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Online retail spends by consumers in emerging markets, including India, will touch $4 trillion by 2022, amounting to about 50% of all retail spending in Asia, Latin America, and Africa, according to a report by BCG.
The report is titled “Digital Consumers, Emerging Markets, and the $4 Trillion Future” said that half of the population in emerging markets is connected to Internet at present and by 2022, nearly 900 million more emerging-market consumers will be online, versus just 80 million new internet users in developed markets.
More than 90% of all internet newcomers during the next four years will be from emerging markets, the report added.
Internet access
Smartphone penetration doubled in emerging markets between 2013 and 2017, from 22% to 44%, and smartphones are the preferred way for people in these markets to access the internet. The report was led by BCG’s Center for Customer Insights (CCI) and is based on a survey of more than 15,000 urban internet users in Brazil, China, India, Indonesia, Kenya, Nigeria, Morocco, the Philippines, and South Africa.
Nimisha Jain, a BCG partner in New Delhi, who leads CCI in emerging markets said, “Emerging markets are on the brink of a major digital revolution.The share of digitally influenced retail in total retail spending will surge from 33% in 2017 to 47% by 2022. There are major differences across emerging markets, however—and in order to succeed in those markets, B2C companies will have to approach each one differently.”
About 39 per cent of the shoppers in China shop online or is influenced digitally. India is at 14 per cent after Brazil, which is at 34 per cent.
China is leading other emerging-market countries in internet usage, with 20% of its retail sales already coming from e-commerce. But e-commerce is advancing in other emerging economies, too. Overall, e-commerce in emerging markets will grow from about 15% of all retail sales in 2017 to 20% of all retail sales in 2022.
The online portion of retail in China already exceeds that of the United Kingdom (16%), the United States (13%), and Germany and France (11% each).
Social media
Social media is a big part of digital influence in emerging markets. In CCI’s survey, 95% of Filipinos and 74% and 73%, respectively, of Kenyans and Moroccans say they sometimes use social media to guide their retail purchases. At 37%, Indian consumers are the least apt of all emerging-market consumers to use social media to guide them in making a retail purchase. Internet users in India are much more inclined to go to a shopping website.
Social media is also popular as a venue for direct e-commerce, whether through a brand’s social media account or in peer-to-peer transactions in which consumers buy and sell from one another with no intermediary. Peer-to-peer transactions over social media are especially popular in the Philippines, Indonesia, and Thailand.
In all emerging markets, air travel is the category most subject to digital influence and the product or service most likely to be bought online, with mobile phones a close second, the survey shows. But countries can be outliers in certain product categories. For instance, Brazilian consumers are much likelier than Indian or Indonesian consumers to buy a small appliance online.
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