Throughout the world digital technologies are being used to keep us connected, informed, and entertained. With growing accessibility to mobile technology, more people are connected to the internet that ever before. The impact that this is having on the way we shop is profound, with global ecommerce making massive strides on an almost daily basis. Yet, the unique nuances that exist in the various regions of the world has impacted the way in which ecommerce has been embraced in each. By understanding the characteristics of each region in relation to ecommerce, we can appreciate how far we’ve come and look forward to the vast opportunities that lie ahead.

 

United States

Being the first-mover into the realm of ecommerce, the history of online shopping within the United States sets a benchmark from which to gauge the progression of other regions. While the first forms of online buying and selling first appeared in the mid-1980s, ecommerce as it is known today did not gain major traction until the mid-1990s with key players Amazon and eBay paving the way. Despite the dot com bubble burst in the early 2000s, brick and mortar retailers identified the need to have online storefronts for both sales and branding purposes. Wide access to the internet, combined with established shipping networks and credit card usage, made for the right environment for ecommerce to thrive. This growth was further fueled with mass access to smartphones, making online shopping accessible to a wider audience and on a more frequent basis. Recognizing the value that mobile plays in both offline and online shopping, it has become a standard for retailers to develop consumer journeys that seamlessly integrate both in a term known as “omni-channel retailing”. Low barriers to entry make for a wide variety of online stores, giving a competitive advantage to those that stand out through innovation, convenience and delivery speeds.

 

China

With nearly $300 billion in online retail transactions last year, China outbeats the United States in online shopping and is arguably the most developed region for ecommerce. Like the United States, the early success of online shopping in China can largely be attributed to its solid shipping structures and digital payment capabilities. Yet unlike America, ecommerce is dominated by just a few major players, most notably Alibaba and Tmall. The economies of scale that are gained by these large companies makes it challenging, if not impossible, for smaller retailers to enter the space. Furthermore, China’s closed system keeps out foreign digital powers (most notably Amazon, eBay, Google and Facebook), further strengthening the stronghold of the existing power elites. Mobile sales account for a larger percentage of online sales than in the United States, with the WeChat app leading the way as the go-to destination for all mobile transactions ranging from shopping to messaging and even offline payments. With a series of recent product scandals, ranging from tainted baby formula to counterfeit designer goods, Chinese consumers are understandably looking to overseas websites for better quality goods and more variety in a term known as “cross-border ecommerce”. While signs of slowing growth are appearing, the innovations that come out of this region on an almost daily basis could soon make China the global ecommerce leader.

 

India

With 1.3 billion residents, India is just shy of China’s population size. Yet, online shopping is just a fraction of what it is in China. This is due to limited access to the internet throughout the country. Yet, the growing accessibility to mobile devices makes for a promising future for online shopping. While at first glance the fact that the majority of the population lives in small towns could seem like a logistical nightmare for distribution, this could actually work in favor for ecommerce as the limited access to stores in these regions makes online shopping a popular option. Fraud, both on the merchant and payment sides, is problematic, making cash on delivery (COD) a popular fulfillment method. Unlike China, India is open to foreign investment and Amazon is a major player. The vast population alone makes this a promising region for ecommerce growth and signs of booming expansion are on the horizon.

 

Southeast Asia

While ecommerce is still in its infancy in Southeast Asia, the wild popularity of mobile technology makes for a promising landscape. Here, mobile phones are most peoples first and only experience with digital technologies and they are embracing it more than other region. While online browsing and texting is more active here than in any other part of the world, online buying has not caught on. The region has a number of small countries within close proximity of each other, each with its own ecommerce leaders, shipping companies and payment providers, making cross-border transactions difficult. Many countries, such as Indonesia, prohibit foreign investment in online retail companies, making it prohibitive for any single company to have enough power to overcome this barrier. However, Alibaba’s recent $1 billion acquisition of regional leader Lazada signals that a major shift will soon be coming.

 

Europe

While online shopping varies between European countries, as a whole the region is well-adapted to ecommerce. UK, Germany and France take the lead in online sales for the region. Unique to the region is its history with mail order catalogs, particularly clothing, which made online shopping a quickly accepted shopping option. Combined with existing wide use of credit cards and well-established regional mail systems, Europe had an ideal environment for ecommerce to thrive. Today, similar to the United States, most major retailers have an online presence and consumers not only value the integration between physical and online stores, but expect it. Europeans are interested in purchasing from foreign websites, but are hesitant due to logistical challenges with delivery and returns. Fortunately, this has been recognized by the European Commission who is making changes in policies to foster cross-border online sales, which will certainly lend to a quick growth spurt for online shopping.

 

South America

This region is one that stands out for economic conditions having the greatest impact on the development of ecommerce. While as a whole the region has had slow growth in online sales, this is driven by the economic downturn of Brazil, which accounts for over half of the region’s online sales. On the plus side, the growing middle class, growing access to the internet, and interest in price-comparison is fueling growth of online sales in other regions. Yet, the lack of digital payment forms, including credit, inhibits growth. In Brazil, EBANX has solved for this with a bar-coded invoice that customers can use to pay for their online purchases at ATMs and supermarkets. In other regions, COD is the preferred fulfillment and payment option, particularly due to the lack of sophisticated shipping infrastructures. Given the low customer confidence in shipping and product quality, it is not uncommon for online retailers to oversee their own shipping services and offer lenient return policies. Despite many having mobile devices, the region’s slow 3G networks has inhibited the adoption of mobile shopping.

 

Middle East

This region holds some of the world’s highest GDP per capita with very high use of digital technologies including mobile phones and internet usage. Yet, ecommerce adoption, and even awareness of it as a shopping option, is low. One reason for this is due to the high preference for cash as the preferred method of payment. Concerns about fraud and security have further inhibited the adoption of credit cards, which is a fraction of what it is in the western world. Fulfillment poses another deterrent, as most retailers don’t have distribution centers that can geographically fulfill in an acceptable period of time. Thus, the development of shopping sites from within the region is still under-developed, with 90% of online transactions occurring with retailers from outside of the region. With Amazon’s recent acquisition of Souq.com, the region’s largest shopping website, adoption of online shopping in the region will surely rise.

Mari Corella is a fashion and beauty ecommerce specialist. She holds over a decade of experience from major retailers such as Gap, Saks Fifth Avenue, Sears, Williams-Sonoma and Avon. She regularly speaks and provides commentary about the state of ecommerce and has been featured on The Dr. Oz Show, Business News Daily and Teen Vogue Online. More information about Mari can be found at maricorella.com

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