We just published our new Latin American Online Retail Forecast, 2012-2017 which forecasts growth in Brazil, Mexico and, for the first time, Argentina. In the report, we analyze the B2C and C2C online retail markets in these three countries, and note that:
Brazil remains the largest eCommerce market in Latin America by a wide margin. Despite the economic slowdown in Brazil, eCommerce continues to charge ahead in the country, surpassing USD 12 Billion this year. Unlike the other two markets we forecast in the region, Brazil’s eCommerce market is heavily driven by mass-market consumers: Our surveys indicate that over half of metropolitan online users whose monthly income is less than BRL 4,000 (around USD 2,000) shop online in Brazil. Online shoppers in Brazil are also starting to diversify their purchases beyond early adopter categories such as books and media, consumer electronics and computer hardware.
eCommerce revenues in Mexico are growing rapidly off a small base. In contrast to Brazil, eCommerce in Mexico remains at an early stage, with small but growing revenues. Online buyers tend to be relatively affluent, but per capita online spending remains quite low. As the online buying population expands and starts to encompass a broader demographic, eBusinesses will need to take into account the large percentage of consumers in Mexico who do not have credit cards and who access the Internet outside the home or office.
Engaging with users via mobile is now unavoidable - no surprise there. By 2016, smartphone subscriptions in the US will likely outnumber people and in Europe, almost 70% of the population will own smartphones. Consumers want simple, immediate, and contextual mobile services.
Mobile offers additional contact options that go beyond the traditional touchpoints you have with a consumer, further embeds your brand into your customers' lives, and, perhaps most importantly, can serve as the central connector between all your touchpoints. The flexibility and immediacy mobile provides enables you to drive customers across and within channels and, at the same time, comes with greater complexity and more need for speed.
eBusiness professionals are at the forefront of this evolution. In order to drive value for your business and your customer, it is critical that you have a systematic, end-to-end approach to support and connect with customers through this critical touchpoint.
The longer we spend researching mobile banking, the more convinced I become that mobile banking is the most important innovation, or cluster of innovations, in retail banking in years, arguably in a century. Here’s why I think mobile banking is a much bigger deal than cash machines (ATMs), credit cards or home-based online banking:
In developing economies that lack a dense infrastructure of branches, ATMs and fixed-line telecoms, mobile banking and payments are bringing millions of people into the formal banking system for the first time.
In developed economies mobile banking will become the primary way many, perhaps most, customers interact with their banks. Banks need mobile banking to provide a platform for mobile payments and to protect their retail payments businesses from digital disruption as mobile payments start to replace card payments in shops.
If you’ve been chatting with your web development team recently, you might recall them talking about responsive design. But, what is responsive design and why should eBusiness professionals be taking it seriously?
First, responsive design is not a technology, it’s a development philosophy - an approach to web development that forces user experience developers to design and optimize from the outset for multiple touchpoints including (but not limited to) the desktop, tablets and mobiles. Until now, many eBusiness teams have either developed their mobile site by coding a separate set of templates, or outsourcing to a 3rd party vendor or agency whom in many cases scrapes or proxies existing content from the desktop site. As many retailers and other eBusiness teams start to develop optimized tablet sites, there is a distinct concern that supporting 3 different sites for desktop, tablets and mobile is becoming increasingly expensive and is causing a drag on innovation momentum.
With a responsive site, developers use a single set of front-end code to build a site that responds within the constraints of the device to deliver an experience that is contextual to the size and orientation of the screen. Responsive design allows eBusiness leaders to consolidate their teams (UX designers and developers) back into a single ‘web’ team aligned around a single technology (CSS3 & HTML5) and writing a single set of code. Some eBusiness leaders are referring to this consolidation as back to “one-web” and are increasingly intrigued by the potential cost and efficiency benefits that moving to a responsive site has to offer.
One of the topics I’ve spoken about at recent industry events is how global eCommerce markets evolve – more specifically, how markets shift from an early stage to one in which consumers spend lavishly online and buy across a wide variety of categories.
After interviewing dozens of companies about their experience expanding into different global markets, and after reviewing internal and external data, we’ve noted that markets tend to go through four phases as they reach the stage of well developed eCommerce. We identify these four phases as the following:
Phase 1: Connecting and Entertaining. In this phase, consumers are starting to go online and connecting with others through the online channel. Some 10-15 years ago, consumers were likely to go online and engage through email or chat; today, social networking has joined the ranks of one of the early activities of online users. Socialbakers’ estimates of Facebook users by country indicate that the network’s top five markets outside the US are Brazil, India, Indonesia, Mexico and Turkey – in such markets, the number of Facebook users today often surpasses the total number of online users just five years ago.
Over the last three months I’ve presented at 4 different European events on the subject of Mobile Commerce in retail, and in every other speech I’m called on to do, mobile is increasingly at the heart of what I talk about when I discuss the key trends impacting European eCommerce. Its unavoidable.
The growth assumptions are based on the existing Forrester Research Online Retail Forecast, 2011 To 2016 (Western Europe), with simplified category groupings to reflect mobile characteristics. Mobile purchasing behavior and mobile Technographics sophistication are overlaid onto the country-by-country eCommerce growth forecasts to reflect the way in which mobile commerce will grow differently from online commerce across Europe. What this gives us is a picture of how we believe that mobile commerce will evolve for some of the key European markets.
So what are we forecasting?
· Mobile Growth Will Be Rapid, But Adoption Will Be Niche For Some Time Yet. Mobile commerce will represent 6.8% of all online eCommerce sales across Europe by 2017 (mobile only – we exclude Tablets from this figure). This is a significant portion of online sales, with the most rapid growth in the south of Europe.
After years of fighting for a voice in the organization, eBusiness leaders are finding themselves in the spotlight. Some all-stars command total compensation packages of more than $1 million and others -- like this example from retailer FinishLine -- step into new roles like Chief Digital Officer. We believe that in the next few years many eBusiness professionals will graduate to titles like VP of Digital Strategy and VP of Multichannel Strategy, reporting directly into CEOs or to VPs of Distribution/Channels.
What's driving the graduation of eBusiness out of the halls of IT and marketing and into the C-Suite? Two words -- mobile and multichannel. This is about so much more than apps and in-store inventory lookup. Mobile is finally enabling many of the multichannel programs that eBusiness professionals have evangelized for years. Some eBusiness teams were already serving as digital centers of excellence for business units and product lines and taking ownership of mobile strategies: In a survey of eBusiness professionals, the majority -- more than 70% -- reported that they have responsibility for the mobile channel. But suddenly, all eyes are on eBusiness teams to develop the firms' digital strategies for what were traditionally considered offline channels as well.
I spent last week in Tokyo, Japan. Given that an increasing number of our clients are eyeing Japan’s eCommerce market, I thought it would be interesting to share some observations from my trip. Local business perception is that the economy is struggling and will persist to struggle, but robust activity on the street and our most recent Asia Pacific Forecast belie that. There is clearly potential for growth in the market, but changes need to be made before that can happen. Based on my observations, the key inhibitors are:
Low adoption of English in the business world. Japanese is the primary language used to conduct business in Japan. Understandable in the world’s third-largest economy. Many understand English, few are comfortable using it in a professional setting. This issue makes it hard for broader penetration globally across eBusiness. A notable exception is maverick Rakuten where employees are required to have strong English language skills.
Retail is aggressive but mostly single channel in focus. Companies I talked to are trying to understand cross-touchpoint attribution, but there is little evidence of multichannel sales in those stores. BIC Camera, one of the largest consumer electronics chains in Tokyo, for example, offers an enormous selection without the option to purchase across different channels.
Consumers are now in control, especially when it comes time to buy. Ubiquitous connectivity allows consumers to easily check prices and buy on the go, which should worry (not terrify) traditional retailers in competitive categories. This “showrooming effect,” which has been encouraged by Amazon, would enable web retailers to snatch some sales from the hands of their brick-and-mortar competition. A majority of sales are still happening offline, so the fear of showrooming — that most people are finding screaming deals online — is largely exaggerated. In fact, the majority of transactions still happen in stores, even when shoppers research online (yes, even when they’ve got their mobile devices in hand in a store). Forrester’s US Cross-Channel Retail Forecast, 2011 To 2016, which launches today makes it clear just how influential and critical the web channel will be to eBusiness professionals in retail. By 2016 Forrester predicts that more than half of the dollars spent in US retail will be influenced by the Web. Already in 2011, $1.3 billion dollars in the US fall into this category.
It is imperative for eBusiness professionals in retail to adopt cross-channel best practices, including:
Pricing more consistently to reduce vulnerability to showrooming. The ability of shoppers to comparison-price shop and demand price matches requires retailers (and manufacturers) to reduce price discrepancies across all channels. With comparable pricing in place, this forecast suggests that many consumers may in fact nonetheless choose to purchase products in stores because of the immediate availability, service levels, or simply because products online do not have significant benefit over those in stores.
I've written about the European Union's grand plans for eCommerce in the past. Much of what the European Commission wants to achieve is laudable and would be fantastic to see. After all, who amongst us doesn't want to see eCommerce thrive? However, recent initiatives such as the much debated "Cookie Law" suggests that the good intent is often diluted by the time directives become in-country legislation. So there is a very real risk that further plans to tinker with national laws regarding things like tax, delivery charges, and returns could wind up making the world more, not less complex.
Each country in Europe has an eCommerce industry body. The IMRG in the UK, Fevad in France, BVH in Germany. The list goes on. But the challenge with these bodies is that they are all country-specific, and as such don't really think too deeply about cross-border issues and also lack the power to effectively lobby the EC when it comes to influencing legislation.
One of the things that Europe really needs to help drive a more effective cross-border e-economy is an effective cross-border "user group." A group that can operate in the way that shop.org does in the US.
We have EMOTA, which is essentially an umbrella organization for the various industry groups, but feels a little detached from the actual retailers.