Emerging countries hold enormous potential for e-commerce growth. According to A.T. Kearney’s 2013 Global Retail E-commerce Index report, the online retail industry has grown at 17 percent CAGR globally over the past five years, with growth particularly strong in Latin America (27%) and Asia Pacific (25%). The advancement of technology and improved access to the Internet is now bringing this huge untapped market within reach of e-commerce companies. According to “E-commerce in Developing Countries,” a 2013 report from the World Trade Organization, “the commercial deployment of next-generation technologies and devices will increase usage of advanced mobile services, which in turn will open up many new, e-commerce business opportunities in developing countries.”
Understandably, skyrocketing demand for products has put enormous strain on transport, storage, and distribution networks in these emerging markets. These challenges often translate to complications for e-commerce companies looking to do business in emerging countries. Fulfillment challenges can revolve around everything from logistical infrastructure, to cultural norms, to regulatory constraints. Such challenges may scare e-commerce retailers away from emerging markets. The good news is, while the logistics challenges associated with e-commerce in the less developed world are greater than in the developed world, there is also great potential in emerging markets.
In most emerging markets, the infrastructure needed to support e-commerce is still at the development stage, though great progress is being made. According to the previously cited A.T. Kearney report, China, Brazil, and Russia lead the next generation markets. In those countries, consumer online practices are well developed, and great advancement is being made in areas including Internet accessibility, logistical infrastructure, and/or financial systems. “Developing these capabilities (as each of these markets is working hard to do) will quickly make these countries critical e-commerce targets for global retailers” said the report.
Fortunately, with the help of international logistics providers, private companies, and government, conditions are improving. For example, in 2011, venture capitalists invested €128 million in e-commerce in India. In China, the government and private sector are making efforts to build a new and improved logistics network, including the construction of a nationwide warehousing network, to meet the enormous demand. In addition, China has experienced enormous growth around online payment methods, with at least 20 different online payment platforms available today. In Brazil, given the magnitude of the online economy, the government found it necessary to update its regulations. And though measures are relatively unstable and include high import rates, a newly-introduced requirement to provide a registration number and full contact details to help reassure customers is an encouraging gesture. In Russia, several efforts to improve the legal framework regulating e-commerce are paving the way for easier e-commerce transactions in the country. These include the 2011 adoption of a federal law on electronic payment systems, as well as significant amendments to existing law on personal data. Read our country factsheets to find out more about e-commerce developments in China, Brazil and Russia.
The government and the private sector in emerging countries have important roles to play in allowing e-commerce to take place and ensuring that it grows and benefits e-commerce businesses as well as consumers. Much of the support for e-commerce depends on having or providing the right infrastructure and regulations that allow e-commerce to flourish. In the meantime, e-commerce companies will need to rely on partners such as Landmark Global, which are skilled at navigating emerging markets, and be willing to work through the challenges of integrating multiple solutions.