The State of Global E-Commerce

I’m likely to publish a larger global e-commerce report but wanted to share with our subscribers some big picture views on the e-commerce market. I’ve been doing quantitive research on the state of global e-commerce and have discovered some fascinating dynamics.

Stats

Worldwide, E-commerce is reaching an inflection point. In nearly every major market I’m studying (the larger, more developed countries and the more developed regions in emerging markets like China, India, and parts of Latin America), those who said they purchased a product online in the past six months is over 70%. Globally, e-commerce is just over 10% when we include every market. However, the direction global e-commerce’s share of the retail market is heading could reach 20% by 2017-2018. The way I look at e-commerce in markets is to examine spending on a prior six month, prior three month and prior one month basis. I do this to study the frequency of online purchasing, not just who has done it in the past six months. Within that framework, I’m seeing distinct increases in the amount of growth from respondents who are now purchasing more frequently (at least once a month). In developed markets, 70% of respondents said they had made an online purchase in the last six months. In 2012, this number was 58%. 45% said they purchased a product in the past 30 days, up from 34% in 2012. While e-commerce penetration overall is growing, so is the frequency of online purchasing.

Another point from my research is the increase in mobile e-commerce as a percent of online spending. For those who understand that we live in a mobile world, this should not come as a surprise. However, there is a stark difference between emerging market mobile commerce and developed market mobile commerce. In nearly every market where consumers leapfrogged the PC and went straight to mobile, m-commerce is the dominant digital purchasing platform. For example in China, mobile share of e-commerce is 41% and in India, 34%. To contrast with developed markets, m-commerce is 15% share of e-commerce in the US and throughout European countries it is 18%. Interestingly, Japan is again an outlier of global tech trends — mobile commerce represents only 6% of e-commerce where e-commerce from PCs in Japan is among the highest of any market. 70% of Japanese consumers say they shopped online in the last 30 days.

Popular Categories

Not much is changing in terms of the most popular categories of online shopping since last year when I did similar research. The most popular global categories are:

1. Clothes
2. Shoes
3. Books
4. Gift
5. Snack Food
6. Chocolate
7. Mobile Phone
8. Packaged Food/Ready Meals
9. Travel
10. Non-food Household Products
11. Beauty Products

I categorize since we list many products in detail for respondents so I can get even more granular with the data. These lists are global but, as expected, the list changes once we drill down on a region. For example, mobile phone jumps to number four on the list when we look deeper at China and Brazil. In India, “mobile phone” becomes the number three most purchased product online. I survey over 30 global markets and, with regards to purchasing online, each is slightly different.

As an additional part of my global e-commerce research, I seek out where consumers are planning to increase their online purchasing over the next year. Two categories stood out. Groceries (fresh items) and Pet Supplies were the two categories with the greatest intent to increase frequency via online purchasing.

No Global Winner or Winner Take All Market

The main observation I want to leave with you is I see no clear global winner in sight. In fact, the regionalization of consumer tech is, by far, one of the most interesting occurrences I have seen recently. This is true of hardware, software via apps, and now services like payments, financial, and e-ecommerce.

Here is how each market breaks down right now by e-commerce leaders by region.

China
#1 Alibaba
#2 JD.com

US & UK
Amazon

South Korea
eBay

Japan
Rakuten

India
Flipkart

Latin America, Africa, and Middle East
Rocket Internet

While these are the leaders overall, there are slight changes to the leaderboard by category in many areas. Once we investigate who the leaders are in certain categories, the scenery changes but remains largely localized.

Due to retail itself being very local, I believe this will remain the case for some time. Once a leader establishes itself in an area, it will be very difficult for others to move in and compete. This point, I believe, can not be emphasized enough.

It is clear local insight is driving more trends in consumer tech than anything else. This is true in hardware where, in many markets, local smartphone companies control the dominant share of sales in the region. Apps are also localizing where local insight is driving new innovation and solving pain points unique to the region. Similarly, payments and payment preferences differ by region. Preferences of security and privacy differ by region. Purchase drivers for e-commerce differ by region. Products preferences differ by region. I can not escape the observation that consumer tech is shaping up very similarly to the market for consumer packaged goods. Where local products, brands, and marketing rule the day. There is a great deal more to tease out here, but e-commerce is one area where the distinct fragmentation by region is exceptionally clear.