I was thrilled to be back in São Paulo last week visiting with different companies in the eCommerce space. I met with over a half dozen online retailers, as well as other players in the industry including payment providers and market entry specialists. It was also great to have the opportunity to speak at Rakuten’s event on April 24th announcing their official launch in the country.
Below are a handful of takeaways from the trip:
Online momentum is building in categories such as apparel and beauty. In markets like the US and the UK, apparel represents a significant percentage of total online sales. In Brazil, by contrast, this category is just starting to take off, with online sales currently representing a very small percentage of the total market. As issues such as inconsistent sizing are increasingly addressed, however, and new entrants boost the market, the online apparel sector is set to grow substantially. Likewise, there’s much talk of growing beauty sales in Brazil (the country is set to surpass Japan to become the world’s second largest beauty market) – as with apparel, online beauty sales are a tiny fraction of the total today, suggesting substantial growth opportunities going forward.
As we look back on the year 2011, eCommerce organizations continued to expand their global reach. A growing number of US and European retailers started shipping internationally. Brands enabled eCommerce on their own websites in new markets and launched online stores on marketplaces in multiple countries. Other companies with an interest in global eCommerce used the year to gain insights into new markets, determining which ones to prioritize in the years ahead. Rumors swirled about Amazon preparing to enter India. Or Brazil.
For many companies, however, the globalization process is still just beginning. Aside from a handful of companies that operate eCommerce sites around the world, few companies have a truly global online footprint. The growing number of US- and European-based companies that ship internationally will see revenues increase from these markets, but will start to hit a language ceiling: Close to two-thirds of online consumers in both France and Germany, for example, agreed with the statement, “I only shop from websites in my native language.” In the UK, the percentage is close to three-quarters.
2012 will not be the year that eCommerce organizations blanket the globe with localized offerings – they will, however, continue stepping into international waters. Next year we expect to see :
Back in September, I wrote up a few of my findings from meetings with companies in the eCommerce space in Rio and São Paulo. We’re fielding an increasing number of questions about Brazil, and indeed, while eCommerce in Brazil today is still heavily dominated by local companies, the landscape is starting to include more international players:
My first whirlwind trip to Brazil confirmed much of what I’d expected. Brazil is booming. Traffic in the cities is horrendous. The buzz of helicopters in Sao Paulo is incessant. And, there is huge opportunity for IT vendors and services providers. But contrary to what I had expected, IT preparation for the upcoming mega-events seems to be getting off to a slow start.
Over the past year, we’ve worked together with the forecast team at Forrester to help eBusiness professionals understand the size of different online retail markets around the globe. Last year we published our first look at the online retail markets in some of the major markets in Asia-Pacific — this year, we’ve just published our first forecast for two of the largest online retail markets in Latin America, Brazil and Mexico. Some findings from the report include:
Brazil is — and will remain — the powerhouse in the region. With more than 40% of the online users in the region and a steadily growing economy, it’s not surprising that Brazil’s eCommerce market will outpace all others by a wide margin. Brazil’s projected 2011 sales of almost $10B put it behind other major online retail markets like France and South Korea but ahead of smaller ones such as the Netherlands and Italy.
Mexico’s online retail market is small today —but growing by a CAGR of almost 20%. With less than half of the online users of Brazil and limited online spending, Mexico’s online retail market remains a small fraction of the size of Brazil’s. Average online spending per buyer will not increase significantly over the next five years, but the sheer number of online buyers will.
International orders grew 34% for HP . . . not this year but actually back in 1964 when non-US orders accounted for 23 percent of HP’s revenues. While the growth of non-US tech revenues is in the news today, HP’s international orders first exceeded domestic orders not recently but as far back as 1975.
In my research on market entry and market opportunity assessment (MOA), I recently spoke to strategists at HP about how they evaluate markets. As I was leaving the building, I stopped in to the HP museum and spent some time with the HP archivist. The highlights of the visit include seeing the first HP device built in the now famous Palo Alto garage and a calculator that brought back memories of my father in his overstuffed chair “figuring out how to pay for college.” I was not only impressed by the history embodied in that room but also with the value that HP places on recording and memorializing its “life” as an organization. Not to sound too sappy but it really brings the company and the industry to life.
I’ve spent the last few weeks reading through some documents on the history of HP’s entry into international markets. There are valuable lessons to be gleaned from their experiences. I’ve written about many of those lessons in reports and blog posts but thought I'd draw out a few of them here.
Forrester’s survey of over 1,000 IT decision makers in North American and European enterprises, only 12% of firms officially support or manage Palm devices. In comparison, 70% of enterprises support BlackBerry smartphones, and 29% support Apple iPhones. Android devices, the newest entrants in the mobile OS wars, have strong momentum and are officially supported by 13% of firms.
Well, that got me wondering how Palm had fared in emerging markets. We know that device preferences are different globally. So, I thought, maybe there are some Palm fans outside of North America and Europe. I checked Forrester’s Global Technology Adoption data from last summer (new survey expected back from the field very soon) in which we surveyed 1,412 IT executives and technology decision-makers across 15 countries. Here is what I found out about PalmOS support across enterprises in a few of the countries:
Last December I wrote about Building B2B Technology Markets, looking at how to penetrate a market with almost none of the traditional characteristics of a mature technology market? As technology vendors increasingly look to emerging markets as a significant opportunity and source of growth, this question becomes more pressing. The report explored some of the elements of Cisco’s Country Transformation initiatives in order to identify steps in the process of building market infrastructure:
For example, the report looked at partnering with governments to encourage market-friendly policies and investment in the necessary technology infrastructure to support market development and overall economic growth. And, from a sales perspective, trade associations provided an alternative channel to reach small and medium businesses in markets where distributors and resellers weren't available.
But, another element critical to successful market development is the ecosystem of partners developing solutions specific to the particular market, or even just contributing local innovation for new approaches to broader global issues. Building B2B Technology Markets discussed finding local organizations to act as partners in the market, and even investing in educational initiatives, but missed the next step of how to help create these new local ecosystem partners.
Brazil has launched a full court press and is using technology to do so in the form of its new e-government portal ‘Portal Brasil’ – the new official website of Brazil. And, here‘s the best news: they didn’t forget us here at Forrester. According to the press release, the site's content is designed to meet the needs of both Brazilian citizens and foreign audiences, including: analysts (yes, analysts!), investors, private sector companies, media, academics, NGOs, students, tourists, and other groups.
And, for us tech industry analysts – according to the Brazil’s Secretariat of Social Communication (SECOM) – Portal Brasil will maintain current information on Brazilian technology initiatives, including:
Information on Brazil’s Digital Inclusion Programs, including the Computer for All program and the Broadband Internet in Schools program
Earlier we shared with you our excitement around our newest addition to the countries we now cover with Forrester Technographics: Latin America. For the ones less familiar with our Technographics offering, please see the text below the graphic.
Recently the data for LATAM came out of the field. Questions we cover include: How large is the PC market in Mexico and Brazil? What brand of PC have consumers purchased most recently? How are PC owners using their PCs?
Please find below some data on PC ownership in Brazil:
The PC markets in Mexico and Brazil are fairly well established, with at least half of consumers owning at least one PC in the home. Interestingly, almost half of the consumers in the low socioeconomic level in Brazil (C1C2) own at least one PC, in contrast to only one-quarter in Mexico (D+).