Four Questions Aspiring Global eCommerce Brands Ask Of Technology Partners

A growing number of digital business leaders are being tasked with global expansion. Their technology partners play a critical role: eBusiness professionals rely on partners not only to help build new digital offerings, but also to provide strategic advice on how to effectively penetrate new markets. Some of the key questions solution providers can anticipate from clients and prospects include:

How quickly can I get up and running?  A common scenario looks like this: After years of discussing the need to go global, senior leaders within an organization finally decide to pull the trigger. A frenzy ensues. Digital business leaders are given just a few months to propose which markets to prioritize and how to enter those markets. Given how quickly the new international expansion must happen, business leaders seek out technology partners that promise rapid turnaround on new global initiatives. Solution providers that talk about launching new initiatives in years rather than months are often sidelined in favor of those that can execute more rapidly to fulfill the corporate mandate. 

What will going global cost? Few leaders have access to an endless stream of cash when it comes to launching new global eCommerce offerings. To the contrary: It’s more typical to see businesses pouring a small fraction of what they invested in the domestic business into their international initiatives. Cost is therefore front and center when it comes to evaluating new technologies. Solution providers that can help businesses launch across multiple countries in a cost-effective manner are well positioned to capture new business, even when the prospect may be only ready to enter one or two new markets at the time of vendor selection. The exception? When a market is large or strategic enough to merit selecting partners with solutions that cater specifically to that market (think China).

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Capture The Global eCommerce Opportunity

eCommerce growth continues unabated around the world, with eCommerce being cited as a driver of overall economic growth in markets from China to Nigeria. Indeed, online retail revenues continue to soar in every market that we forecast—China alone will generate more than $1 trillion in eCommerce sales by 2019.

As eCommerce markets in different parts of the globe flourish, a growing number of digital business leaders are being asked to take their brands into new markets. What opportunities exist for eCommerce leaders looking to expand internationally? How are they tapping into these opportunities? Our newly updated report (client access req’d) addresses these questions. We find that:

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Five Key Trends In Global eCommerce

Yesterday I had a chance to join the fantastic Global eCommerce Leaders Forum here in New York. Leaders from Puma, Borderfree and Alibaba delivered keynotes at the event, and in the afternoon, I did a quick presentation on five key themes in global eCommerce to tee up a panel on international expansion:

The Asia pivot. Arguably the biggest story in global eCommerce over the past five years has been the rise of China as an eCommerce force. No other eCommerce market has rivaled China’s ascent to power: Between 2009 and 2014, revenues increased by 16-fold, reaching over $440B in 2014. That shift fundamentally changed how brands view eCommerce in Asia. Instead of contemplating expansion into Asia only after years of operating in North America or Europe, a digital strategy for Asia—and China in particular—is now front and center for many brands.

Options for brands beyond direct sites. Today there are very few brands whose global expansion plans focus exclusively on localized, direct-to-consumer sites. Cross-border shipping and marketplaces —two relatively low-cost, low-risk approaches to international expansion—now factor into the consideration set of almost every brand evaluating new global markets. Indeed, today many solutions are available which enable brands to tap into online shoppers overseas without massive investments or years of preparation.  While direct sites will remain a core part of brands’ global expansion efforts—and their value unrivaled in many ways—other approaches will increasingly supplement this tried and true method.

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eCommerce Sales In Brazil, Mexico And Argentina Will More Than Double By 2019

Latin America remains solidly on the radar of eCommerce leaders taking their brands global—at the same time, local players are rolling out sophisticated offerings of their own to compete with the growing number of international players in the region. Which trends will propel eCommerce forward and how big will these markets be in five years? Our newly published forecast addresses both topics for the three largest markets in Latin America: Brazil, Mexico and Argentina. We find that:

Young, increasingly digital shoppers are driving eCommerce across the region... The markets of Latin America boast not just a rising middle class, but also a young, digitally savvy population. Indeed, while the average age in the US is 38, in Brazil and Argentina it’s 31 and in Mexico just 27. These young consumers are accelerating the shift to online shopping and embracing mobile just like their counterparts around the globe. Still, business leaders that are eagerly eyeing the region must bear in mind that mobile commerce is still at an early stage—it does not yet represent the same high percentage of online sales as in some Asian markets.

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Marketing And Site Features In Brazil’s eCommerce Market

We just published our third and final report in the Retail eCommerce in Brazil series. We tackled key performance indicators in our first report and team headcount and priorities in our second—our third report looks at the marketing tactics employed by online retailers in Brazil and the site features they’re embracing.  All three reports summarize the findings of a survey we fielded of 300+ online retailers in Brazil together with partner e-Commerce Brasil.  

In the report, we find that:

Online retailers continue to rely heavily on core marketing tactics. Despite the bevvy of new and emerging marketing options at their disposal, eCommerce leaders continue to prioritize search and email marketing as the most effective tactics for acquiring customers. Not surprisingly, store-based online retailers find offline advertising more effective than other types of online retailers do, and web-only retailers find social networks to be a particularly good source of customer acquisition.

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More Trends in Brazil’s eCommerce Market

eCommerce in Brazil has gone from an $8 billion market in 2010 to a nearly $20 billion market today.  As the market has grown, eCommerce team sizes have expanded and retailers’ priorities have shifted. We address these issues in the second of our three-part series on retail eCommerce in Brazil. The three reports summarize the findings of a survey we fielded of over 300 online retailers in Brazil together with partner e-Commerce Brasil.

In our most recent report entitled Retail eCommerce In Brazil: Team Headcount, Priorities And Challenges, we find that:

Operations has the highest headcount while analytics and customer experience lag far behind. Our survey shows that the average eCommerce team in Brazil has 24 members, with half of those being part of the operations team. Customer service, IT and marketing fall further down the list. eCommerce teams include just two people in usability/customer experience and just one in analytics.

Hiring qualified talent remains many online retailers’ largest hurdle. When asked about challenges, retailers cited hiring as one of their biggest issues over the next 12 months. Not surprisingly, the two areas of low headcount cited above – customer experience and analytics – are two of the most challenging positions to hire for in other markets, as well. The other top challenge cited by Brazilian retailers was managing fulfillment costs and expectations – not surprising given Brazilian shoppers’ expectations of free, quick delivery in major metropolitan areas. 

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Global eCommerce Will Shift In 2015

We just published our predictions report for global eCommerce in which we identify 10 trends and discuss the impact they’ll have on the industry in 2015. We look at key commerce topics such as mobile and omnichannel and also address what we expect to see from some of the global eCommerce giants in terms of their international efforts in 2015.  In addition, we explore topics such as:
 
  • The B(R)IC markets will continue to attract attention, but smaller ones will also gain traction. Next year, we expect to see continued interest in Brazil, India and China (the political situation in Russia means it will be bumped down the list for many US and European brands). However, all of these markets will remain challenging for varying reasons and we expect that other emerging markets will gain traction with brands in 2015. Indeed, a look at the World Bank Ease of Doing Business Index shows the BRIC markets falling well below other markets like Malaysia, Thailand, the UAE, Mexico and Colombia. Many eCommerce organizations won’t yet be able to justify the cost of launching direct-to-consumer sites in these smaller markets, but a handful of large global organizations will jump in to establish a brand for themselves before their counterparts do the same. Brands looking to sell cross-border will also turn their attention to smaller but fast-growing eCommerce markets.
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Key Metrics In Brazil’s eCommerce Market

In August and September of this year, we fielded a survey of online retailers in Brazil together with partner e-Commerce Brasil, an established industry organization. The goal was to better understand key performance indicators (KPIs) in Brazil as well as retailers’ priorities, challenges and the size and composition of eCommerce teams.

We received over 300 responses to our survey and have just published the first in our three-report series based on the survey. Retail eCommerce In Brazil: Key Metrics provides a look at over a dozen KPIs such as conversion rates, average order values, return rates as well as sales driven by smartphones and tablets. Our report analyzes the data by retailer type (web-only, traditional retailer or manufacturer selling direct) as well as by retailers’ total online revenues and tenure.

A few findings from the report:

Conversion rates in Brazil average 1.9%. In Brazil, we found conversion rates that varied quite a bit by type of retailer, with web-only retailers reporting the highest conversion rates. These rates tend to increase as markets evolve: Our previous research on The State of Retailing Online 2014: Key Metrics & Initiatives conducted with Shop.org yielded an average conversion rate of 2.7% for the US.

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Three Things We've Learned About Emerging eCommerce Markets

As global eCommerce players like Alibaba and Rocket Internet have made headlines in recent weeks, there has been much focus on how eCommerce is emerging around the globe. While a lot of the media coverage has looked at the specific operations of these two players, it’s important to note some of the trends that are powering growth in emerging eCommerce markets. Below are two themes we discuss in our research — and one more that keeps rearing its head in the media:

  • If traditional retail stores don’t meet rising consumer demand, eCommerce will fill the void. In some emerging markets, the nature of the traditional retail market left consumers particularly ripe for eCommerce. In markets like China and India — which have highly fragmented traditional retail landscapes and few retailers with nationwide footprints — consumers in smaller cities have traditionally had little access to global brands. This situation leaves an opportunity wide open as the growing number of middle-class consumers seek out access to a greater variety of products. Even as eCommerce revenues have soared across Asia, few traditional retailers have been quick to embrace the new medium. Today, eCommerce in many countries across the region is almost completely dominated by Web-only players.
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eCommerce Evolution In Brazil

Many brands eyeing Latin American eCommerce markets look first to Brazil, and with good reason. Brazil is Latin America’s largest online retail market by a wide margin and growth rates remain high: Our forecast shows the market growing by a CAGR of 18% to reach $35 billion in 2018. 

As in every fast-growing eCommerce market, however, companies that compete in this environment face numerous challenges. Issues like complex tax navigation and the long path to profitability are well documented. In addition, companies need to prepare for shifts in what consumers buy online and how they make these purchases. The dynamics of online shopping are shifting.   

Our report published today on The Evolution Of eCommerce In Brazil (client access req’d) discusses five trends that will impact the online retail market in the country. While these same trends will play out in many markets around the globe, our report dives into how and when we expect to see shifts in Brazil. 

For example, in Brazil:

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