With "The Big Five" already explored, it's time to turn our attention to 5 more major players on the world stage. We look at the strengths and weaknesses to each, and whether or not it's possible (or practical) to make your way in to these markets.
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Good to have you here. Earlier on Ecomonics, a Debutify podcast, we talked about the five biggest markets on the planet, or rather the ones known as “the big five.” But there’s a lot more we can learn if we examine other markets too. We may even be able to target them ourselves. In no way shape or form would I recommend not focusing on the big five, but we should take some time to talk about other markets, and that’s what I’ll be doing today.
The first article I’ve found for you is from ecommerce-nation.com, it’s the top 10 e commerce markets in the world you should target. They make a unique assertion I hadn’t seen prior in my research, they used the term phygital, which is a combination of physical and digital. The next unique point is that shopping is habit based, which depends on the region. From there, we move on to the top 5 countries, and again this is based on raw sales, the big 5 will always refer to the 5 biggest english speaking countries. The number one country right now, more than the US is China, with it’s population of 1 billion, 440 million. Ecommerce has taken off in China in a big way, with the Alibaba group responsible for 15% of the country's total retail sales as of 2017, those sites being Taobao, Alibaba and Aliexpress, Tmall, Fliggy Corporate and 11 Main. 11 Main shouldn't have been on the list, I looked into it and it was sold to a US company in 2015, so while it was odd to see the site on a 2018 list, it does point to the fact that the alibaba group has had a wide array of projects and ventures including the ones listed above. Since we’re on the subject, let me hit you up with what companies they own at the moment. Freshippo, a grocery retail chain, Lazada an ecommerce platform for logistics and payment infrastructure, ele.me a food delivery service, dingtalk, a workplace collaboration service, Ant Group, the parent company of Alipay, the digital payment platform, Cainiao network which is in charge of 24 fulfillment in China and 72 hours everywhere else, Alimama which is a fundraising platform and Alibaba Cloud which is digital technology and intelligence and Youku, the youtube of China. So they’re a big player, but if you’ve already delved in to dropshipping you’d know that. Fliggy.com didn’t have much of a takeaway, it’s a travel website. The only thing I can really say is there was next to no english, other than the numbers which I’d be able to recognize. They don’t expect english speaking visitors at all. Tmall and taobao however, while still focusing primarily on serving their domestic market, do have an element of English to their websites, such as the brands, so my takeaway from looking at these sites is that English does have some inroads, even on sites designed mainly to service China. Additionally, according to business.com, China’s annual online sales are 672 billion, with Ecommerce taking up 15.9% of total retail sales, a 2020 stat. What this tells me is that while Ecommerce is there is a thin line between ecommerce sites in China, and the dominance of the Alibaba group. To back up the efficacy of this, I have a 2019 article from retail-insight-network.com that states that in China, brands tend to have stores on well-established online retailers like Alibaba rather than have their own site. What this means for the user is they have a personalized experience when they shop on Alibaba. More popular than Black Friday and Cyber Monday in the West is Single’s Day, which focuses less on prices and discounts favoring games and entertainment. Furthermore, Black Friday and Cyber Monday have sprawled out into week-or even month-long sagas, where Single’s Day in China is pretty set as a day. The next critical takeaway is the emphasis on delivery options both before and during the order.
The article says and I quote “Chinese customers are spoilt for choice when it comes to delivery options and have a vast menu of preferences they’re able to define - from fast deliveries with tight, time-definable windows for the latest must-have tech products through to slow but economical postal services for basic purchases.” The second point they make regarding delivery is that they’re delivery process is transparent and flexible, providing customers with options to adjust preferences during delivery. Now, to turn our attention towards actually getting business going there is tricky from a research perspective. Without getting into touchy territory, we have to acknowledge that the covid19 pandemic originated in China, and where the country has had a significant global impact on commerce around the world, so too did this tragic virus. There’s a reason why we hear about outbreaks in Africa that don’t make their way to every other country in the world. Bearing that in mind, the information I find is a best guess when relating to the circumstances, and I don’t doubt the strength of the Chinese people. According to some great content provided by bigcommerce.com, here’s some things you should know about the country; They focus both on price and brand, because they value social status in their local culture. They will spend extra money on a brand name that would raise their social status, and can use their month’s earnings on an iPhone… Frankly we’re like that too. They’ve put their trust in Alipay, far more than third party systems. They love brands with a long legacy, like Chanel. They stay actively informed, they take time to research what they’re interested in. Social media channels will be more effective in their decision than advertising. They’ll try brands, which is a tradeoff, on the one hand securing loyalty is difficult, on the other hand it means different companies will be given a fair shot. Loves discounts, but who doesn’t? They want to communicate with social media accounts, compared to the US 90% of online users have social media, US is only 70%. Which is a gap of 20%, but becomes far more significant once you account for total population. The next set of points made in the article relate to how to gain the trust of customers. The goods you offer should be on a local webshop that’s hosted in China, translated into simplified Chinese, offers payments the local market is used to, is backed by customer service support across phone email and live chat, and that returns are managed locally. A lot of these insights and takeaways would apply to customers in other parts of the world, there’s a lot in common here with the west. The one that sticks out to me is that Chinese customers are willing to pay more for premium products because it advances social status. We have that too in the west, trust me I know. But as always, I welcome any feedback on the subject, email@example.com
The next two biggest spots on business.com’s list were USA and UK, but we’ve talked about them. Next up on the list is Japan. According to worldometer, Japan’s population is currently 126 million. They are a single-language culture, have high internet usage and rank 11th in population, which is impressive considering they don’t have a lot of space to work with. My country, Canada, has a population of 37 million but we have a lot more geographic land spread people out. The result of this means Japan is a dense, urbanized country, their largest city, Tokyo has a population of 8 million, Canada’s largest city Toronto has a population of 2 million 600 thousand people. But on the flipside, Tokyo is a massive city, it’s population density per square mile is 15 thousand, vs New York’s 27 thousand people. Their annual onlines sales counts for 79 billion, with ecommerce taking 5.4% of the total retail sales. According to business.com, Japan is also leading in m-commerce, aka mobile commerce, which is considered to be the next evolution of ecommerce. Their leading platform is Rakuten, which I had a look at and was directed to the westeren version. The first thing that sticks out is, Rakuten has a value proposition for it’s guests; Get up to 40% Cash Back at over 2500 stores, they pay Rakuten a commission for the referral and then Rakuten pays the consumer for participating. According to entrepreneur.com, E-Commerce is doing well in Japan, in addition to the reasons I stated above, but also because the small country size leads to strong infrastructure, which means deliveries shouldn’t take as long on average. Also, according to entrepreneur.com, one element that makes Japan standout from a lot of the other countries we talk about is that a third of their population are over 65, but also they’re knowledgeable about smartphone usage and have the money to spend. Aside from the domestic heavyweights of Yahoo! Japan and Rakuten, and Amazon acting as the foreign competition, the e-commerce sector that up and comers are having success with are customer to customer platforms and marketplaces, targeting young female customers. A large part of that growth is attributed to Mercari, an app that allows people to buy and sell second-hand products. Additionally, two other successful female focused websites Wowma! And Qoo10 are the result of a cast array of discounted prices online, while we have a gap in pricing in the west, it’s said here that nearly half of products in Japan are less expensive online. In regards to getting into the market, there’s a lot of money to be made but it won't be easy, not that any of this is. According to clickz.com, Japanese customers are highly loyal, so a good place to start are the three platforms that dominate the market, Rakuten, Amazon and Yahoo! Next point is that businesses located outside of the US or Japan cannot join the market directly, so they must work with Japan-based subsidiaries. In addition, they have one of the lowest cross-border shopping rates, just over 10% of Japanese consumers shop on overseas websites versus 54% of US shoppers. So, if you’re an American brand you’re good to go, brands who set up shop on Rakuten get a storefront and product listing. Similar to Amazon, they can advertise through sponsored product listings, but also have access to coupons, newsletter ads and banner ads. Rakuten also has it’s own fulfillment service, Rakuten Super Logistics. If you’re outside of the US or Japan, like m’self, you’d have to start a local company or work with a local agency to setup accounts on their behalf. If it were me, that’s the option I would pick, get a partner. In addition to being able to handle the administration, I would also turn to them to have a better understanding of culture and language, I wouldn’t want to run afoul of socially unacceptable discourse. If you were to go with Amazon, you can register your own seller account instead of selling through an intermediary. On the other hand, you need a Japanese company to act as an importer of record and provide customer support in Japanese. So all in all, it’s doable, and it may be worth the investment, especially if you want to target the young female demographic or the elderly since they’re both plentiful and able to spend.
Number 5 on business.com’s list is Germany, the second largest e-commerce market in Europe, after the UK and the largest european market altogether. They’re the second largest population in Europe, after Russia, with nearly 84 million people. Their online sales annual are 73 billion, with ecommerce taking 8.4% of the share. According to ecommercenews.eu, 103.4 billion euros will be spent online there, with an increase of ten percent from 2019. 95% of the population are expected to be online, and they expect 85% of the population to purchase at least one thing from the internet. On the downside, according to ecommercegermany.com, only 8.5% of German internet users have optic fibre, ranking them somewhat low in terms of data download speed. According to practicalEcommerce.com, Germany has one of the world’s best-developed logistics infrastructures, and so they had a much better handle on the Covid-19 pandemic than other European countries.. A lot of the brick and mortar stores in Germany are small businesses, less than 5 people working for them. So prior to the pandemic they didn’t have much incentive to sell online. They have since formed local online marketplaces so they can pool their resources and deliver groceries and other products also locally. Some shopping habits to note, they prefer .de domains and shopping in their own language, nothing jaw-dropping there, electronics and apparel/accessories are the most often purchased products online, generally speaking. One fact I found interesting, of all the devices they most commonly use, laptops are number one. A mixture of mobility and processing power. Germans also have a law requiring a 14 day return period, as the country does reportedly have a high return rate. Apparel returns are up to 40 percent. They also have a high degree of invoice usage as their preferred method of payment, which according to practicalecommerce, ties in with their return habit. Otto is their major ecommerce player. It’s a pretty common function that any country with ecommerce penetration would have at least one major online market, whether that ends up being Amazon or something local. So one thing to keep in mind is that regarding sales in Germany, stores should make sure their layout is friendly to mobile as well as desktop devices. Again, according to ecommercegermany.com, social media is not the country’s strong suit, but they’re attention to detail is, precision German engineering as the saying goes. They are prolific reviewers, often posting their feedback on review sites as well as blogs and forums. They take their time when it comes to purchase decisions, and while they prefer the lowest price, as we all do, they tend to be alright with the premium if there’s proof of quality. Also vital to them is security, transparency, social and environmental suitability. There is an aversion to data sharing, they need to know for certain the data collected isn’t passed on. Company’s would also do well to develop a strong CSR, Corporate Social Responsibility, which means if the company has a good reputation with its employees and is taking steps towards improving their impact on the environment. All that said, my takeaway is that Germans have an eye for quality, so while earning their loyalty may not be easy, they can be some of your best advocates.
France is number 6, population 65 million people, geographically they are adjacent to many other major European countries; Germany, Italy and Spain. Their most popular method of payment is their bank card by 80%, according to ecommercenews.eu. They’re the six largest ecommerce markets and are number 3 in Europe, they’re expected to reach 115 billion euros in online sales by the end of 2020, totalling 6% of total retail sales. According to practicalecommerce.com, 60 percent of the customer base are loyal to national brands and don’t intend to purchase outside of France. Additionally, they also purchase services online such as travel, event tickets and music subscriptions. The article goes on to advise potential sellers to put their goods on one of France’s marketplaces. Amazon is dominant in France, but the other big online presences are Cdiscount, Fnac, and Auchan, fashion is the dominant category but that tends to be the case most places, due to profit margins.Cdiscount offers low prices for technology, appliances and furniture. Fnac ranges from music cds, DIY/Garden, Cameras, Video Games to books and stationary. The only category I found to be absent was clothing. Auchan was a mix, activites, toys, home and garden, pots and pans, again I didn’t see much fashion. My sense is, because fashion is so highly valued, that shoppers in France prefer specialized websites for it. They also highly favor click and collect, it is true that 86 percent of online shoppers use home delivery, 83 percent also use click and collect points, and do not particularly require same day delivery. So most of this sounds intriguing so far, but here’s where things get difficult. France, in the interest of protecting small businesses, announced they’d provide small business protection so they don’t get run out of operation by Amazon. At one point the government had ordered Amazon warehouses temporarily closed during peak covid19. If the government views small businesses are under threat they may step in again. That said, according to practicalecommerce.com, Amazon still reigns supreme, accounting for 63% of online marketplace shoppers, with cdiscount trailing in second at 20%. Growcode.com speculated in 2019 that a key habit of French shoppers is they intend to still buy in person, using the internet as a research tool. My takeaway from this is, it would be a feather in my cap to sell products to French consumers, but the pushback between federal legislation and the people’s general shopping habits makes me think carefully about what product would be worth selling there. Aside from Amazon, selling on cdiscount makes the most sense as it carries many high profile brands and legitimizes the operation.
The last one we’re doing today is 7th on business.com’s list, South Korea, who have the coveted title of highest average internet connection speed. Additionally, it has an online penetration of 92.7% and is considered one of the most connected countries in the world. According to easyship.com, 99% of south koreans go online and spend up to 14 hours a week. 5Their population is 51 million and their leading domestic markets are Gmarket and Coupang. They have a strong preference for M-Commerce, ranging about 26% of the total orders in the country. Both Coupang and Gmarket had the full array of products, including food and baby products. The most popular products according to privacyshield.gov from 2018 were travel and transportation, followed by clothing in second. The article goes on to say that pricing tends to be cheaper purchasing outside of the country, even after duties have been factored in. A 2017 report indicates 2 billion dollars were spent on overseas platforms, with half of that from the US. The main products from the US were dietary supplements, goods and apparel. Cosmetics and electronics were more sourced from the E.U and China. They're method of payment preferred is credit card. Authenticity is a key issue for the country, as enforced by the intellectual property law, it is illegal to sell counterfeit products or to have them imported by cross border e-commerce. The consumer base wants a centralized shopping experience, so between internet portal sites, social network services or even tv home shopping, they have to implement online shopping functions; the consumers want their experience on these platforms to also include product reviews, price, and as well, the ability to pay with modern options. Some welcoming information, shipping into South Korea from the US is possible, DHL ecommerce and USPS priority are two options companies can use. Again, according to easyship.com, it’s important to understand import regulation, they specify that you need proper documentation and that customs duties are all paid for. My main takeaway here is that South Korea is receptive to ordering from across the waters, even going so far as turning to the US for certain needs like dietary supplements. With a strong digital infrastructure they’re used to web material being fast and efficient. So if you’re going to take a look at them, the most important aspect is to ensure there are no kinks in your operation as they’ll have high expectations.
So that’s a wrap for today, as always it’s been a joy bringing you what I discover. But don’t let this be a one way street, if you want to weigh in on anything discussed here, our door’s always open, just email firstname.lastname@example.org.