising can help it.

Reasons for Giving F-Commerce a Shot

Your demographic is on Facebook.
Let's be honest here. Facebook affords businesses the opportunity to specifically target age groups and geography in a way that traditional marketing can't.
Facebook ads allow you to target by demographic, location, interests, and within a budget that's a fraction of the cost of traditional marketing.
You make content easy to share.
No user wants to become confused with the buying or selling process on your platform. If you are a business that sells directly from your own shop, make it easy for users to share their recent purchases.
This can be as simple as offering a generic Facebook post mentioning your post or offering an incentive for posting. Social plug-ins allow for the Liking of products to be shareable across social networks.
Change your strategy. Sell something worthwhile.
F-commerce is changing the name of the game and selling should change appropriately. Whether you are a large or small business, selling desirable content through Facebook is advisable when you understand your target.
iTunes allows musicians such as Pink to sell MP3s directly through Facebook.
Companies like Spreadshirt and BravadoUSA allow political satire and celebrities to shop APIs for inclusion on Facebook pages.
Walmart allows users to search local stores for deals, meal ideas, and support.
Showtime's API for "Dexter" lets fans buy gear from the show.
Small businesses also thrive, such as Got What It Cakes and Legendary Whitetails, among others.

Tips for Success

Lose the lofty business expectations.
Your f-commerce business will take time to grow. Even if a Facebook giveaway increases Likes on your page, that won't necessarily translate into new sales.
Understand the culture.
Not every e-commerce company should try to use f-commerce, but consider whether yours should. Are most members of your target demographic active on Facebook?

Is F-Commerce Worthwhile?

If you're simply looking for another environment to market your goods, critically consider whether it adds anything to sell through f-commerce. Does it change the user experience?
Be open to change.
This should apply to any type of new marketing, but always be open to see what new opportunities are available. With 800 million active users on Facebook, it's a treasure trove for any business willing to take the risk and dive in.
Create an API that's shareable.
If applicable to your business, make it easy for customers to add your app to their Facebook page and sell merchandise.
Incentivize sharing.
Users are more likely to access your Facebook app if there is an incentive, especially if there is an incentive to share using a plugin.
Ask for feedback.
Ask your customers what's working and what isn't. Asking advice will go farther than you think.

The Big Secret

"The best way to monetize social media is to empower people to promote products to their friends not for brands to spam you on Facebook," wrote Wade Gerten "Online shopping experiences are better when they're social."
At the end of the day, f-commerce needs to remain social. What do you think? Will Facebook commerce be a boom or bust?

Overview of E-Commerce in Malaysia

From: http://www.getranked.com.my/e-commerce/e-commerce-in-malaysia.html

E-commerce in Malaysia

Posted on Sunday, March 25, 2012

Malaysia is one of those countries that have dreamed to excel in technology and internet. For Malaysian government, eCommerce, technology and internet are strategic drivers to drive the economy from knowledge-based to competitive knowledge-based and to enter the digital age. With the support of Malaysian government, the information & communication technologies (ICT) and e-commerce industries in Malaysia are growing by leaps and bounds.

The internet usage stats of Malaysia support the fact that the country has bright prospects for eCommerce industry. The acceptance of new technology, increasing trend for online shopping and increased number of online users are some of the key drivers in development of e-commerce in Malaysia. According to international data corporation survey, the number of internet users in Malaysia will increase to 18.5 Million and number of online spending will increase to 10.5 Million by 2012. Malaysia has been ranked 10th in internet usage among top 10 countries of the world. As per survey of International Data Corporation (IDC) in 2007, the overall eCommerce spending in Malaysia was US$22.3 billion which is expected to get doubled by 2012.

The Malaysian government is always been a big supporter of internet technology. There are a number of policies that intend to promote investment in online ventures. One of the major supporting initiatives by Malaysian government is 8th Malaysian plan that aims to increase the usage of technology and build a strong infrastructure ICT both for private and public sector. Some of the main goals of Malaysia 8th plan are:

• To ensure national information security
• To create Emergency Response center to address regulatory and technical issues
• To ensure high level of internet security

Apart from Malaysian 8th plan, there is a specified ministry which is working for the growth of information and communication technology in collaboration with other organizations such as Malaysian Institute of Microelectronic Systems, Multimedia Development Corporation and Malaysian Communications & Multimedia Commission. Moreover, Malaysia is also participating in Asia Pacific Economic Cooperation’s (APEC) to collaborate in devising E-commerce laws, regulations and policies. With all these policies and initiatives, eCommerce in Malaysia will soon be one of the most growing industries.

Malaysia E-commerce Stats:

 

The above mentioned graphical presentation shows that e-commerce industry is on its boom in Malaysia. People as young as below 21 to as old as 51 or above are involved in online buying. People prefer online buying for things such as air tickets, jewellery, watches, computers, books and many other items. The size of Malaysian e-commerce market is anticipated to be increased to RM 5 billion by 2014, which is very encouraging.

Barriers of E-commerce in Malaysia:

No doubt, eCommerce in Malaysia is in booming stage. Still there are number of challenges that need to be addressed. Yes, the number of people spending online is increasing, yet online spending is not a habit of general public. In Malaysia, eCommerce is far behind than the other developing economies such as USA, UK and Canada, etc. It lacks giants such as amazon and eBay. All the major retail companies are investments of multinational companies. There are very less Malaysian local companies which are tapping the eCommerce market.

The following table summarizes top online retailers in Malaysia:

Following are the top five Malaysian online stores.

• http://www.airasia.com
• http://www.maybank2u.com.my
• http://www.buysell.com.my
• http://www.blooming.com.my
• http://www.dominos.com.my

Gradually, with the initiatives and support of Malaysian government, the number of online local stores is increasing. For these small and medium sized companies, the biggest challenge will be attracting organic traffic because online buying behavior is far more different than buying from physical stores. The online retailers have to won the trust of customers by facilitating with best prices and best internet security features. For this purpose, a price comparison engine should be in place that will bring convenience for the online buyers and will enhance eCommerce in Malaysia

.

The above mentioned graph represents some of the reasons which are posing challenges for e-commerce growth in Malaysia. However, the initiatives by Malaysian government to strengthen the ICT infrastructure will soon resolve many of these issues and the e-commerce will continue to boom.

Also see: http://humanwebsite.com.my/blog/online-shopping-statistics-in-malaysia.html 

From: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/id/351896

E-Commerce Is the Next Frontier in Global Expansion

Online shopping is changing how retailers develop their global expansion strategies. A.T. Kearney's E-Commerce Index reveals which developing markets hold the most potential for online growth.

Retailers are constantly seeking new paths to growth. As revenues plateau in developed markets, expansion into developing markets is a popular means for reaching new growth targets and boosting returns in overall portfolios. But choosing a developing market is more complex than looking through the traditional bricks-and-mortar lens to determine where to locate—it also requires looking through the online lens.

As online sales skyrocket in developing markets, an online presence is a low-risk way to test new markets and complement existing store footprints.

As e-commerce sales skyrocket across the developing world, building an online presence is a low-risk way to test new markets or complement existing store footprints. Gaining maximum advantage from such strategies requires knowing a country's true e-commerce potential and its online market challenges.

A.T. Kearney's 2012 E-Commerce Index, the first in a series, examines the top 30 countries in our 2012 Global Retail Development Index™ (GRDI). Using 18 infrastructure, regulatory, and retail-specific variables, the Index ranks the top 10 countries by their e-commerce potential (see figure 1).¹ The findings provide a wealth of information for retailers use in developing successful global e-commerce strategies and identifying emerging market investment opportunities (see sidebar: About the Study).²

E-Commerce: A Ripe Growth Opportunity

Global e-commerce is thriving as infrastructure, laws, and consumer preferences evolve. Global e-commerce has grown 13 percent annually over the past five years (see figure 2).3 Retail expansion is increasingly occurring through online channels as a way to tap into growth markets, build brands, and learn about consumers while investing less capital than traditional formats. For example, American luxury retailer Neiman Marcus acquired partial ownership in a Chinese fashion website to test China's market, learn about Chinese consumers' likes and dislikes, and capitalize on the country's increasing demand for luxury goods. Neiman Marcus got all the information it needed without entering into expensive real estate contracts or trying to navigate the complexity of tier 2 and tier 3 cities. French luxury retailer Louis Vuitton Moet Hennessy (LVMH) used a similar strategy, acquiring Sack's, Brazil's leading online beauty retailer, to develop local recognition of its Sephora cosmetics line.

E-commerce is playing a vital role in multichannel retail strategies, which are new to many developing markets. In late 2011, U.K.-based Argos partnered with Chinese electronics manufacturer Haier to create a new multichannel operation in mainland China. Argos plans to open a showroom in Shanghai and take advantage of Haier's existing franchise network of 6,000 stores to serve as delivery points for online orders.

Pursuing international online expansion often means doing battle with domestic e-commerce players that already control a large portion of a market.

Pursuing international online expansion often means doing battle with domestic e-commerce players that already control a large portion of a market. Chilean retailers Falabella and Cencosud combined own nearly 40 percent of their home country's online retail market, and Brazilian retailers B2W and Magazine Luiza own 30 percent of the Brazil market—similar trends are occurring across Asia, Eastern Europe, and the Middle East. Competing against these domestic players requires understanding online consumers within each market and tailoring e-commerce operations accordingly.

Build It and They May Come

A country's prospects for online retail success are closely related to how many people use the Internet and how many are comfortable purchasing products online. The matrix shown in figure 3 compares these two factors for all 30 countries ranked in the 2012 GRDI. We've identified four types of online markets:

Infrastructure impediment. These markets lack the technological and logistical infrastructure for high-volume e-commerce. For example, most consumers in India, ranked 5th in the GRDI but unranked in the E-Commerce Index, lack the technology to connect to the Internet, and those who do have the technology still avoid e-commerce because of a poor infrastructure that prevents reliable delivery and returns. Succeeding in these markets may require collect-on-delivery (COD) payments to overcome constraints in the financial infrastructure and better communications with customers to help them understand delivery timeframes.

E-commerce inequality. Markets such as Mexico and Sri Lanka have low-to-moderate Internet penetration overall but have a wealthy class that uses the Internet extensively and regularly buys online. Adjusting the product mix, prices, and advertising will appeal to these high-income Web surfers. Having the flexibility to adjust products, prices, and ads for online buyers will become more important as low-income users become more accustomed to buying online.

Ready and willing. Five of the 10 countries ranked in our E-Commerce Index fall into the ready and willing category of markets because they have the full e-commerce package—the infrastructure to support high-volume e-commerce and users who are comfortable buying online. In these markets, it is important to thoroughly understand why customers buy online and to continually meet their expectations to ensure repeat purchases. Chile's Cencosud finds out what its online customers like and dislike by asking them to participate in an online post-purchase survey; participants are registered in a raffle for free gift cards after comments are posted.

Hesitant shoppers. Some markets have the technological infrastructure to support e-commerce, but poor in-country dynamics—such as logistics, digital laws, or cultural biases— that make Internet users wary of purchasing online. These markets require a combination of techniques to instill confidence in e-commerce, including in-store pickup, rebates for credit card transactions, online product promotions and value pricing, and 24-7 call centers. For example, Turkey's hepsiburada.com has overcome Turks' hesitancy to pay online by offering a pay-at-your-door option that allows customers to receive and inspect the product before paying for it with cash or card.

Top 10 Countries in the 2012 E-Commerce Index

The Index assesses the attractiveness of e-commerce in the 30 developing markets ranked in the 2012 GRDI. Following is a summary of the top 10.

1. China: leader of the pack. China's $23 billion online retail market, second only to the United States, places it atop the E-Commerce Index.⁴ With a 78 percent annual growth rate since 2006, its online retail market is expected to explode, reaching $81 billion over the next five years as the country's infrastructure improves and online purchasing behaviors evolve.

China has 513 million Internet users, the largest online population in the world, and 164 million online shoppers who are drawn in by lower online prices, promotions, and free shipping on transactions over a certain price. Chinese online buyers value the ability to read consumers' online comments and reviews of stores, products, and service quality. Consumer electronics and apparel are the two most popular categories among China's online shoppers. Apparel attracts more than half of all online shoppers (both men and women) in metropolitan areas, a higher percentage than in the United States. Beauty is also popular, as almost half of women online buyers in China's big cities purchase beauty products online.

Infrastructure challenges continue to stymie China's e-commerce potential; however, only 34 percent of citizens use the Internet, lower than other markets primarily because of a large rural population that is less likely to use the Internet. The quality of China's transportation infrastructure also varies outside of its metropolitan hubs, inhibiting deliveries. In tier 1 and tier 2 cities, online retail purchases are typically delivered by couriers, which are price-competitive with high-end express services offered by FedEx, UPS, DHL, and EMS.

With a 78 percent annual growth rate since 2006, China's online retail market is expected to explode, reaching $81 billion over the next five years.

Payment solutions such as Alipay are the most popular form of online payments and are frequently the first option offered by leading online retailers. COD exists but is less popular, and some retailers, such as U.S.-based amazon.com, cap the amount that can be paid via COD because of security concerns. Luxury goods sellers go even further. For example, Swiss-based Richemont has partnered with security companies such as Brinks to ensure delivery and payments, while others send two couriers to deliver high-priced items and to guarantee that funds are deposited correctly.

Local Chinese retailers, including Taobao, Paipai, and 360Buy dominate the online retail market. 360Buy, originally selling consumer electronics online, has expanded into clothes, food, cosmetics, and books. The company owns 16 percent of the market and is considered China's homegrown version of amazon.com. International retail leaders, including Carrefour, Tesco, and Wal-Mart are attempting to take online market share from the domestic players. Wal-Mart has a controlling stake in the Chinese e-commerce firm Yihaodian, allowing it access to the company's premium customer base and extensive logistics network. Other foreign retailers are close behind, with Spanish apparel retailer Zara and U.K. online luxury goods seller Net-A-Porter establishing an online presence.

2. Brazil: a not-so-distant second. Brazil has 80 million Internet users who spend $10.6 billion online per year, the largest total in Latin America, and are expected to spend $18.7 billion by 2017.

Brazil's strong and growing middle class shops online to get more "bang for the buck." These shoppers are price conscious, demand free shipping and interest-free payment terms, and frequent group-buying sites to look for the next big bargain: In 2011, 10 million Brazilians made more than 20 million transactions on Groupon-like websites. Appliances and consumer electronics are the most common products sold online. Online apparel sales remain marginal as fashion-savvy Brazilians still value the social experience of in-store shopping.

Local Brazilian retailers already have an online foothold, with B2W (owned by Lojas Americanas department stores) possessing 20 percent of the online retail market. Local electronics retailer Magazine Luiza is on a mission to increase its online presence by tapping into Latin America's largest social networking base. The company encourages consumers to open their own digital Luiza stores on Facebook and Orkut and sell products to friends and family. These social entrepreneurs are paid anywhere from 2.5 to 4.5 percent in commissions.

Although Brazil's e-commerce market is thriving, the country has issues with logistics and online payment security. To combat these, the Brazilian government has invested in air and shipping ports and is strengthening its digital commerce laws.

3. Russia: an online giant awakens. Russia has the largest online population in Europe (60 million users) and 15 million online shoppers. Russians also browse the Web regularly from their mobile phones—there are 1.8 mobile phones per person in the country. These market dynamics translate into a $9 billion online retail market, with growth projected to reach more than $16 billion by 2016.

To sustain online sales growth, Russia must address its poor financial and logistics infrastructure and consumers' lack of confidence in delivery. Russians primarily buy with cash, as only one in five households has a credit card. The country is also heavily reliant on rail for transporting goods, so products ordered online may take a week or longer for delivery to the outer provinces. As a result, 70 percent of Russia's e-commerce sales are concentrated in Moscow and St. Petersburg, and 20 percent are in second tier cities that have more than 1 million people.

Both domestic and foreign retailers are investing in e-commerce operations to position for future growth. Leading Russian grocer X5 Retail Group recently launched an e-commerce site, while French retailer Auchan plans to establish collection points for online orders. In April 2012, Spanish apparel chain Mango announced plans to continue its online expansion by selling through its own website and partner websites.

Russia's e-commerce market is hampered by poor digital consumer protection laws and active, regular censorship of digital content, so the key to growth is building trust with Russian consumers. This is most often done through promotions and customer service. Ozon, for example, operates a 24-7 call center to field inquiries and M.video offers a 5 percent discount for online credit card orders.

4. Chile: Latin America's hidden gem. Advanced technology and telecommunications infrastructure and an active base of online buyers have propelled Chile to a 27 percent e-commerce growth rate since 2006 (see figure 4). Seventy-one percent of Chilean Internet users shop online, highest among the 30 countries ranked in the GRDI. However, because of the relatively small size of Chile's online market—just $749 million in sales compared to Brazil's $10.6 billion— it is easy to overlook its vast potential.

Chile's Internet users are not afraid to purchase online. The average Chilean household has four credit cards and spends $158 per year online, compared to $44 in the rest of Latin America. Over the next five years, Chile's online retail market is expected to double to $1.5 billion as more people shop online.

Chile's domestic retailers control the market, but international players are gaining traction. As such, domestic retailer Falabella is trying to stay one step ahead of the competition through heavy investment in the online buying experience. It has developed a ground-up e-commerce logistics network, intelligent routing systems, online order tracking, and a strong reverse logistics system for returns.

5. Mexico: the next breakout star. Mexico is Latin America's second largest online retail market (after Brazil) with $1.2 billion in sales per year, and the fastest-growing Internet penetration rate in the world. As more Mexicans obtain Internet access, online sales are projected to nearly triple to $4.4 billion by 2016.

Despite its potential, a poor technological infrastructure hinders Mexico. The Internet penetration rate is 31 percent, with users primarily connecting at slow speeds to avoid paying for faster but higher-priced broadband connections. Still, Mexico offers some of the most unique e-commerce innovations, such as the BanWire system, which allows customers to purchase a product online, print a voucher, and pay for the product in person at a nearby convenience store.

International retailers are seeking to capitalize on Mexico's potential. The Gap offers international shipping to Mexico on its U.S. website; its long-term goal is to operate country-specific websites that fulfill e-commerce orders domestically. Wal-Mart's Superama chain allows customers to order products online and either pick them up (no charge) in the store two hours later or pay for home delivery within the hour.

The UAE serves as an e-commerce gateway to other oil-rich Middle Eastern markets with advanced technological infrastructures, strong retail sales, and a common Arabic language.

6. United Arab Emirates: gateway to the Middle East. The UAE boasts an advanced technological infrastructure, an active Internet user base, and strong retail development. The UAE's 76 percent personal computer household penetration rate is the highest of all ranked countries in the GRDI, and its 78 percent Internet penetration rate leads the Middle East. In addition, its retail sales per capita of $9,155 is on par with the United States and Sweden, which indicates that UAE residents have money to spend across retail channels.

While the current size of its online retail market ($227 million) is relatively small, the UAE serves as an e-commerce gateway to other oil-rich Middle Eastern markets with advanced technological infrastructures, high retail sales per capita, and a common Arabic language. Souq, a leading online retailer in the Middle East, has established websites in the UAE, Saudi Arabia, Jordan, and Kuwait as part of a regional strategy. International retailers, such as Carrefour and coffee brand Nespresso (a unit of Switzerland-based Nestle), are testing online sales in the UAE before expanding regionally. Carrefour's UAE website gives customers access to more than 3,000 items, some not sold in stores, with free delivery on purchases over a certain amount.

However, a few characteristics may hinder the UAE's e-commerce development. Credit card penetration is low among local residents (albeit high among expats), and bricks-and-mortar stores also offer free delivery as a customary service, diminishing the convenience of online shopping.

7. Malaysia: Asia's next e-commerce leader? Half of all households in Malaysia own a PC, and 56 percent of the population is connected to the Internet. Malaysians are relatively heavy users of credit cards (1.1 cards per household) and debit cards (5.6 per household), allowing for easier online shopping. Moreover, Malaysia's high-quality logistics infrastructure ensures that online retail purchases can be delivered in a timely manner. According to the World Economic Forum, the quality of Malaysia's transportation services is on par with the United States.

Malaysia's active online user base has embraced e-commerce. More than half of users shop online and rely on personal recommendations, search engines, and special Internet offers to make purchasing decisions. Today's online retail sales level of $250 million will double over the next five years. Some of the main challenges to e-commerce in Malaysia include cyber-security concerns and the need to touch and feel products before purchase.

Malaysia's online potential has drawn, among others, Germany's Rocket Internet GmbH, which designed and launched local versions of Zappos and Amazon, and Zalora, an online fashion retailer from Singapore that began e-commerce operations in Malaysia in February 2011 and offers 48-hour delivery, COD delivery payment, and 30-day free returns on all orders.

8. Uruguay: an urban stronghold. Uruguay has an active online user base in urban areas and a 48 percent Internet penetration rate—highest in Latin America. Uruguayans are proving ready to shop online—70 percent of Internet users make online purchases, second among GRDI countries only to Chile. A highly urban population also helps improve the reliability of deliveries. To date, Uruguay's online retail market—$43 million—is small, but sales are projected to double by 2016.

9. Turkey: a quiet success. Turkey features a strong logistical infrastructure that allows consumers to make online purchases and receive their products within one or two days. In fact, most online purchases made within 350 miles of Istanbul arrive within 24 hours. The country also boasts an engaged base of Internet users who spend an average of 30 hours online per month; half of all users make purchases online. The Turkish government has also aided the e-commerce boom by enacting digital laws that protect online consumers and oversee e-commerce companies.

Turkey's $1.3 billion online market has already drawn interest from many retailers and investors. For example, Turkey-based Dogan Online, which operates hepsiburada.com, has recently purchased evmanya.com (a Turkish home decorating site), and is in talks with as many as four other online retailers. In 2011, Naspers, the South African media conglomerate, acquired 70 percent of Markafoni, one of Turkey's largest private online shopping sites.

10. Oman: small but important. Oman has an advanced technological infrastructure to support e-commerce and an active Internet user base. Half of Omani households own a PC and 62 percent of the population (roughly 1.7 million people) are connected to the Internet. Omani citizens own, on average, more than one phone, including smart devices that connect to the Internet. Still, Oman's online market remains small at $111 million.

As more Omanis are buying consumer electronics online, the bricks-and-mortar retailers are noticing. Domestic retailer OHI Electronics launched e-commerce operations in 2011 as part of a multichannel strategy, and its website is notable for offering customers a unique and interactive shopping experience.

The Path to Profits

Success in online retail requires patience, persistence, and an ability to adapt to local markets. There are four main success factors for entering new markets either online or as part of a multichannel strategy.

Develop a customized value proposition. As in bricks-and-mortar retail, e-commerce requires adaptation to local markets. A one-size-fits-all approach will not work because online consumers in different countries exhibit unique behaviors and make Internet purchases for different reasons. Success requires adjusting websites, payment methods, shipping options, and business models according to the needs of each market.

Manage the customer experience. The convenience of ordering products at the click of a button and having them delivered to your home is a main benefit of online shopping. Thus, managing the customer experience from online browsing and product purchase to delivery and return is critical. In markets where logistics are a challenge, constant communications with customers about shipping timelines can help manage expectations and build trust.

Do not underestimate local players. Domestic companies dominate online retail in developing markets because they understand local consumer preferences and the e-commerce challenges and have well-honed online retail skills developed in their home countries. Even as foreign retailers enter, these local firms will continue to be formidable competitors.

Have a long-term focus. Launching e-commerce operations in developing markets demands patience. It takes time to navigate a market, learn about online consumers, and build a reputable online brand.

Expansion and Long-Term Rewards

The race to expand online retail in developing markets has already begun for both international and home-grown retailers. E-commerce and multichannel integration in emerging markets offer tremendous opportunities—at potentially lower risk and investment than building bricks-and-mortar stores. The best path to online retail success is the one that creates an immediate impact in developing markets and builds a growing, long-term advantage.

 

¹For findings in the 2012 GRDI, see "Global Retail Expansion: Keeps on Moving."
²E-commerce is defined as the sale of consumer goods to the general public through websites either operated by online-only retailers or store-based retailers.
³In this paper, growth rates are CAGR.
⁴All monetary figures are in U.S. dollars unless otherwise noted; online market size throughout the paper refers to sales.

June 2012

Global eCommerce sales forecast, from IMRG report

Date:07 June 2012

IMRG Publish B2C Global e-Commerce Overview 2012

IMRG have today published a report looking at the e-commerce potential for every region in the world. The IMRG B2C Global e-Commerce Overview 2012 also focuses on 15 of the most developed and most interesting up-and-coming e-commerce countries in detail, identifying trends, issues and opportunities in each.

The aim of the report is to provide insights into these markets to help e-businesses make the most appropriate decisions in support of their expansion plans.

Total B2C e-commerce sales in 2011 are estimated to have grown to €690bn (£599bn, $961bn), an increase of close to 20%. IMRG estimate that growth will continue in the coming years, passing the trillion-euro mark in 2013, a year earlier than forecast in the first edition of this report published last year.

The world leader in B2C e-commerce remains the USA, followed by the UK and Japan. Asia-Pacific is continuing to power ahead in terms of growth, with China’s e-commerce market in particular rising over 130% in 2011.  The mature markets in the world such as USA, UK and Japan will continue to grow slightly slower, but still in double digits between 10-15%. France, Italy, Spain, Russia, Turkey and Poland will be the fastest-growing markets in Europe.  IMRG forecast substantial growth in Latin America, led by Brazil and Mexico and the Middle East, led by Israel and UAE.

The number of internet users at the end of 2011 was estimated to be around 2.2 billion and is forecast to reach close to 3.5 billion in just a couple of years, around 50% of the world’s population.  As the number of internet users grows and users get more and more confident in purchasing online, the number of e-shoppers is set to grow rapidly. 

In addition to the well-established markets, this report examines the e-commerce potential in the BRICS countries (Brazil, China, India, Russia and South Africa) as well as the MIKT countries (Mexico, Indonesia, Korea and Turkey) which have excellent economic futures and will in the coming years be amongst the leaders in internet and e-business. A separate report focusing solely on the BRICS countries will be published by IMRG later this month. 

Aad Weening, Head of International at IMRG and author of the report, said: “The future of e-retail is global and with the inevitable slowing of growth in several major markets in the likes of North America and Europe, it is important for businesses to understand where the future opportunities will be. The country profiles in this report take in to consideration a range of factors in assessment of the potential for the development of the e-commerce markets there; online is now becoming an integral part of any country’s economy and should be considered so. Worldwide we are increasingly seeing trust and confidence in purchasing online growing and government and private initiatives brought in to support the development of the global digital economy.”

From: http://www.internetretailer.com/2012/06/14/global-e-commerce-sales-will-top-125-trillion-2013

Global e-commerce sales will top $1.25 trillion by 2013

China’s e-commerce market is growing 130% a year, a U.K. e-retail trade group says.

Abdul Montaqim

Topics: Aad Weening, Asia, Brazil, China, e-commerce spending, europe400, European Multi-channel and Online Trade Associatio, France, IMRG, industry statistics, international e-commerce, international marketing, Israel, Italy, Japan, Latin America, Mexico, Middle East, Spain, UAE, United Kingdom

Global business-to-consumer e-commerce sales will pass the 1 trillion euro ($1.25 trillion) mark by 2013, and the total number of Internet users will increase to approximately 3.5 billion from around 2.2 billion at the end of 2011, according to a new report by the Interactive Media in Retail Group (IMRG), a U.K. online retail trade organization.

The study estimates that business-to-consumer e-commerce sales in 2011 increased to 690 billion euros ($961 billion), an increase of close to 20% from a year earlier.

The United States remains the world’s single biggest e-commerce market, IMRG says, followed by the United Kingdom and Japan. IMRG estimates that growth rates in those countries will be approximately 10-15% a year.  But with China’s e-commerce sales growing more than 130% in 2011, it is only a matter of time before the Asian giant becomes the single largest market in the world.

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In terms of regions, Europe is currently the largest e-commerce market in the world, according to a separate report released recently by the European Multi-channel and Online Trade Association, which said European online business-to-consumer sales posted 19% growth in 2011 to reach an estimated $307 billion, surpassing North America at $297 billion.

IMRG, meanwhile, is forecasting that France, Italy, Spain, Russia, Turkey and Poland will be the fastest-growing markets in Europe. It also anticipates substantial growth in Latin America, led by Brazil and Mexico, and the Middle East, led by Israel and the UAE.

Aad Weening, head of international at IMRG and author of the report, acknowledges that mature markets in Europe and North America face challenges from faster-growing economies elsewhere in the world, but says the growth of Internet usage and online shopping presents new opportunities in many countries.

“The future of e-retail is global and with the inevitable slowing of growth in several major markets in the likes of North America and Europe, it is important for businesses to understand where the future opportunities will be,” Weening says. “Worldwide, we are increasingly seeing trust and confidence in purchasing online growing and government and private initiatives brought in to support the development of the global digital economy.” He adds, “Online is now becoming an integral part of any country’s economy and should be considered so.”

 

Singapore Online Shopping Statistics

From: http://www.techinasia.com/the-stats-and-facts-of-online-shopping-in-singapore/

The Stats and Facts of Online Shopping in Singapore

March 30, 2011 by Willis Wee, in Asia, Business

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The size of the Singapore online shopping market reached S$1.1 billion in 2010 and is forecasted to hit S$4.4 billion in 2015, according to PayPal’s research.

Even though 1.2 million Singaporean online shoppers (above the age of 18 years old) had an average spend per head of S$1,492 over the past year, two-thirds of the online shopping spend (S$730 million) came from the middle income and above (personal earnings of S$4,001 and above) groups in Singapore.

Contrary to popular belief that Singaporeans shop online mostly on overseas websites, a significant portion of online retail purchases are domestic as online shoppers spend nearly 40% (approximately S$420 million) on local websites.

Even when Singaporean online shoppers do buy from overseas websites, they cite “unavailability” (58%) and “greater choice” (48%) as more important reasons than “less expensive” (44%), “better discounts” (42%) or “strong Singapore dollar” (35%). Local merchants can benefit from the growth in domestic online spending as well as offer a wider choice and selection of goods (instead of competing on price) to get a larger slice of the online shopping market.

Elias Ghanem, PayPal’s General Manager for South East Asia and India, said, “With the online shopping market growing so quickly and breaking through the billion dollar mark, Singaporeans are clearly finding great value and a wide range of products and services on the Web, be it on domestic or overseas websites. The study results prove to local merchants that they should embrace a multi-channel approach for both in-store and online retail experience, with mobile as an emerging platform, in order to be wherever their customers are.”

The study was conducted from January to February 2011 and polled 407 Singapore online shoppers aged 18 and above from Nielsen’s panel for their online and mobile shopping transactions in the past 12 months. Besides providing an overview of the growing online shopping market, the study also revealed insights into the attitudes and behaviors of Singaporeans when buying online and on mobile devices.

Below are some of the key findings for domestic and cross-border online shopping in Singapore:

1. More than just airline and hotel bookings: While the travel category is tops, it only accounted for S$307 million or 28% of the online shopping market in Singapore. Other key online shopping categories include: Fashion/Beauty (S$146 million, 13% share), Entertainment/Lifestyle (S$143 million, 13% share), IT/Electronics (S$117 million, 11% share), General Insurance (S$83 million, 8% share), and Gifts/Collectibles (S$75 million, 7% share).

2. Different items purchased between domestic and overseas websites:Movies/events tickets (S$36 million) and general insurance (S$36 million) are top categories for domestic online shopping, while books (S$41 million) and movies/music/video games (S$24 million) are top categories for cross-border online shopping. In addition, online shoppers buy nearly double the amount for clothing (S$84 million) and travel packages (S$38 million) on overseas websites compared to domestic sites.

3. Security and online spending: Enhancing security can boost online spending, especially for high income group (With personal earnings of S$6,001 and above). Slightly more than 4 out of 10 say that current credit/debit card security measures for online transactions are inadequate and half believe they are taking a risk every time they transact online with their credit/debit cards. Yet, increasing safety measures would convince nearly 6 out of 10 to spend more online. In fact, the high income group was the most concerned about security measures (57%), but are the most willing to increase their online shopping if safety is improved (65%).

In addition, these were the key findings for m-commerce and mobile shopping:

1. Mobile shopping still in its infancy stage: Over 364,000 Singaporean online shoppers spent S$43 million on their mobile devices last year, approximately 4% of the online shopping market. Mobile shoppers bought low-priced items like movie tickets, fashion items and mobile apps, leading to an average spend per head of S$119 over the past year.

2. Significant growth potential for mobile shopping: 4 out of 10 online shoppers in Singapore are willing to make a purchase on their mobile phones. More importantly, nearly 6 out of 10 of the high income group would be interested to do so, and they accounted for more than half of the mobile spend last year. In addition to more Singaporean online shoppers interested in buying on their mobile devices, they would like to buy higher-priced items like IT/electronics, general insurance and collectibles, boosting the potential size of the mobile shopping market.

3. Factors for mass adoptions: Convenient, safe, and fast mobile shopping experience will be critical for mass adoption. The top 3 barriers to mobile shopping are small screen size (55%), security concerns (52%) and slow mobile Internet connection (42%).

Based on the online and mobile shopping study results, Elias concluded, “The strong call-to-action for local merchants is to quickly adopt a multi-channel retail strategy, provide greater choice in their online product offerings and offer more secure online payment options. In order to sell to mobile shoppers, they should choose a safer mobile payment method that can be completed in as few clicks as possible.”

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Tags: e-commerce, M-commerce, Singapore

About Willis Wee

Founder of Tech in Asia who is also an entrepreneur since 2005. Contact him at willis[at]techinasia[dot]com

View all posts by Willis Wee →

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