An e-commerce boom in emerging markets across South America, Asia and Eastern Europe is being propelled by smartphone proliferation, improving broadband and rapid economic growth.Here are some tips on how e-tailers can tackle emerging markets.
Fast developing low-to-middle income economies often struggle to meet the burgeoning demands of increasingly affluent populations – something overseas e-tailers can exploit. Because demand for international consumer products often grows faster than domestic supply, direct imports contribute considerably to online sales. However, it pays to use a trusted logistics partner and be aware of middlemen who may exploit you over import regulations. Local online marketplaces – eg China’s Alibaba, India’s Snapdeal and Russia’s Ozon – meanwhile, are helpful for testing the marketplace and market-research advice. Use them as a bridgehead into new markets.
You could emulate GeekDeal owner Ron Moisant, who focused on optimised international shipping costs in emerging economies rather than product prices, a policy he says has boosted profitability. The Maldives is particularly lucrative for the Washington-based retailer “because of favourable import duties and taxes”.
eBay may have been defeated by Alibaba in China in terms of sales, eBay however remains a good option to consider due to the fact that Alibaba fails to offer customisation functionalities or customer data access. If you use Tmall then be prepared to handle your own logistics and marketing. Angie Au-Yeung, online sales executive for luxury brand Richemont, warns of a widespread fear of buying fakes – of mundane items like toiletries as well as luxuries – through eBay-like marketplaces. “The most important step is always to have an official presence, offering a clear anchorage for brands to differentiate and further educate consumers against fakes,” she says. Taiwanese retailer Mayuki’s CEO, Kuo Yi-Ling, meanwhile, recommends “hiring different staff for almost each province. They have their own local way of speaking, and that matters a lot for marketing”.
Fashion e-tailers can prosper in Russia: in 2013 the top 25 brands searched for on Yandex (61% of search market) were all overseas fashion brands. And it’s wise for any e-tailer to accept the most popular local electronic currencies: Yandex Money, Webmoney and QIWI Wallet. PayPal has served domestic transactions only since late 2013.
Russians are heavy social media users, so strong social strategy boosts brand and search presence. But focus on the VK platform, which dominates the market with nearly 57 million daily users (LiveInternet.ru). Facebook visits actually fell 18% between 2012 and 2013 (ComScore).
Your Brazilian domain should be responsively designed for both mobile and desktop PCs. Only 3.6% of Brazilian transactions were generated from mobiles during June 2013 (ebit Webshoppers). Differentiate yourself from competitors through simple, effective return/exchange policies – and highlight this in your marketing. 7 out of 10 Brazilians who exchanged e-commerce purchases, and 8 out of 10 who returned products in 2013 encountered difficulties (ebit Webshoppers).Be aware that Brazilian culture has Portuguese, African, Italian, Japanese – not Hispanic – influences and Brazilian Portuguese subtly differs from regular Portuguese. Consider hiring a Brazilian brand advocate. Olga Martinez Garcia, Diageo marketing director, Latin America, says Brazil ‘leapfrogs’ trends. “For example, people are jumping straight from not having used technology at all to having smartphones. […] Anticipate this adoption of technology and ensure you have the right content and tools.”
Because emerging markets are growing faster than those of mature nations, local suppliers often struggle to meet demand – which presents an exciting opportunity for overseas newcomers. A reliable logistics partner like Landmark Global, with local presence and subsidiaries in different continents, can help you meet regulatory, logistical and cultural challenges.