Guest Analysis: Quick Findings from The Strawhecker Group’s New Global Retail eCommerce Market Report

JARED DRIELING

Major payment players and merchants continue to see global expansion as a crucial platform to further support growth. As such, diving into online retail across the globe in developed and developing markets appears to be the prime target. eCommerce is expected to account for about 6.5% of the total retail market worldwide in 2014 with China and the U.S. making up for about half of those eCommerce sales. Over the next five years, China will likely account for 40% of global eCommerce sales. A little over a decade ago, China’s path to eCommerce would have been difficult to foresee, even as the tech boom in the US and other markets saw the development of eCommerce as an important B2C and C2C channel. In 2000, China had yet to develop any eCommerce applications and had just a few million internet users. Essentially, China’s large and growing middle-class have become accustomed to making frequent eCommerce purchases. The uptick in computer and smartphone ownership has certainly not hurt eCommerce prospects in China as well.

However, the global eCommerce market is not without its major challenges. Clearly, retailers and payment players are struggling (and investing heavily) to integrate in-store and online channels (especially in the U.S.) to offer consumers that seamless shopping experience. On the other hand, retailers and payment players worry less about multi-channel integration in developing markets and are addressing more difficult barriers to online buying, such as financial and logistical infrastructure and cultural norms. For example, low credit card penetration and tax laws impede Indian consumers’ ability to conduct online transactions efficiently. Despite the hurdles, India’s large population presents a tremendous long term opportunity as investments shore up infrastructure gaps. On the other hand, in the developed country of Canada which has high banking, internet and smartphone penetration the logistics and linguistic challenges (French and English speaking markets) and the disproportionately large number of small and medium sized business can present major obstacles.

Success in established and developing markets will rely on innovation, insights into why consumers buy online, and meeting consumer expectations from browsing to purchase to delivery. Payment processors will continue to be a key player in the global eCommerce evolution as increased efforts by these firms to normalize various types of payment and regulatory issues across many geographies will help alleviate some of the growth burdens.

Please e-mail Jared Drieling at The Strawhecker Group ([email protected]) for more information on the 44 page report.