gE Blog Series: Global E-Commerce Part 2 - E-Commerce Growth Led by Emerging Markets

Investment in Africa’s emerging markets is booming, and it is no different for the e-commerce industry. Online shopping is in its early stages in Africa, and the growth potential is immense. E-commerce growth will provide e-retailers, both local and foreign, the opportunity to develop retail sites to satisfy the demand in this market. Besides Africa, e-commerce growth is taking place in other emerging markets like Russia, China, and India. In all emerging markets, technology is transforming these economies and creating major investment opportunities for companies and individuals around the world.

Currently, 16% of Africa’s population has internet access, which marks a 6% increase since 2010. Additionally, it is projected that by 2025, five to six percent of Africa’s GDP will come from online commerce. These trends speak for the success that could be achieved by firms who elect to enter this booming industry in Africa. To take advantage of this opportunity, existing e-retailers can create different versions of their websites to specifically cater to their African customers. Also, local e-commerce startups can capitalize on their understanding of local culture and business practices and find success in the African e-commerce industry.

Like Africa, Russia is experiencing substantial e-commerce growth. E-commerce revenue increased by 28% from 2012 to 2013, and 23% of Russia’s age 18 and older population is now shopping online. Inefficient logistics is one issue preventing even stronger growth in Russia’s e-commerce industry. Logistics have been problematic for Russia, as the country spans nine time zones and has historically not focused on the consumer goods sector. Investment in infrastructure will help to remedy logistics issues and further propel this emerging economy’s e-commerce growth.

E-retailers looking to expand into emerging markets must consider the different transportation, payment, and customer norms in these countries. For instance, in China, India, and Russia, limited payment options exist, as many consumers do not have credit cards. In fact, the most common method of payment is cash on delivery. To be successful in new markets, e-commerce firms must understand the markets they are entering and become familiar with local business practices and customer tendencies.

Stay tuned the rest of this week to the globalEDGE blog to learn more about global E-commerce in the latest globalEDGE blog series.