The growth in e-commerce marketplace is seen in the past decade due to change in consumer spending power and shopping habits. This affected the product price, consumer behavior and availability of the product or good in the emerging and developing countries. It was projected that the e-commerce will grow at a CAGR of 12% worldwide. In fact, the CAGR of traditional brick and mortar stores is only 2%. Without a doubt, internet penetration broadens the reach of unprecedented opportunities to expand internationally through digital channels.
Careful analysis of opportunities and customer expectations are essential for developing the business model and expanding business with international based expansion. Preclude the expensive steps and ensure the best strategy, payment integration and logistics management for entering into international markets. Retailers must understand the market characteristics and the indicators specific to the targeted market when expanding into emerging and developing international markets.
Know the market
Rise in income and increase in spending power of the middle class, the developing countries have huge potential and opportunities for e-commerce marketplace. Demographics are very crucial in the e-commerce marketplace and can change the way of business around the world. For retailers “Echo Boomers” are the prime audience to target through the internet. Analysing the targeting audience is one step but the second step for the enterprises is to build a strategy to target the prime audience. China and India are the best markets to target millennials as the size of millennials population combined in both these market are bigger than twice the US population.
Analyze the market conditions
Understanding the consumer demographics for the targeted market require a strategy for expansion into emerging targeted market. Expansion strategy via e-commerce requires the understanding of positioning the brand in the market. Pinpoint the factors that can create the hassle for brand expansion and identify the gaps in the targeted market that can give you the competitive advantage over the competitors. Discover the gaps in the competitor strategy that you can fill. The gaps can be neglecting customers in Tier II and Tier III cities. Identifying such gaps can enable you to create an experience for the potential consumer in the targeted market by taking the advantage of the fulfilling gaps created by competitors.
Expansion in the international markets for companies with cultural or linguistic boundaries is difficult, especially for those with no international experience. E-commerce is the effortless way for expansion into the marketplace where e-commerce is already present. Consumer acquisition is much easy through online marketplace due to the availability of a wide variety of products and product handling & delivery services offered by online marketplace. Understanding the consumer needs and expectations are also essential. In the emerging and developing countries following factors motivates consumers to shop online.
- Variety of Brands
- Wide Product Range
- Best Price
- Quick and Reliable Delivery
- Payment Transaction Security
E-commerce Marketplace Payment Dilemma
Expanding the business into the international market may seem very promising idea but the final step for the consumer on e-commerce marketplace is to make payment for the transaction. Understanding the consumer preferred mode of payment is essential. Card-based or online payments are the preferred mode of the majority of e-commerce marketplace consumers in developed countries. Most preferred mode of payment is still the cash in developing countries. In a traditional brick and mortar retail stores, transactions are done using cash payments. Not processing cash payment on e-commerce marketplace creates a payment dilemma for online retailers. Southeast Asian countries and other developing countries have the number of customer transactions in cash. Malaysia, Egypt, Thailand, India, and Vietnam are countries dominated by cash transactions. These countries have more than 80% of total transactions on e-commerce marketplace done in cash.
Upon completion of the transaction by the consumer on an e-commerce marketplace, the next dilemma is the logistics operations. Brands need to ensure that their logistics network is prepared and equipt with the necessary resources to deliver the product at customer’s doorstep. Ensuring consistent delivery is essential for building trust and faith in the brand or e-commerce marketplace. Potential pitfalls that can happen while handling logistics can be lost packages, wrong delivery address, late delivery and return packages. All these pitfalls further add the delivery cost for the e-commerce marketplace.
Significant growth in the e-commerce marketplace and potential emerging markets are attracting many young entrepreneurs. They are looking to expand the e-commerce marketplace in international markets and to start a new marketplace. As a matter of fact, understanding the market requirements is a complex task which can’t be ignored for the successful launch.