E-commerce growth in emerging markets is set to outpace growth in developed markets as wider digitisation and access to technology facilitates structural shifts, addressing traditional challenges. Locally-driven innovation and new consumer profiles are resulting in these markets leapfrogging e-commerce development. As companies look to establish and expand in emerging markets, having a localised strategy that encompasses technology leadership, consumer centricity and talent development is key.
This report comes in PPT.
Global retail e-commerce is expected to see absolute value growth of USD1.4 trillion over 2022-2027. Over 64% of this opportunity is expected to come from emerging markets as growth of retail e-commerce in these markets will outpace that of developed markets.
Wider digitisation and technological leapfrogging have empowered emerging markets, making them attractive for investment by venture capital firms. Fintech and e-commerce verticals form a great share of these investments. Wider e-commerce development is also supported by governments focusing on digital ecosystems to further growth of the digital economy.
Despite being an emerging market, China holds the dominant place in the global e-commerce landscape, surpassing the US. However, the gap between China and the next top emerging market remains significant - reflecting the untapped opportunity that remains to be explored through market development and innovation.
Understanding market intricacies is vital given no one-size-fits-all strategy to establish and expand presence in emerging markets. E-commerce players require active participation in the overall digital ecosystem, with high levels of investment, building supporting services and partnerships with governments and local partners.
Regulations around foreign direct investment (FDI), profit repatriation, ownership rights and structures are some of the key challenges hindering investment and expansion by foreign players into e-commerce in the emerging markets. Meanwhile local players often face constraints around needed funds and investment to tackle challenges around last mile delivery and scaling up technologies for growth.
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