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Making Leaders Successful Every Day
Making Leaders Successful
Every Day
eCommerce Globalization and
Latin America
Zia Daniell Wigder, Vice President & Research Director
9 April 2014
© 2013 Forrester Research, Inc. Reproduction Prohibited 3
Agenda
› What are some key trends in the BRIC markets outside of Latin America
› What are some of the trends that extend to every emerging eCommerce market
› What is unique about the Latin American eCommerce market
*Forrester does not have a forecast for Russia – estimates are from Data Insight, East-West Digital News, PwC
eCommerce market sizes vary greatly
Focus on China
Some eCommerce trends in China
This year, the Chinese
market will hit $373B
(B2C & C2C) compared to
the US at $291B (B2C
only) and will continue to
grow at over 20% a year.
Shoppers buy across all
categories online
Unprecedented
size and growth
rates
Market concentration is
greater than in any other
major eCommerce
market.
Tmall is said to have
40-50% of the B2C
market, Taobao 80-90%
of the C2C market
Market
dominance by a
single player
Given the challenges of
operating in China,
numerous providers
such as Baozun and
Yoox offer streamlined
solutions for brands
looking to enter the
market
Numerous
players
streamlining
market entry
Alibaba alone is
investing $16B in a
logistics network –
Jingdong has invested
almost $4B.
Jingdong offers 3-hour
delivery in 6 cities
Massive
logistics
investment
Focus on India
Some eCommerce trends in India
Online retailers are
receiving hundreds of
millions of dollars of
investment:
Flipkart: $360m (in 2013)
Snapdeal: $133m
(in 2014)
Myntra: $50m
Small market,
massive funding
Traditional retailers
slow to embrace
eCommerce; some
online retailers going
offline
Most traditional retailers
are barely eCommerce
enabled (if at all);
Some such as Healthkart
and Firstcry are online
retailers going offline
Marketplaces
dominate
All leading players now
offer marketplaces:
Flipkart, Snapdeal,
Myntra, Amazon,
eBay.
The shift to
marketplaces has
brought customer
satisfaction challenges
India’s eCommerce
market is dominated by
local players in part due
to the fact that foreign
multibrand retailers
cannot sell online in
India – although that
may change
Foreign direct
investment (FDI)
restrictions
Focus on Russia
Some eCommerce trends in Russia
Unlike in China, where a
single player dominates
the market, Russia is the
opposite: No player holds
more than 4% market
share*
Fragmented
online retail
environment
Significant cross-
border eCommerce
– but with new
hurdles for foreign
sellers
In 2012, eBay sellers sold
over $400 million of
goods in Russia and 40%
of small packages
entering Russia were said
to come from Chinese
eCommerce companies.
However, new package
delivery restrictions
means FedEx and DHL
have suspended
shipments to consumers
In Russia, leading online
retailers like Ozon.ru
offer almost 20 payment
methods, including COD
– there are also different
pick-up options such as
QiwiPost terminals
Wide variety of
payment and
pickup options
Leading apparel retailers
like Lamoda, Ozon.ru
and Wildberries are all
said to offer a delivery
service where the courier
waits 15 minutes while
you try on clothing and
provides fashion advice
Fashion advice
via delivery
person
Source: Press release, “Russia Placed 13th in the Russia Retail eCommerce Index for Market Opportunity”, 18 November 2013.
© 2013 Forrester Research, Inc. Reproduction Prohibited 11
Takeaways for Latin American retailers from emerging markets in other regions
› In markets like China, numerous solution providers are streamlining market entry to a challenging market. There is still a dearth of similar options in Latin America – what role can your company play?
› A shift to marketplaces is a big revenue generator for online retailers, but can take a serious toll on customer satisfaction. Be prepared.
› Russian online retailers have thought creatively about providing services that drive sales of key categories. How can retailers in Latin America differentiate their offerings through service?
© 2013 Forrester Research, Inc. Reproduction Prohibited 12
If those are some of the
unique things about
China, India and Russia,
what trends are nearly
universal in emerging
markets?
© 2013 Forrester Research, Inc. Reproduction Prohibited 13
#1. Profitability is elusive - everywhere
#2: eCommerce growth starts in big cities, but rapidly migrates to Tier 2-3 cities and towns
Sources: Tech In Asia, 17 July 2013, IMRG Press Release, 24 September 2013
#3: Mobile is a primary driver of new user and buyer growth
#4. New eCommerce markets follow a similar path
Source: June 2013 “The Evolution Of Global eCommerce Markets”
Understand which phase countries are in
June 2013 “The Evolution Of Global eCommerce Markets”
© 2013 Forrester Research, Inc. Reproduction Prohibited 18
Takeaways for Latin American retailers from these global trends › If your brand is entering Latin America with
eCommerce, don’t expect payback in 1-2 years. As in all emerging markets, profitability is a challenge.
› Prepare for growth to come from smaller cities where offline product selection is limited, and think about how you will target consumers in these areas.
› Ensure your business is positioned to take advantage of mobile, and realize mobile offerings are a work in progress rather than a one-time initiative.
› Understand where your products fall on the eCommerce adoption curve, and what you’ll need to do to drive adoption of your product categories.
What is different in
Latin America?
#1. Alternative payment and delivery methods have emerged
#2. Online retailers do not own and operate delivery networks to the same degree as they do elsewhere
Source: Tech in Asia, Bloomberg
#3. The nature of brand engagement through social media is exceptional in Latin America
Strongly agree Agree
Brazil
Mexico
US
UK
= >20% = 10-20% = <10%
Source: Latin American Technographics Online Benchmark Survey, 2013, Asia Pacific Technographics Online Benchmark
Survey, Q2 2013, North American Technographics Online Benchmark Survey Q2 2013 (US Canada), European
Technographics® Online Benchmark Survey, 2013
I think it is cool to be associated with a
company/brand on social media
#4. Traditional retailers’ involvement in Latin America looks more like the US than Asia
China
India
Brazil
US
Top 10 online retailers by principal market as ranked by Internet Retailer
= Web-only = TV or catalog = Traditional retailer*
* Includes any online retailer with a traditional retail store counterpart
Mexico
Argentina
© 2013 Forrester Research, Inc. Reproduction Prohibited 24
Takeaways for Latin American retailers from these local trends › In Brazil, retailers won’t have to deal with the
headaches of cash on delivery, but they’ll need to come up with other ways to drive trust among online buyers.
› Retailers that do not (and do not plan to) own their own delivery networks will need to work closely with logistics partners to create competitive offerings.
› Social networks present a different opportunity for brands operating in Latin America as compared to the US or Europe – be aware of the differences and adapt.
› Omnichannel initiatives, while nascent in Latin America today, will soon change consumer expectations of the overall shopping experience.
© 2013 Forrester Research, Inc. Reproduction Prohibited 25
eCommerce is
growing in every
country and in every
category.
How will your
business adapt?
Thank you
Zia Daniell Wigder
@zdwigder
Thank you / Gracias / Obrigada
