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There has never been a better time to be in e-commerce. Multiple factors have combined to bring us to the tipping point for e-commerce adoption, resulting in more opportunities than ever before for online and omnichannel merchants. But, as is often the case, with opportunity comes challenge, and for many operating in the e-commerce space the pressure is now on to build on and grow post-COVID revenues and extend customer bases.
It is well-known that COVID-19 has resulted in a surge in e-commerce spending worldwide. But the effects of the pandemic are just a small part of a much bigger picture. While e-commerce adoption has accelerated dramatically over the past year and a half, in many markets the pandemic merely pressed “fast forward” on developments that were already gaining steam. This is especially true in emerging high-growth markets that have historically been overshadowed by their more developed counterparts.
With western markets likely saturated with a high number of merchants in verticals such as fashion and gallantry and digital goods, many online sellers are beginning to realize there are billions of potential customers living elsewhere.
Indeed, regions with increasing disposable income for certain population groups, including Latin America, Central and Eastern Europe, Africa, as well as India and Southeast Asia, boast digitally savvy shoppers with strong demand for globally-sourced goods and services.
However, with so many opportunities across so many different markets, it can be difficult to know exactly where to turn next as e-commerce leaders look to expand beyond their domestic markets.
With this in mind, PayU’s recent global e-commerce report, The Next Frontier, explored online consumer spending across 19 high growth and emerging markets. Below is a high-level summary of its findings:
Poland
COVID-19 may have been the catalyst for 2020’s e-commerce growth in Poland, but it is far from the only factor. For many years, consumers’ digital literacy has been increasing thanks to the growing popularity of smartphones and increasing internet penetration, leading to a boom in e-commerce spending. Of the 20.3 million internet users in Poland that shop online, 59% (12 million) do so from their mobile phones.
India
The number of smartphone users in India surpassed half a billion in 2020, leading more consumers to turn to their devices for a variety of needs, from financial to retail and educational. More secure and stable infrastructure and affordable smartphones and internet connections are triggering the movement from traditional payments to e-payment options such as internet banking and subscription-based models.
Latin America
By 2025, we estimate there will be 424 million mobile internet users in Latin America, which will likely grow the sector even further as m-commerce takes off in popularity. As a payment provider, our challenge now is to help reach those new users, understand their needs and keep them confident in the security of digital payments.
Turkey
The average person in Turkey is online for 7.5 hours per day, and more than 92% of its 83 million residents use a mobile device. This high adoption has led consumers to prioritize speed and convenience and has heightened their expectations, particularly when it comes to shopping.
South Africa
PayU saw an impressive move to mobile payments in South Africa, with up to 85% of transactions completed on a mobile device in 2020, a significant gain from 50% in 2019. This rapid increase in mobile payment usage correlates to the huge increase in smartphone penetration there.
Colombia
In 2018, Colombia set a goal for 85% financial inclusion by 2022, which was exceeded two years early, reaching 85.9% in 2020. During the quarantine months, 1.6 million adults in Colombia obtained a financial product for the first time, while 2.3 million reactivated an existing one. Colombia is among Latin America’s leaders when it comes to financial inclusion, giving more consumers an opportunity to participate in the digital economy.
Brazil
Brazil’s Open Banking agenda will bring financial system interoperability to residents, reducing barriers to financial inclusion as well as the costs of accessing financial systems for consumers. The Central Bank has also launched a QR-code based instant payment solution (Pix), which is expected to become so popular that it will account for 25% of all online payments within three years.
Mexico
When it comes to total e-commerce spend across the four sectors we investigated, Mexico is toe-to-toe with Brazil, despite having a population approximately half the size. And its favorable demographics play a role. For e-commerce to thrive anywhere, the ideal demographic is young, urban and middle class. Mexico has this in abundance, with 66% of citizens (84 million) aged 15-64, and 80% (102 million) living in cities.
Nigeria
Nigeria is Africa’s largest business-to-consumer e-commerce market, both in terms of the number of shoppers and overall revenue. This can be attributed to a combination of a fast-growing and youthful population accustomed to buying online along with high smartphone penetration, which make it attractive to any merchant looking to expand.
The above findings highlight the fact that irrevocable changes in consumer habits present a truly golden opportunity for merchants to conquer new markets as they seek to grow revenues and extend their customer base in the post-COVID era.
To find out more about the next frontier of emerging markets for e-commerce leaders, including considerations based on deep market knowledge of consumer preferences and local payment ecosystems, you can access PayU’s report here.
Mario Shiliashki is the CEO of Global Payments for PayU