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RAPAPORT... According to A.T. Kearney’s 2013 Global Retail E-Commerce Index™, China ranked as first place for online retail market opportunity, followed by Japan, the U.S., the U.K., South Korea, Germany, France, Brazil, Australia and Canada, to complete the top 10. The group measured 186 countries for market potential and ranked the top 30. Globally, over the past five years, online retail sales have grown at a 17 percent annual rate, with growth particularly strong in Latin America (27 percent) and Asia Pacific (25 percent), according to the group. A.T. Kearney developed the index to measure 30 developed and developing markets. Developing countries featured prominently in the index, holding 10 of the 30 positions and many of these markets have been able to shortcut the traditional curve as online retail grows at the same time as physical retail becomes more organized. Mike Moriarty, A.T. Kearney's partner and co-author of the study, noted, “Consumers in developing markets are fast adopting behaviors similar to those in more developed countries. For example, mobile phones per capita in Russia (1.8) and the United Arab Emirates (1.7) are much higher than many developed markets, including the U.S. and France (both 1 per person). Consumers in these countries use their phones to research products, compare prices and seek input from their friends on social media.” Furthermore, the index defined what it called “small gems” or countries with populations of less than 10 million, including Singapore, Hong Kong, Slovakia, New Zealand, Finland, United Arab Emirates (UAE), Norway, Ireland, Denmark and Switzerland, that have active online consumers and sufficient infrastructure to support strong online retail growth. The study highlighted key similarities across most of the top markets, such as consumer sophistication with ecommerce, the creativity and ingenuity of online sellers, fierce competition and the types of products consumers will buy online. Hana Ben-Shabat, A.T. Kearney's partner and co-author of the study, said, “Understanding these similarities will enable retailers to devise online strategies that are effective and scalable.” Ben-Shabat said that mobile shopping is becoming a critical ecommerce enabler. For example, 93 percent of mobile phone owners in Brazil and 51 percent in the U.K. already use their devices to learn about retail offerings. Social Media is another factor that is having a major impact, but in different ways, whereas in China, shoppers are encouraged to write post-purchase reviews in exchange for loyalty points or online coupons but in developed markets, online retailers such as Amazon mine these pre- and post-purchase reviews for insights on products, instruction manuals and supply chain issues. A.T. Kearney defined three distinct types of retail ecommerce markets in the study – Next Generation, Established and Growing, and Digital DNA.
Three of the four BRIC countries, China, Brazil and Russia, were defined as Next Generation Markets along with Argentina, Italy, Slovakia, Chile, Turkey, Venezuela, UAE, Ireland and Malaysia. A.T. Kearney considered that consumers in these markets were well developed, but each region lacked one of the big three capabilities -- Internet accessibility, logistical infrastructure or financial systems. Australia, Canada, the U.S. and Nordic and Western European countries were defined as Established and Growing Markets. The environment includes high Internet penetration and use, but logistics and last-mile strategies make the first three (Australia, Canada, and the U.S.) higher-growth opportunities than the Nordic and Western European markets, according to the group. Parvaneh Nilforoushan, A.T. Kearney's consultant and a third co-author, said, “Moving forward, success in the Established and Growing markets will depend on innovation across all the customer touch points, better insight into why consumers buy online versus other channels, and clarity as to what customers’ expectations are from pre-purchase to delivery.” Japan, South Korea, Singapore, Hong Kong and New Zealand were Digital DNA markets, with high technology adoption rates, advanced infrastructure and a track record of innovative, new ways of shopping online. Growth may be slower, but these consumers understand online retail. New retailer players in these markets will have to be sophisticated, with exciting online offers, new omnichannel experiences and innovative last-mile strategies, according to A.T. Kearney.
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