It’s an exciting time to be a global brand. In western markets, eCommerce continues to grow steadily — but, more importantly, it’s taking significant hold in less developed markets, opening up opportunities for brands to secure footholds in new regions.
The time, according to ePayment service provider PPRO, is now. Global merchants who wait until these markets are established will arrive too late.
There’s a hunger for global brands among young, affluent consumers in these populations, and at this stage of the game, there’s still room for many international players to get a piece of the pie — but the “PPRO Payments & E-commerce Report: High-Growth Markets 2018” said that won’t be true for long.
Steve Villegas, VP of Partner Management at PPRO and based in the company’s U.S. office in Atlanta, told PYMNTS which fast-growing markets global brands should be courting — and why these markets are expanding so fast. Beyond that, Villegas makes the case for why international eCommerce players must embrace alt payments to gain traction.
PPRO’s Top 10 Growth Markets
It may come as little surprise that China remains among the fastest-growing markets today. Even with decreased demand from western markets, Chinese eCommerce continues to grow at a rate of nearly 27 percent a year, driven by growing prosperity within its own borders. Chinese wages are closing the gap with those in eurozone economies like Greece and Portugal, the PPRO report noted.
Neighboring economies may benefit from the successful Chinese market, Villegas said. China tends to set the benchmark for the entire region. Thus, growth in Singapore, Malaysia, Vietnam, Indonesia and the Philippines was almost bound to happen.
Still, Villegas noted that it was interesting to see the Philippines place third among this year’s top growth markets (with 51 percent growth), considering the recent political climate in the country.
Colombia was another surprise, Villegas said. The South American nation placed fourth with 45 percent eCommerce growth. It’s not a large country, with a population of only 48 million, but it is the third-largest economy on the continent, said Villegas, and several factors contributed to its sudden growth trajectory, including increases in card usage and smartphone penetration.
With 59 percent eCommerce growth, Mexico continued a four-year growth trajectory built on logistical improvements for shipping goods purchased via eCommerce and other factors.
The number one growth economy for 2018, with 78 percent growth this year, was Indonesia. The report noted that it is the world’s fourth most-populous country, spanning more than 13,000 islands.
The United Arab Emirates, Saudi Arabia, Israel, India and Argentina also made the top 10.
Why These Markets?
While every market is unique, Villegas said there are a few traits shared by the ones that are seeing exponential growth this year — and these factors could be telltale signs for other markets that are about to explode, he said.
First, all of these markets have recently seen increased internet and mobile penetration. Many of them are creating access to international eCommerce for the first time. That’s why Villegas said it’s so important for international merchants to get into these markets before they’re saturated. They won’t be seeing 78 percent growth forever.
Second, people in these markets don’t pay with credit cards. Many still rely on cash for general purpose transactions, such as paying their local grocer. So, when eCommerce comes knocking, someone has to come up with an alternative payment method that lets people who are used to transacting in cash or bank transfers access goods online.
Third, changes in regulations and available technologies created opportunities to enable an eCommerce experience that feels natural to consumers within the market, building on payment methods and procedures that are familiar to them.
Markets that want to spur eCommerce growth must have a grasp on these factors, Villegas said. If they try to recreate the way payments and commerce are done in the area, adoption is unlikely to follow.
It will take companies developing tech to help their own consumers and to start growing beyond borders, he said. It will take an open market that allows outside players to come in and participate, driving competition for companies with local products and services.
Alternative Payment Acceptance Is a Must
Villegas said that, by next year, 60 percent of the world’s global eCommerce payments will be made by some type of alternative payment. Online merchants would do well to take note, he said, since shopping carts that don’t offer the method of payment that’s familiar to shoppers see abandonment rates as high as 50 percent.
Villegas said eCommerce players must make consumer purchases as easy as possible. That means building landing places and shopping carts that work with the local language and payment methods.
If a customer in the Netherlands wants to buy a U.S. product but the website doesn’t let him pay via his preferred method, likely iDEAL bank transfer, he’ll go somewhere else, said Villegas.
In Latin America, customers shop online then pay in a local grocery store, where the transaction confirmation is wired to the online merchant. While this is changing as the middle class grows and more people are getting banked, Villegas said it’s important that customers are able to pay by this method if merchants want to attract business from that region.
Meanwhile, in Pan-Asia, eWallets are the top payment method, powering nearly 50 percent of transactions. WeChat Pay is the largest eWallet in the world, with 1.3 billion users, and Alipay isn’t far behind.
Regardless of the specifics, the takeaway is the same, said Villegas: To tap into international fast-growth markets, cross-border merchants must look at how things are already done in those markets and enable customers to do the same on their sites.
If they try to reinvent the payments wheel, customers won’t want to learn and adopt these new methods — they’ll just go back to shopping with the same local merchants they’ve always used.
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