Forrester Releases Its New Asia Pacific Online Retail Forecast

Today we published our Asia Pacific Online Retail Forecast, 2011-2016 highlighting online retail sales in five different markets in Asia Pacific: China, Japan, Australia, South Korea, and India.

Along with providing overall online retail market sizes, we note that:

The combined size and growth of China's eCommerce market are unprecedented. China's online retail market surpassed $100B in 2011 and continues to grow at a breakneck pace — when the US online retail market was the same size as the market in China today, growth was considerably slower. We revised our forecast upward to reflect the fact that online sales continue to increase at a rapid pace, even as the market size swells.

Growth rates in Japan, South Korea, and Australia are more tempered. In contrast to China, online retail sales in Japan, South Korea, and Australia will grow at rates more in line with those of the US and developed eCommerce markets of Europe. However, all three markets are attracting increased investment as a growing number of both domestic and foreign players launch new online offerings in these countries. 

India will grow quickly off a small base. India's eCommerce market, by far the smallest of those covered in our forecast, is poised to grow by more than five-fold by 2016 as the number of online buyers and per capita online spending increase rapidly. This market is gaining more attention as global brands look to markets that are in the early stages of eCommerce adoption but offer significant long-term potential.

Forrester clients can read a summary of the report here.

US Online Retailers Still Look First To Europe Despite Growing Interest In Emerging Markets

Online retailers are rapidly adding emerging markets to their list of new global opportunities to explore, as these markets are set to take a growing percentage of global eCommerce sales going forward.  However, it’s important to remember that Europe still ranks as at the most popular region outside of North America for US online retailers expanding internationally. The market is set to grow at a healthy pace over the next five years: Clients can read my colleague Martin Gill’s recently published forecast of online retail sales in key markets across Europe.

Some takeaways from recent conversations with online retailers expanding into and within Europe:

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Some Thoughts On FiftyOne's Acquisition Of Borderfree

FiftyOne, the company that provides globalization and international logistics services to US-based online retailers such as Gap, Pottery Barn, and Crate & Barrel, announced today that it is acquiring Canada Post’s Borderfree unit. Borderfree, one of the first organizations to play a role in driving cross-border eCommerce, carved out a niche for itself helping US online retailers target online shoppers in Canada.  

A few observations:

The acquisition does not disrupt the landscape of solution providers. With this acquisition, FiftyOne boosts its Canadian offerings and takes a small competitor out of the market, but the acquisition does not counter any direct threat from another solution provider in the space. Other providers tend to focus on different market segments, for example, International Checkout counts hundreds of clients in the SMB space, while BorderJump focuses on Latin America and the Caribbean (For an outline of different vendors, clients can read our 2011 report on Using International Shipping To Reach Online Shoppers Around The Globe). Today FiftyOne does not face another rival with the same roster of large clients.

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Brands Are Increasingly Selling Direct Online . . . In New Global Markets

Back in 2010, we wrote a report that looked at how and where US online retailers were expanding internationally. Today we published a related report that focuses on brands that have extended their international offerings by launching transactional websites. Establishing A Global Direct Online Sales Footprint looks at the countries where brands are choosing to focus on with their eCommerce offerings, and some of the tactics they’ve used to keep costs in check.

A handful of findings from the report:

Brands rarely enter a market by selling direct on their websites. Most brands enabling eCommerce on their global websites today already sell in these markets through traditional retail channels — the online sales channel simply becomes a new way to reach consumers.

Country selection is not always dictated by market size. Brands expanding their online offerings in Europe, for example, often focus first on the UK, France, and Germany. After the big three, however, the ease and convenience of serving other markets often trumps market size.  

Online sales strategies differ by market. Rare is the brand that has an identical offering in every international market. Most brands that offer eCommerce-enabled sites also provide informational sites in other markets, with little consistency in how the informational sites direct online shoppers to the brands’ retail partners.

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The Globalization of eCommerce in 2012

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 :

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Growing Momentum Around eCommerce In Brazil

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:

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Some Observations On The Evolving eCommerce Landscape In China

Last week I joined a few of my colleagues in China to meet with a variety of eBusinesses in both Beijing and Shanghai. We met with online retailers, technology companies, and other players in industry. For those used to selling online in countries other than China, some of the takeaways included:

Multichannel remains in its infancy. With the leading online retailers in China being pureplays, multichannel remains at very early stages. In-store pickup or returns are not widespread – however, there are emerging multichannel initiatives. In a recent, high-profile online-to-offline expansion, for example, Taobao opened a new furniture showroom in Beijing to enable consumers to experience different furniture brands sold on the site. The furniture sellers rent out space in the showroom to display their products. We had an opportunity to visit the huge showroom, which was somewhat quiet when we were there – terminals stationed throughout the showroom (see below) enabled consumers to insert a card and select products online, then proceed to checkout to pay.

    

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Quick take on eCommerce in Brazil

I recently joined two of my analyst colleagues - Jennifer Belissent from Forrester's Vendor Strategy role and Jan Erik Aase in Sourcing & Vendor Management - in Brazil to speak with companies in our respective coverage areas. It was a fantastic trip: Well organized and incredibly useful in better understanding the business landscape.

On the eBusiness side, we had the opportunity to meet with a wide variety of companies in São Paulo and Rio, ranging from online retailers like Sacks and Comprafacil to eCommerce technology providers such as IBM and hybris to others like FedEx and Google. We also spoke at events organized by content optimization provider Arizona as well as Brazil’s eCommerce Committee.

We are working on a report that summarizes some of the key findings from those conversations – in the meantime, a handful of high-level takeaways from the trip:

Multichannel functionality has not arrived, but is coming. Multichannel came up in almost every conversation I had with companies in the online retail space in Brazil. While there are few options like in-store pickup or returns currently available on leading retailers’ eCommerce sites, the fact that many of the large traditional retailers are active in eCommerce means that multichannel functionality is poised to be a core area of investment going forward.

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Forrester Publishes Its First Online Retail Forecast For Brazil And Mexico

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.
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The Globalization Of eCommerce In 2011

Nearly one year ago, I asserted that the global economic downturn had not slowed the international expansion of eCommerce initiatives. In 2010, online retailers continued their push into new global markets: Gap launched eCommerce sites in the UK and China while starting to ship internationally to other markets; Amazon launched its first new localized Web site in six years;  Zara went live with eCommerce sites in six European markets.

The push toward global expansion is poised to continue in 2011, with few companies suggesting that international markets will represent a decreasing percentage of revenues in the future. And while Canada and the UK still rank as the top destinations for US online retailers operating abroad, it’s not just the markets of North America and Europe that are attracting attention. Indeed, companies increasingly cite emerging markets as key to long-term growth. A survey of business executives just released in the McKinsey Quarterly indicates that more than 75% of those surveyed expect to see revenues from emerging markets within the next five years; more than one-third of companies expect those revenues to represent more than 25% of the total.

Looking forward to 2011, we expect to see the following trends:

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