Si Oui Ja Da はい 是 - International Retail Opportunities? WE LOOK AT THE TOP NINE COUNTRIES FOR LUCRATIVE ONLINE RETAIL OPPORTUNITIES.
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International Retail Opportunities? ¡Si! Oui! Ja! Da! はい! 是! WE LOOK AT THE TOP NINE COUNTRIES FOR LUCRATIVE ONLINE RETAIL OPPORTUNITIES.
If your customers are not shy about crossing
A Wide-Open Market borders to get goods they desire, why should you
remain focused on your own backyard?
Global ecommerce continues to accelerate and is
expected to reach $4.5 trillion by 2021. Worldwide
spending online increased 18 percent in 2018, Even though international ecommerce expansion is a key growth opportunity for
according to Internet Retailer. The vibrant growth retailers based in the United States and Europe, it can be a daunting enterprise
provides a significant opportunity for retailers who are to embark upon. You likely have to deal with new currencies, different languages,
ready to move beyond their home country’s borders different buying habits, and logistical and distribution challenges like taxes, trade
and sell internationally. In fact, a recent Nielsen agreements, and customs paperwork.
report found that 57 percent of shoppers bought
something from an overseas retailer within the past Fraud and risk are also concerns, as fraud trends and the availability of data to
six months. protect retailers from fraud and chargebacks differ from country to country. In
fact, in a survey of retailers, Pitney Bowes found that in 2018, fraud became the
Overall, the global outlook is promising. According top-most concern for merchants looking to expand into new countries.
to a 2018 briefing by the United Nations, the global
economy is finally growing again after a sustained Plus, according to Deloitte, retailers throughout the world are coming to terms
stagnant period. Regardless of doubts incurred by with the fact that consumers no longer think of shopping in terms of channels.
some political instability — notably Brexit and trade They want to effortlessly move from bricks and mortar, to bricks and clicks,
wars dominated by the United States and China — to online only. You could say that they are “channel-agnostic,” says Deloitte.
the worldwide economy is experiencing increased Pre-shopping research, the purchase itself, and taking physical possession
investment and trade, improved spending attitudes of purchased products are all done in a “fluid” way, with consumers moving
by both businesses and consumers and better labor seamlessly between online and offline channels.
market conditions. Moreover, cross-border commerce
is increasing, as consumers look beyond their
country’s boundaries to get the goods they want.
3
Things To Ponder When Going International
One of the most important things to consider if you do decide to expand globally
is whether you want to grow or buy your infrastructure. Today, even the smallest
niche ecommerce businesses can leverage third-party vendors to get access to
multilingual platforms that translate their existing U.S.-focused content to serve
consumers in new markets such as China, Germany and Russia. They can hire third-
party logistics firms to handle fulfillment, payment and delivery.
Just as digitally native retailers have outpaced the success of legacy retailers by
partnering with firms that specialize in specific aspects of ecommerce operations,
merchants going international have made progress by enlisting third-party firms.
The same Pitney Bowes report that found that fraud was a top fear, also found that
high-growth retailers were significantly more likely to have outsourced their fraud
management responsibilities.
On the other hand, a larger retailer may choose to invest in building its own fully
integrated physical stores, ecommerce storefront, supply chain and integrated
processes to serve new international markets. It depends on what investments will
reward you with the best competitive advantage.
Pricing: Tariffs and taxes can significantly raise the final price of
Here are some of the issues you’ll face when venturing across country borders: products. It is critical to understand how these charges will affect sales
and pricing. Some online markets are extremely price sensitive, others
Payment methods: Customers in different countries prefer paying in not. International shipping is another aspect of pricing that can prove a
different ways. Whereas United States buyers prefer credit, debit, deal-breaker for buyers in some markets (see below).
PayPal, PayPal Credit and Google Checkout, debit is a popular payment
form in the United Kingdom. In Russia, cash is still king. You need to set Shipping: Shipping costs can also significantly affect the price of
up a payment infrastructure that best meets local preferences. the transaction — especially for international shipments. The cost to
the retailer to fulfill orders will vary significantly based on where the
Product and content localization: You have to customize your product inventory is located and what partners they’ve signed up.
and content for each market. That means you have to understand local
product preferences, descriptions and images and safety regulations. Risk: Expanding into new markets means serving customers with
whom you have no transaction history. You might also be facing
Language: Although English is widely spoken in other markets, retailers different restrictions on using data that can help identify whether an
need to evaluate whether to translate the content on their websites. order is legitimate or fraudulent.
Some retailers elect to translate only portions of their website whereas
others translate entire sites. Wherever content is translated, it needs to In this e-book, we’ll explore the top nine international markets for ecommerce
be localized and then tested for accuracy. (other than the United States). We examine each one in terms of market size
and growth, purchasing trends, payment methods, challenges and special
considerations for each particular market.
5
ONLINE PURCHASING TRENDS
China: Land of Burgeoning Alibaba has been named the company “most likely to disrupt business”
Opportunity—and Competition by global tech industry leaders, who were asked to name the business
they were most worried about. That’s because Alibaba—along with rivals
China is still the supersized version of ecommerce when Tencent and JD—has perfected the art of the seamless consumer online
compared to the rest of the world. It is also the birthplace of the supply chain. Everything from social media, to virtual window-shopping, to
only ecommerce giants that could eventually meet and battle buying, to payment and delivery is covered under the online behemoths’
Amazon as equals. business portfolios.
SIZE AND GROWTH OF ECOMMERCE MARKET What’s more, the blurred lines between all their customers’ digital
Chinese ecommerce revenue in 2018 was almost as much as activities provide online giants Alibaba, JD.com and Tencent with a vast
the United States and the United Kingdom rang up together. amount of information about its customers’ lives. For example, Alibaba
Retail web sales totaled 7.18 trillion yuan ($1.149 trillion), passing gives customers a “unified ID” that collects data on them across Alibaba’s
$1 trillion for the first time, according to Internet Retailer. The many businesses and allows Alibaba to do extremely targeted selling.
sum marked an increase of 32 percent from the previous year.
China’s online retail market is expected to hit $1.8 trillion in “We know you as well as you know yourself.”
2022, according to a report by Forrester. -Zhang Chen, chief technology officer, JD.com, said to the
Economist.
SALES IN 2018 SALES IN 2022
$1 TRILLION $1.8 TRILLION Perhaps as a result of this, six out of 10 (59 percent) of Chinese shoppers
are comfortable shopping online, versus the international average of
47 percent, according to Delivery Matters. Eighty percent prefer using
China also has one of the highest percentages of online to their phones to shop, nearly twice as much as in the United Kingdom, for
bricks-and-mortar retail sales, according to The Economist. example.
Euromonitor predicts that the ecommerce proportion of total
retail will reach 24 percent by 2020, and other experts say it Clothes are the most popular goods to purchase online, Delivery Matters
will overtake that to achieve 31 percent of all retail sales. says, followed by food and drink, footwear and toiletries.
Much of this activity is powered by Alibaba—now the What China’s shoppers love buying
world’s biggest ecommerce platform—and supported by the
Chinese ecommerce behemoth’s sister payment, shipping What’s on the list for shoppers in China?
and auctioning sites. JD.com is another up-and-coming etail Key
platform titan in China that has an entire portfolio of delivery China International
average
and payment services.
The most recent increases in online shopping dollars come
from consumers living outside of China’s big cities. They
increased online purchases by 39 percent in 2017 to 1.25 billion
yuan ($199 billion). This was a huge jump, largely attributed
61% 46% 51% 23% 44% 26% 36% 24%
to broader and more sophisticated delivery networks. Sales
outside of China’s largest cities now represent more than 17
Clothes Food and Footwear Toiletries
percent of total online purchases in China. drink How many times will you telerate a negative experience and stay loyal to an online retailer?
Source: https://www.royalmail.com/business/system/files/Delivery-Matters-China-2017.pdf 7
PAYMENT
Chinese consumers don’t trust credit cards. Most use cash on delivery or Alipay, a
digital payments system spun off from Alibaba, that is currently used by 520 million
Chinese people.
MARKET CHALLENGES
In a phrase, entrenched competition. Alibaba’s online marketplaces are expanding. Free delivery is expected
For example, the firm has moved from physical goods into healthcare, with Ali Health
selling medicines online. A partnership with the world’s biggest hotel chain, Marriott,
was just announced. Alibaba also owns Youku, a video-streaming site, and Didi, a
ride-sharing service.
Say they expect no
Alibaba first coined the concept of “new retail” in 2016. In a letter company founder
minimum spend to
qualify for free delivery.
66%
and Chairman Jack Ma argued:
“Pure ecommerce will be reduced to a traditional business
and replaced by the concept of new retail – the integration of
online, offline, logistics and data across a single value-chain.”
Say they search for
The end-to-end services provided by Alibaba — and increasingly, Tencent and
websites that offer
free delivery. 88%
JD.com — can make it difficult for small or new companies to break into the online
market.
Source: https://www.royalmail.com/business/system/files/Delivery-Matters-China-2017.pdf
Consumers also expect free, fast delivery and will base purchasing decisions on your
ability to supply that, as well as promise free and painless returns.
OTHER SALIENT POINTS
Despite the formidable competition from the big players, individuals and small businesses
are increasingly getting into the action. There are 9.9 million individual online merchants,
an increase of 20.7 percent from a year earlier.
Vendor Selection
■ Double 11, “Singles Day,” and other so-called shopping festivals offer opportunities for
foreign brands to leverage shopping enthusiasm among Chinese consumers. On these
holidays, consumers are looking to experiment, try new things and buy products that
may be new to them. Nielsen found that 79 percent of consumers participate in these
festivals.
■ Chinese consumers are also experimenting with cross-border purchases for reasons of
quality, health, and safety. Seven out of 10 (67 percent) had recently bought something
from a foreign ecommerce site.
9
PURCHASING TRENDS
The United Kingdom: Thirst for Amazon remains the No. 1 online retailer in Britain. Clothing and
footwear remain the most popular online purchases.
Services and Experiences in an
Omnichannel Model Physical shops, such as those on “high streets,” and shopping
centers are trying to adjust to the rage for online sales by offering
click-and-collect and other omnichannel sales. The successful
The elephant in the room when discussing retail in Great Britain is, of
physical stores have developed online services that complement
course, Brexit. The pound dropped immediately upon the referendum,
their physical establishments. There is considerable evidence
leading to higher import prices. Wages could not keep up with the
that successful physical shops offer services that consumers can’t
resulting inflation. No surprise — retail suffered. Prolonged uncertainty
get from their online shops—such as browsing, trying on clothes,
about Brexit kept consumers on edge, stifling growth.
testing furniture and actually seeing merchandise that they then buy
online. There is a decided rise in storefront services (beauty) and
In all, 2018 proved to be a challenging year, with pressure mounting on
entertainment businesses (cafes, movie theatres) in multipurpose
retailers of all kinds. Even as the proportion of online sales increased,
shopping areas that will continue to attract shoppers to physical
brick-and-mortar retailers suffered. The first half of 2018 saw nearly
stores even if they ultimately buy the goods online.
as many store closings as in all of 2017. By year’s end, the Telegraph
was reporting that nearly 1,300 stores run by major retailers had been
shuttered.
PAYMENTS
Credit cards and debit cards are widely accepted and used.
SIZE AND GROWTH OF MARKET
Despite these constraints, throughout 2018, the proportion of online
MARKET RISKS
versus all retail spending kept rising, increasing to 18.2 percent in August.
Brexit is of course a lingering stressor. And like other geographic
That meant that British consumers were the most enthusiastic online
markets, the UK is over-stored in terms of physical retail. And
shoppers in the European Union. Overall, online retail sales grew by
while stores have been closing at an alarming rate, there will be a
15.8 percent to reach £60 billion ($78 billion) in 2018. Online sales are
continuing correction ahead.
predicted to keep expanding by the double digits through 2023.
Internet sales as a % of all retail sales (excluding fuel), UK OTHER SALIENT POINTS
20% ■ Increasing use of smartphones is linked to anticipated strong
growth of internet retailing.
16%
■ Multichannel is evolving and pressure is on to be “more than
12%
the store.” Offering consumers experiences is critical, so stores
8% need to be more than just places to transact business.
4% ■ Growth of “try-before-you-buy” transactions. Millennials,
especially, are demanding this, and asking to postpone
0%
2008 2010 2012 2014 2016 2018 payment until they are satisfied with the products they
ONS, Series MS6Y, monthly data, seasonally adjusted bought online.
The popularity by buying goods via the internet varies considerably by
type of shop.
Source: http://researchbriefings.files.parliament.uk/documents/SN06186/SN06186.pdf
11
Japan: Convenience Reigns as Online
Sales Continue to Grow
The Japanese economy is finally coming back to life. The “Abenomics” economic policy named for
Prime Minister Shinzō Abe has improved the competitiveness of exports, and unemployment is low,
increasing household income. Yet despite this tight labor market, wages are stagnant, suppressing
overall consumer retail spending, even as the proportion of online-versus-physical sales increases.
Longer term, the biggest problem for Japan’s retailers is its aging population.
PURCHASING TRENDS
Interestingly, the top two reasons that Japanese
consumers buy online are based on convenience, not
SIZE AND GROWTH OF ONLINE MARKET
the usual reason, which is price. A full 71 percent mentioned being able to buy anytime and 62
Japan is the third-largest (after China and the United States) online retail market in the world. It’s
percent said that they “don’t have to go outside” as their primary reasons for purchasing online.
been growing at roughly 9 percent a year for the past few years, according to the U.S. Commerce
Department, with 74 percent of consumers regularly shopping online. Japan’s highly developed
Electronics and media is currently the leading product category in Japan for online sales,
infrastructure, urban population and single language make the market a relatively easy entry to
accounting for $23.7 billion. Today, electronics are followed by fashion, which generates $22.3
foreign online retailers. Its small size makes home delivery much easier than in countries with a
billion in sales. But by 2021, fashion is expected to lead all sales.
larger geographic terrain to cover.
A total of 83 percent of Japanese consumers shop online, with 60 percent doing so at least once a
PAYMENTS
month. Total sales across all product categories was $84.5 billion, a figure that is expected to grow
Three-fourths (75.5 percent) of Japanese shoppers prefer to use credit or debit cards online,
to $111.8 billion by 2021. The number of online shoppers continues to grow as well.
compared to 4.5 percent who like to pay with cash on delivery. A number of other “ewallet” and
electronic payment options are also popular.
All these are impressive numbers. However, ecommerce’s share of all retail is just 5 percent—much
lower than other countries in the world.
Preferred online payment
Number of online shoppers in Japan methods in Japan
(in millions)
90 ATM
Internet banking 1% Other
4% 1%
Cash on delivery
5%
60
Bank transfer
5%
30 Convenience store
10%
0 Credit card
2015 2016 2017 2018 2019 2020 2021 76%
ONS, Series MS6Y, monthly data, seasonally adjusted
Source: https://www.travelvoice.jp/20171025-94075
https://www.eshopworld.com/blog/japan-ecommerce-insights-2017/
13
OTHER SALIENT POINTS
Germany: In Love With Online
■ Online handmade marketplaces are growing,
CHALLENGES exceeding $64 million in sales last year. Customer demands in Germany are evolving rapidly. As the biggest market in Europe in terms of
One challenge is the aging marketplace and Creema, one of the biggest online handmade purchasing power and internet use, Germany’s population of internet users has grown by more than a
the fact that the number of working consumers marketplaces in Japan, is organizing offline third over the past five years. The increased demand from internet users has caused retailers to work
in Japan is decreasing year by year. Marketing events, such as handmade exhibits, where hard to “consolidate their position in the market, meet the enhanced expectations of their customers
to millennials might not have the same payoff fans and creators meet each other in person, and implement the most advanced analytical software and technology,” according to Online Retailing.
as in other countries. An unusual byproduct of to bolster their online relationships.
this demographic trend is that the young are
actually less enthusiastic online spenders than ■ The C-to-C market is vibrant. Mercari is Japan’s SIZE AND GROWTH OF MARKET
the middle-aged: 76 percent of women aged biggest “community-powered” shopping app. Online shopping is nearly universal in Germany, according to new research from Mintel. A full 92
20-29 purchased online last year, while 93 It is not only popular in Japan, but has growing percent of German internet users have made an online purchase in the past 12 months. And age
percent of 40-49 year-olds did so, according to numbers of fans in the United States and the is not a factor in who goes online. Almost as many (89 percent) over-65-year-old internet users as
IMRG, a UK online retail association. Figures United Kingdom. Mercari allows consumers millennials have shopped online in the past year.
for men are slightly lower. Spending power to buy and sell secondhand goods from their
among the under-30 demographic is also low smartphones. This darling of the startup
compared to other developed countries. world has a startling valuation of more than $1 “Even retailers targeting older customers have to accept the
billion, and has achieved more than 75 million likelihood that they are increasingly shopping online, meaning that
Additionally, retailers moving into Japan need downloads by consumers around the world. a multichannel approach is essential for almost all retail operations
to be mobile-ready. Japan has been one of the in Germany.”
world leaders in mobile transactions for years ■ Spending holidays are hot. Online spending
-Thomas Slide, senior retail analyst, Mintel said to the Economist.
now. Medianama declared Japan the global increases in the summer months when
m-commerce champion in 2016 and the U.S. Japanese firms give out their annual summer
eMarketer estimates that retail ecommerce sales in the country were $80 billion in 2018, and will pass
Commerce Department recently reported that bonuses. Such bonuses average $3,000 and
$86 billion by the end of 2021. Some 49.5 million people in Germany are expected to make at least
60 percent of Japanese digital commerce is tend to be spent on luxury goods, leisure and
one digital purchase this year. Although the percentage of online versus total retail sales is flattening,
conducted on a mobile platform. travel. Additional spending holidays include
existing online buyers are expected to buy more frequently and spend more, raising the overall dollar
White Day (March 14) as well as international
amounts spent in ecommerce.
holidays such as Christmas and New Year.ar.
Retail ecommerce sales in Germany, 2016-2021
billions, % change and % of total retail sales
$86.06
$81.73 Note: includes products
$76.74 or services ordered
$71.19 using the internet via
any device, regardless
$65.13
of the method of
$58.52 payment or fulfillment;
excludes travel and
event tickets
Source: eMardeter, June 2017
12.5% 11.3%
9.3% 9.1% 9.6% 10.0%
7.3% 7.9% 8.5% 7.8%
6.5% 5.3%
2016 2017 2018 2019 2020 2021
Retail ecommerce sales % change % of total retail sales
15
MARKET CHALLENGES
ONLINE PURCHASING TRENDS PAYMENT Also because of competition, Germans expect
High return rates can be a problem. Return
Germany lags behind only the United States Germans’ favorite payment methods are credit or personalization in what they are offered by
rates for online sales range from 5 percent to
and the United Kingdom in cross-border debit cards (29 percent), invoice (26 percent) and online vendors.
10 percent for electronics to 70 percent for
ecommerce, so online buyers are constantly digital payments (22 percent).
fashion. Strong consumer protection laws and
looking beyond Germany to purchase How much are you planning
high consumer expectations drive this.
attractive goods. Germans are not new to Assuming that everybody will reach for a credit or to invest in personalization
cross-border purchasing — more than half (53 debit card when buying can result high shopping solutions in the next 12 months?
Trust, loyalty, familiarity, quality and security
percent) of German internet users purchased a cart abandonment at checkout in Germany. That’s
are valued highly in Germany. Because
product from abroad in 2015. because some Germans are very risk averse and 1 Million 56%
are the top sellers in online retail. 25 percent will abandon their shopping carts—a
the online marketplace is so competitive,
higher percentage than in other countries.
buyers can afford to be demanding about
Personalization is key for German retailers, given that 100%
service and delivery, and you must be careful of respondents confirmed they are looking to invest in
personalization solutions over the next 12 months, with over
to meet their expectations. half of them, expecting to spend more than a million Euros
to achieve this.
Jose de Cabo, Co-founder, Olapic
OTHER SALIENT POINTS
■ German is spoken by 95 percent of the local population. Germans prefer to do
business in their own language. When in Germany, it is recommended to sell and market
in German as opposed to English and to provide local online shoppers with localized
buying experiences.
■ U.S.-based retailers Amazon and eBay dominate in terms of traffic to retail sites by
consumers in Germany, but Otto Group and other homegrown retailers also rank in the
top 10.
■ When asked how they are encouraging shopper loyalty online, German online retailers
said they concentrated on removing friction from the shopping journey by creating online
profiles, storing credit cards and offering one-click checkout.
17
France: A Maturing Online Market
Online retailing in France continues to grow.
In terms of development, it is only midway up
the innovation curve compared to China and B2C ecommerce turnover & growth rate
other Northern European countries, but it’s still B2C ecommerce turnover, billions of euros FRENCH CONSUMERS PREFER PLASTIC
ahead of Southern European ones. And the FOR PURCHASES
opportunity is there: Ecommerce Europe found
14.36% 13.67% 14.27% 14.08% Like in the United States and the United Kingdom,
that the annual online basket spend in France 11.11% French consumers prefer to pay with credit and
€93.2
has risen 186 percent over the past decade. debit cards, although PayPal is also popular. other things, overcoming the language barrier
€81.7
will make the purchasing process more
SIZE AND GROWTH OF MARKET €71.5
straightforward for your French-speaking
Ecommerce grew 14 percent last year in
€62.9 Payment methods preferred by customers. Also, be aware of the three buying
€55
France and was worth €81.7 billion ($93 billion) €49.5 French online buyers criteria (delivery, price and product) that French
in 2017 and €93 billion ($105 billion) in 2018. In France, credit and debit cards (57%) are the most popular payment method consumers see as the most important.
for online purchases. They’re followed by PayPal (25%) and bank transfer (9%).
Growth levels have remained consistent for
three years now. French consumers expect a truly “impeccable”
Online payment preference in French %
buying experience that combines convenience,
60
A full 84 percent of French consumers speed, reliability, and regular reassurance about
57%
shopped online in the past year. However, 2013 2014 2015 2016 2017 2018
50
where their packages are in the delivery process.
online sales are only 6 percent of all retail Due to customer expectations, you’ll probably
Source: ecommercenews.eu/ecommerce-in-france-was-worth-e81-7-billion-in-2017
sales, compared to 12 percent internationally. 40 need to offer multiple delivery options.
French Internet shoppers average 33
transactions online per year for a total amount 30
of nearly 2,200 euros ($2,500). 25% OTHER SALIENT POINTS
20
■ The most successful online retailers are
10 omnichannel sellers — not brick-and-mortar
9% 2%
7% only and certainly not online only. The rise of
0
Credit and PayPal Bank Other Cash bricks-and-clicks retailers is causing French
WORK WITH TRUSTED, THIRD-PARTY PARTNERS debit cards transfer
retailers to innovate in coming up with new
Like many countries, online spending typically rises at the end of the year, with about 20 percent of web-to-store concepts.
Source: Payvision
sales coming during the holiday season.
■ The online retailers who do best are either
As in other Northern European countries, Amazon dominates. Fashion, books and home large retailers (Amazon) or small merchants,
CHALLENGES
electronics are the most popular online purchases. as opposed to other markets, where
Despite the growing number of players, online
competition in France is becoming less, not more, midsized sellers are doing well.
French consumers aged 18 to 24 years old are 30 percent more likely to shop via their mobile
fragmented. In 2017, 4 percent of online retailers
devices than those more than 55 years old. ■ When French consumers shop across the
rang up 85 percent of sales.
border, they mostly to go directly to the
A full 80 percent of French consumers compare prices before buying. And flash sales have grown foreign websites (42 percent), compared
If you’re an international online merchant who
in popularity. In fact, France’s vente-privee.com is the world’s biggest flash sale site. to patronizing the foreign sellers on French
wants to sell in France, it’s important that you
translate and localize your online store. Among marketplaces (29 percent). An additional
29 percent say they purchase via both
channels.South Korea: Aggressively
Competitive PURCHASING TRENDS
South Korea, with a population of 51 million, is the fourth- One of the biggest trends in online retailing is digital convergence. The connections among internet portal
largest economy in Asia and possesses an advanced high- sites, social network services, TV home shopping and online shopping platforms are multiplying because
speed tech infrastructure well suited for ecommerce. It is consumers want a one-stop shopping experience that includes product reviews, price, purchasing and
already the seventh-largest ecommerce market in the world. It paying with new electronic payment solutions. The etailers that build partnerships with the most online
is expected to surpass Japan and the United Kingdom within platform partners are thus flourishing.
five years to become the world’s third largest after China and
the United States. Consumers tend to window shop at traditional stores, then go online to find the best deals.
SIZE AND GROWTH OF MARKET Mobile ecommerce is driving South Korea’s explosive ecommerce expansion. Whereas online shopping
Ecommerce is critical to consumers in Korea, where 99.2 grew by 19.2 percent last year, mobile ecommerce increased by 34.6 percent. Mobile transactions
percent of households possess internet access. Online represented 61.1 percent of the total market value of online purchases.
purchases reached $69.2 billion in 2017 up from $55.9 billion
in 2016. This represented approximately one quarter (25.3 Koreans make a lot of their online purchases from foreign retailers because they find less-expensive
percent) of Korea’s total retail sales. prices on overseas websites even after adding international shipping fees and import duties. Cross-border
ecommerce reached $2 billion in 2017. Under the United States/Korea Free Trade Agreement, express
courier service mailed goods under $200 from the United States are duty free, and “made in the USA”
Number of online shoppers in South Korea
items under $1,000 are exempt from trade agreement documentation. As a result, U.S. multi-brand online
(in millions)
31.8
retailers such as Amazon.com and eBay are among the most frequently used online shopping sites.
31.6
31.3 As with many international markets, fashion is the No.1 online category, followed by media and electronics.
30.9
30.5
Projected South Korean ecommerce revenue per year
30.2 by market segment (in $USD millions)
30
35,000
30,000
2015 2016 2017 2018 2019 2020 2021
25,000
Dividing internet usage into age groups gives a better picture of the South Korean eCommerce
market – 96% of 16-24 year-olds, 100% of 25-34 year-olds, and 98% of 35-44 year-olds log in daily. 20,000
The older generations also log on regularly with 45-54 year-olds and over 55s showing a 93%
and 87% daily penetration rate, respectively.
15,000
10,000
5,000
0
2015 2016 2017 2018 2019 2020 2021
Fashion Electronics & Media Food & Personal Care Furniture & Appliances Toys, Hobby & DIY
Source: https://www.statista.com/outlook/243/125/e- 21
commerce/south-korea#market-arpuCanada: Welcoming to
Foreign Players
Canadians stand out as some of the most
PAYMENT sector after years of ambivalence from both
enthusiastic users of the internet globally (89
Koreans prefer quick and simple consumers and merchants.
percent are online). Like the United States,
purchases. Most payments for online
Canada has recently seen disruption in retail
shopping are by credit card purchase Online retail is influencing brick-and-mortar
channels and is turning toward omnichannel
or a bank transaction. The most popular OTHER SALIENT POINTS store customer expectations. Consumers
shopping. In general, ecommerce has been
payment method is credit card, but it expect instant gratification and a seamless
■ Ecommerce companies should be slower to take hold in Canada due to low
can be complicated, as consumers need experience, no matter what channel
familiar with Korea’s Personal Information population density, relatively high shipping
to install an app before they can pay they’re using, and stores are responding
Protection Act (PIPA) and ministerial costs and relatively high sales taxes. But that
by credit card. Recently, some online accordingly.
data privacy regulations, which restrict looks like it’s changing.
platforms have introduced their own ecommerce if you manage your
payment systems to simplify the payment The so-called “Amazon Effect” has hit
customers’ data on foreign servers.
process. Examples include SSG Pay, Canada hard, changing the retail game for
SIZE AND GROWTH OF MARKET the industry. The online giant continues to
Payco, Naver Pay, Rocket Pay, KakaoPay.
■ CS Korea created a 16-page International In 2017, 18.5 million Canadian consumers
expand into new categories, and is driving
Market Insight report describing how used online shopping channels and an
CHALLENGES loyalty through Prime memberships and its
Koreans make purchases from foreign additional 5.2 million users are expected to
As the internet retailing channel is foray into physical stores with its acquisition
online retailers. join them by 2021. Accordingly, ecommerce
growing significantly in South Korea, of Whole Foods and launch of Amazon Go.
sales jumped 26.3 percent between 2017 and
many operators are entering it and As a result, Canadian retailers, both on-
Korean consumers are mostly concerned 2018 to reach $43 billion, accounting for 9
competition is becoming fierce. Everyone and offline, are mixing it up. Online brands
about price when shopping online. percent of total retail sales.
is vying to become the Amazon of South like Frank and Oak and Warby Parker have
Korea, but so far no winner has emerged, launched physical stores within the last
■ Chu-seok (The 15th day of the eighth lunar Driving this growth are stronger domestic
according to the Financial Times. Amazon few years, while traditional retailers like
month), Seollal (Lunar New Year’s Day), players expanding their online stores, and
itself is said to be about to launch a South Reitmans are expanding into the online
Parents’ Day (May 8) and Children’s Day even more multinationals competing for
Korean-native site soon, although its world.
(May 5) are major buying holidays in Korea the Canadian dollar. In particular, grocery
products and delivery services have been when sales proliferate. Koreans also follow is rapidly evolving into a true omnichannel
available from Amazon.com for years. foreign countries’ buying holidays, like
Black Friday, to get good deals.
23OTHER SALIENT POINTS Products/services bought online yearly (Among those who buy online)
Fashion is the leading sales category, followed by electronics and media. As with online shopping overall, most purchases are occasional rather than regular,
although many categories are bought on a yearly basis.
Cross-border shopping is extremely strong in Canada, particularly at U.S. online
sites. Half of what online shoppers in Canada purchase comes from foreign sites. Monthly
Gifts for others 11% 30% 33% 74%
Every 2-3 months
eMarketer estimates that mobile transactions will account for 30 percent of retail Clothing, shoes and accessories 15% 30% 23% 68% Yearly
ecommerce and 2.6 percent of total retail sales this year. Books/ CDs/ DVDs 15% 24% 26% 65%
s everything.”
Tickets to live events 10% 24% 24% 58%
Mobile retail by the numbers Reserve accommodations 7% 16% 30% 53%
74%
of onine
Airline tickets 7% 15% 28% 48% shoppers buy
Small houseware/ kitchenware items 7% 13% 22% 42% gifts for others
83% 47% have bought something (via
app or in store) on their phone 12% have made an NFC or tap
payment on their phone
Any other travel services 7% 12% 23% 42%
online each year
Any services other than travel 7% 12% 20% 39%
of Canadians own Computer software 7% 12% 18% 3 7% Source: Ayima Insights West
smartphones
But Only
33% 76% 12%
of survey respondents of Canadian retailer survey of those retailer respondents
plan to use a mobile
device for payments
respondents believe mobile
commerce will grow
plan to integrate it into
their business Use of foreign sites (Among those who buy online)
While many Canadians (particularly those under 55 years) have bought from
Source: Visa, Catalyst Canada, Amex a “foreign” site in the past, this behavior is far from regular for most.
Canadian consumers want an experience that aligns with the principles of frictionless retail 100% Less often
18-34 13% 48% 61%
Once a year
— the idea that all activities, from searching for products to the checkout process, should
Every 2-3 months
contribute to quick, easy and convenient shopping. 75%
64% 35 to 54 12 % 43% 55%
Monthly
Weekly
3%
People don’t even say “omnichannel” anymore in Canada, it’s all just “shopping.” The 50% 2 6%
55+ 2 6% 29%
ecommerce era has forced all retailers to redefine themselves and embrace hybrid-
shopping experiences. The experience has to be seamless and integrated across all 18%
2 5% Monthly +
channels. 11% 6% 3% Yearly +
0% Statistically significantly higher than comparison group(s)
Although Canadians prefer to support Canadian online businesses, a significant percentage Statistically significantly lower than comparison group(s)
of Canada’s online dollars go to non-Canadian websites. More than three-quarters of
Source: Ayima Insights West
online shoppers (77 percent) buy from Amazon.com. Canada has a large number of small
and medium-sized brick-and-mortar companies, but they are risk averse and are only now
entering the online world.
25PAYMENT
Six in 10 Canadians (59 percent) use credit cards when
shopping online and another 20 percent prefer PayPal.
Mobile wallets are in their infancy, as only 17 percent of OTHER SALIENT POINTS
Canadians have ever used one and only 8 percent of those
■ Homegrown Canadian brands are
surveyed use one weekly. There are, however, signs that this
payment method is starting to be adopted. struggling to compete with well-funded
international giants. In addition to Amazon,
Mastercard is the preferred credit card in Canada, with 53.6 retailers with less recognizable names are
percent share of the market; Visa closely follows with 41.3 coming from overseas and taking online
percent and American Express with 5.1 percent. shopping dollars from Canadian brands.
■ Abandoned shopping carts are common.
MARKET CHALLENGES Being unpleasantly surprised by shipping
Fulfillment is a major challenge for retailers, and one of the costs is the primary reason (71 percent) for
toughest hurdles to succeeding in the Canadian market, with abandoning a shopping carts. Finding out
its low-population density and large-geography terrain. Four about an ungenerous return policy causes
shipping options are in high demand from consumers: same- many others (40 percent) to abandon their
day delivery, in-store pickup, ship from store and scheduled carts
delivery.
■ 75 percent of Canadian shoppers think free
Amazon’s ability to offer free shipping—not to mention its shipping is critical when deciding what site
fleet of cargo planes and unmanned delivery drones—makes to buy from. Indeed, shipping is at the top
it a formidable competitor. Canadians also want hassle-free of their list of what they look for online, with
returns, as their main complaint about online shipping is that more than half (57 percent) making it their
they can’t tell the quality of a product when buying online. top concern.
Major barriers to online shopping (Among those who do not buy online)
A variety of reasons have relevance as barriers to those who don’t buy online now. A
perceived price advantage offline, spending control issues and a like of shopping are
among the least wide-spread of those tested.
Can’t tell the quality when buying online 71%
Too much hassle to return things 67 %
Like to try on/ touch/ see the products you buy 66%
Concerns about security of your personal information 64 %
Just don’t feel comfortable buying services online 61 %
Concerns about privacy of what you do/ buy 60%
Shipping costs too much 51%
Too much hassle to be home for delivery/ pick up if not home for delivery 4 5%
Don’t trust online retailers in general 43%
Too hard to make decisions about what to buy when shopping online 38 %
Like to shop at stores/ enjoy shopping 32 %
Less expensive to buy in stores 2 6%
Will have more trouble controlling your spending if you buy online 22%
Source: Ayima Insights West 27Russia: Playing Catch Up with Passion
Russia is a gigantic landmass covering more 2020 and may reach $52 billion by 2023 – up
than 10.5 billion square miles, with a population from around $18 billion (1 trillion rubles) in 2017.
of 147 billion people. Although slightly behind
the curve when it comes to online retailing, Starting in 2017, the percentage of the PURCHASING TRENDS
recent thawing of a frozen economy due to population using the internet saw double-digit According to the Russian Association of Internet Trade
sanctions is causing ecommerce to heat up. growth. Now, 80 percent of the population uses Companies, Cross-border sales accounted for 37 percent
the Internet and 66 percent use smartphones. share of online transactions in 2017. A case in point: the largest
Still, Russia has a mere 3 percent ecommerce Chinese third-party merchant, Alibaba, leads Internet retailing in
MARKET CHALLENGES share in total retail (compared to 12 percent Russia, whereas home-grown Wildberries is the strongest domestic internet player.
Russia, which has in recent years experienced a percent average globally). This means that the
deep and prolonged recession, is now growing full potential of the Russian ecommerce market Russians tend to compare online extensively before they buy—58 percent of consumers compared
again. Morgan Stanley’s forecast says Russia’s has yet to be fully exploited. A torrid annual products, prices and features online prior to purchasing. Additionally, 15 percent of consumers researched
ecommerce market will see a compound annual growth of 35 percent through 2021 has been products on their smartphone while in physical stores.
growth rate of 24 percent. Sales will hit 3.2 predicted, until online retail reaches 10 percent
billion rubles ($49 billion) by 2021. to 15 percent of total retail sales, according Most Russians are occasional online buyers.
to the United Nations Industrial Development
The Russian ecommerce market for physical Organization.
goods is expected to grow to $31 billion by
Aliexpress is the most visited ecommerce website
Top 10 most visited ecommerce websites
Most visited ecommerce websites in Russia, in millions, 2017¹
Russian ecommerce market forcasts by Morgan Stanley
3060 8% 22,194
7%
2560
6%
2060
5%
1560 4% 8,987
7,564
3% 6,976 6,923 6,772
1060 6,012
5,157
4,548 4,420
2%
560
1%
60 0% Aliexpress.ru Ozon.ru Eldorado.ru Dns-shop.ru Mvideo.ru Wildberries.ru Ulmart.ru Ebay.ru Lamoda.ru Citilink.ru
2017 2018 2019 2020 2021
¹Top 10 most visited ecommerce websites in Russia, 2017. Source: RBTL, 2017.
eCommerce % Penetration % Domestic penetration
29Majority of cross-border purchases are in China
Cross-border destinations¹ Cross-border spending distribution²
Cross-border parcel distribution, 2016 Cross-border spending distribution
Brazil: Cost-Conscious Online
4% 2%
Other USA
12%
4%
USA
Consumers
EU
13%
Other
Brazil is the largest economy in Latin America. In terms of
geographic reach and population, it’s the fifth largest country
in the world. It has 140 million internet users, out of a total
population of more than 207 million, which represents 42
percent of all online retailing in Latin America. With 130 million
90% 23% 52% active Facebook users, Brazil is the third largest country to use
China EU China
the social media giant.
¹Cross-Border Destinations. Source: AITC; Gfk, 2016. | ²Cross-Border Spending Distribution. Source: AITC; Gfk, 2016.
Brazil’s economy, which has recently experienced a deep and
prolonged recession, is now growing modestly.
The largest product category of Russian CHALLENGES
ecommerce sales is electronics and appliances, It can be difficult to succeed in Russia. eBay came MARKET SIZE AND GROWTH
followed by clothing and footwear. However, to Russia in 2010, but failed to develop a following Despite the negative economics of past years, Brazil’s
through 2022, retail ecommerce sales of food and China’s JD.com’s market entry attempt in ecommerce market continues to grow. It ended 2017 with a
and groceries are projected to outpace the rest 2017 also failed. Some German players seemed growth of 8 percent, with 55 million online consumers spending
of the market. The competition in this market to be working well at first, but recently have shut 47.7 billion Brazilian real ($ 14.5 billion). It saw 12 percent online
segment is already intensifying, as the leading down many of their retail operations—both online retail growth in 2018, with a total of 60 billion Brazilian real ($16
food retailers launch online supermarkets. and brick-and-mortar. billion) in sales As a result, Brazil is one of the most promising
opportunities for online retailers in Latin America.
PAYMENT Why is this? Morgan Stanley believes the high
Russian consumers distrust the safety of online capital requirements, the complexity of organizing The average transaction amount of the 111.2-million ecommerce
ecommerce transactions. Cash on delivery is local logistics and finding the right merchant transactions completed in 2017 was 429 Brazilian real ($115).
the main payment method (80 percent). The partners all serve as barriers. There’s also Although leading in number of transactions, the fashion and
use of electronic payments is increasing slowly. complex legislation on personal data collection accessories category is only sixth in revenue, with a 6.1 percent
Bankcards are rarely used. The most popular and storage and the depreciation of the ruble, share.
local electronic currencies are Yandex Money, which make foreign-made goods too expensive
Webmoney, and QIWI Wallet (5 percent). for Russian consumers.
21.2% 19.3% 10%
Approximately 60 percent of domestic sales The vast majority of international online orders Telephony / Household Electronics
Mobile appliances
are paid via cash on delivery, so offering this are placed on Chinese websites, especially
payment method is critical when competing in Alibaba’s AliExpress.ru, which has four times the
Russia. A full 72 percent of consumers received
their online purchase by collecting it from the
traffic of Wildberries.ru. Price-sensitive online
shoppers also gravitate to stores that offer lower
8.9% 8.4% 6.1%
IT Home and Fashion
store. Much of this is due to questions about prices and purchase 50 percent of their online decoration
product quality. goods using discounts and special offers.
Source: www.pagbrasil.com/market-insights-brazil
31PURCHASING TRENDS CHALLENGES
Brazil is the fifth largest smartphone market in the world. Mobile There are significant barriers to entering the Brazilian ecommerce
transactions, which make up 27 percent of all online purchases, market. U.S. firms, in particular, need to be careful. A very cost-
are growing. Even so, most online shopping is still completed via sensitive market to begin with, Brazil has high import taxes and all
desktops. However, the future is definitely mobile, so make mobile- foreign goods are subject to onerous customs and duty regulations.
first a strategy if you enter the Brazilian ecommerce market. These regulations favor local products over foreign ones.
Social media is a critical part of ecommerce for 91.1 percent of The 10 top local retailers in the country rule ecommerce in Brazil. But
companies in Brazil. They use it to increase online visibility and some foreign companies have managed to open up opportunities
connections with customers, and to increase brand awareness, with lower prices or highly coveted products that can’t be found
engagement, traffic and, ultimately, sales. locally.
PAYMENTS Not only is taxation very high on foreign goods, customs can be very
Brazilians prefer national payment methods using local credit slow. It can take as long as five weeks before customs releases
cards. In fact, local cards are used in 90 percent of online shopping products to the customer. Another critical issue is frequent striking of
transactions. That’s because the country’s online payments market the federal customs postal services, which slows things down even
is heavily regulated and controlled by a handful of local banks with more.
their own standards. Domestic payment solutions are also more cost
effective for consumers, since they save the 6.4 percent IOF tax, Brazil is also on the U.S. Trade Representatives Special 301 Watch List
which is applied to international transactions and the cost of currency because of widespread counterfeiting and piracy, including internet
conversion. piracy and online sales of counterfeit goods.
You should register your trademark and domain names with a “.br”
Payment types (in percent) ending, as that will speak more authentically to local buyers as well
Reading support as avoid the problems that arise with cybersquatting—that is, people
In 2019, 56% of total ecommerce purchases will be paid by Cards.
who register brand names as domains in bad faith.
100 5% 5% 5% 5% 6% 6% 6%
75 OTHER SALIENT POINTS
59% 56% 56% 59% 58% 58%
66% Brazilian retailers strongly felt the pain of the recession. Almost
In percent
50 60 percent of them say slowing consumer spending impacted
13% 10% 1% 1% 1% their ability to grow in recent years. Despite that, brick-and-
14%
25
16%
mortar retailers are increasing ecommerce investments in
25% 27% 32% 33% 33%
20% marketplaces. They feel the platforms will be important to
12%
0 1% 2% 2% 2% 2% 2% them in the retail future and because they know that third-
2017 2018 2019 2020 2021 2022 2023
party marketplaces are a relatively simple way to sell directly to
Bank transfer Cards Cash on delivery E-wallet Other
consumers.
Source: Statista, October 2018
Half of online retailers lack a mobile strategy. Fifty-six percent of
Brazilians also like to pay in installments. In 2017, only half (49.8 retailers are increasing their investments in mobile. But most of
percent) of online sales were made in one payment. The rest were them are behind: 50 percent of all online retailers either are in
made over time: 18 percent in two to three installments and 31.5 the early stages of developing mobile strategies or don’t have a
percent in four to 12 installments. mobile strategy at all.
33About Signifyd
Signifyd enables merchants to grow with confidence by providing an end-to-end
commerce protection platform. Powered by the Signifyd Commerce Network of more
than 10,000 merchants selling to more than 250 million consumers worldwide, its
advanced machine learning engine is able to protect merchants from fraud, consumer
abuse and revenue loss caused by barriers and friction in the buying experience.
Signifyd counts among its customers a number of companies on the Fortune 1000
and Internet Retailer Top 500 lists. Signifyd is headquartered in San Jose, CA., with
locations in Denver, New York, Barcelona, Belfast and London.
HEADQUARTERS
2540 North First Street, 3rd Floor
San Jose, CA 95131
U.S.A.
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