Strategies for Expanding into Emerging Markets with E-commerce

April 2017

This global briefing presents five strategic considerations for assessing and expanding into emerging and developing countries. It identifies market characteristics and indicators specific to emerging and developing countries that retailers and manufacturers should understand when selecting a market for entry. Company examples demonstrate how successful retailers have effectively entered emerging markets by navigating local conditions and consumer preferences.

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Global e-commerce opportunity

Global internet retailing sales are set to increase by a 12% CAGR from 2016 to 2021, compared with just 2% for store-based channels. With internet use growing rapidly across much of the world, retailers and manufacturers have an unprecedented opportunity for international expansion through digital channels.

Emerging markets as a target for growth

Driven by young populations, increasing rates of device ownership and growing comfort with technology, emerging markets will increasingly be a target for both domestic companies looking to get ahead of e-commerce growth, as well as international companies seeking to grow their footprints.

Understanding unfamiliar markets and strategies

Companies launching online sales in a market for the first time will need to consider the existing strategic landscape, along with factors such as the present state of e-commerce development and preferred devices for internet retailing.

Varied payment preferences and barriers

With cash the dominant method of payment in most key emerging markets, retailers and manufacturers seeking to sell online will need to develop an effective payment strategy to accept the full range of payment methods which consumers in that market expect.

Logistics environment presents challenges and opportunities

Emerging markets often bring a host of challenges associated with delivery and returns not seen in the same way in markets such as Japan and the UK. Difficulties may include poor infrastructure and significant traffic. Internet retailers must think creatively about a logistics strategy that builds trust in shopping online in a cost-effective way.

Introduction

Scope
Key findings : Strategies for e-commerce expansion

Know Your Target Market: Demographic and Income

E-commerce goes global
Growing connectivity
Expansion of the middle-classes
Rise of the millennial consumer

Consider the Digital Landscape

Consumers connecting online
Company example: Amazon Vakrangee
More mobile devices in more hands

Assess the Strategic Status Quo

Market development and the competitive landscape
Evaluating market conditions and adapting to local characteristics
Company example: MercadoLibre
Understanding consumer channel preferences

Understand Payment Preferences

The payments dilemma
Company example: Lazada
The paradox of accepting cash
Company example: Oxxo
Cash is not a panacea
Limitations of cash
Company example: Falabella

Adapt to the Logistics Environment

Consumer expectations for logistics
Company example: Alibaba
The operational environment
Company example: Konga
Rural opportunities

conclusion

Looking ahead
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