The tale of eCommerce has been worth the read worldwide. Incepted as a model to aid traditional retail, eCommerce has now become a vertical in itself. The growth of this online retail format, over the past 5 years, has not just transformed consumer buying behaviour but has also affected emerging and developing countries and its product pricing, lifestyle and consumption pattern.
As per Euromonitor International’s projection global eCommerce market is touted to grow at a constant value CAGR of 12 per cent from 2015 to 2020. At the same time, traditional brick and mortar retailing that has been the biggest channel by value will grow at a CAGR of mere 2 per cent during the same period. With more and more consumers getting access to smartphones and the internet across the world, future of eCommerce looks more bright and promising. With many foreign brands willing to expand their footprint across the globe are preferring the eCommerce way, emerging markets will become an increasingly attractive hotspot for the growth of the industry.
Rise of the millennial consumers
One of the prime reasons behind this exponential rise of eCommerce across the world is the millennial generation, also known as Generation Y or the ‘Echo Boomers’. These new-age consumers are technology dependent and are the prime audience for retailers to reach through the internet. It is important for online retailers to understand the worth of this set of audience and augment their models and services in sync with consumer’s demand and desire. These millennial consumers represented over 1.5 billion people in emerging markets in 2015.
These set of consumers are more educated, multi-tasking and have more exposure to the recent trends through smartphones and internet. Also, they have more purchasing power and decision making influence in economies across the world.
No doubt eCommerce is successfully winning hearts of millions of customers across the country, but when it comes to tapping a first time shopper it is a more complex and difficult task. Consumers from the very beginning have been habituated to in-store shopping and thus trusting a new brand that too online become difficult for consumers to trust.
Apart from winning new consumers, retaining them is also one big challenge for eCommerce companies, especially the new entrants. In a market that has become exceedingly competitive, gaining consumer’s trust and loyalty is not at all a cake walk. The ongoing fraudulent and volatile nature of the internet has poised a huge roadblock for the eCommerce industry. Trying to overcome the aforementioned challenges, many eCommerce companies around the world are leaving no stones unturned in order to gain consumers’ confidence. Seamless shopping experience, quick delivery and no questions asked return policy, attractive deals and heavy discounts are some armour for the industry to combat the trust challenge.
Though the industry is expanding day by day, but it requires a lot of rework on some of its ongoing models. It is very important for an online retailer to understand how their consumers want to pay. With the advent of eCommerce, dominance of card-based payment mechanism have really picked up pace in most of the developed markets such as Argentina, Chaina and UAE etc., but cash payments by far is the most preferred mode of payment across the consumer populations of most emerging markets. Countries such as India, Thiland, Egypt are the ones where maximum cash-based online shopping happens. But customers being comfortable in paying through cash, it is becoming tough for eCommerce companies to drift them towards digital payment. The advent of eWallets has somehow bridged this gap, but still large a large chunk of payments is happening offline. On one hand developed markets like Argentina, UAE and China etc. are friendlier towards online payment emerging countries like India are still prevalent to cash. In Mexico, cash payments accounts for 82 per cent of all consumer transactions.
It is very important for these online companies to build that trust amongst consumers, not just during the time of purchase but till the very end of customer’s interaction with the brand. This is the only key to gain that trust to even consider the online shopping model.