The global eCommerce market is in the midst of massive growth. Data from Statista suggests that global eCommerce sales will reach $4.5 trillion by 2021. If you are looking at this trillion-dollar figure and wondering how it can capitalise, rest assured you’re not the only one. One option would be to double-down your efforts locally for a bigger slice of the pie, but the biggest opportunities for expansion are often overseas.
Our research suggests that peer-to-peer platforms, eCommerce marketplaces, and social selling companies should consider these expansion-readiness indicators as each country will have its own unique selling point, with some suiting your business more than others. This allows you to land in a new market that suits the needs of your company and will give you the best chance of capitalising on opportunities.
Market size
When expanding your firm, established markets such as China can stand out. Due to its robust market size, China offers online retailers and start-ups the opportunity for rapid and consistent growth. It also boasts high adoption of information and mobile technologies and an impressive tech infrastructure.
However, taking market share from a dominant, local incumbent has proven to be difficult, especially for foreign platforms. With this in mind, it can be beneficial to look to less saturated markets, such as Indonesia. Driven by high internet-capable mobile penetration rates and the world’s fourth most populous country according to the World Bank, Indonesia presents an ideal launch pad into the broader Southeast Asian region.
Payment infrastructure
Payment infrastructure should also be a top consideration when looking to expand, as it’s essential in day-to-day operations. One that promotes efficiency and competition will ensure seamless payments to sellers or freelancers, which fosters ease of doing business and ultimately may allow you to scale at a faster pace.
Rather than finding local partners to process payments in each market, digital merchants stand to benefit from signing one contract with a global partner who understands the regulatory landscape and has the technical know-how to navigate the payments landscape in several currencies.
It’s also necessary to adopt a global payments solution – just think where Airbnb would be without building out a solution for its hosts in markets as diverse as Brazil and Denmark.
Workforce
Another important indicator is the country’s workforce. This includes the population’s level of English proficiency and the availability of freelancers.
These two factors do not necessarily go hand in hand. India, for example, boasts the second-largest freelancer population in the world, an enticing drawcard for marketplaces. However, a deeper look would reveal that English is a second language for most of these freelancers, and many do not have a bank account in which to pay. Though, an estimated 100 million of those adults do have mobile phones, indicating potential for financial inclusion.
Conversely, the United States ranks among the most attractive global destinations for online marketplaces seeking fast growth. While English prevalence is high, the country’s freelancer workforce is on the rise as the gig economy becomes larger and more important to the wider US economy. It’s projected that within 10 years freelancers will make up more than 50 per cent of the workforce.
Closing thoughts
Many eCommerce marketplaces and peer-to-peer platforms undertake international expansion without fully recognising the opportunities and challenges on their road to growth. If you’re after a slice of that trillion-dollar eCommerce pie, or want to see your expansion efforts amount to scalable growth, it is essential to take an analytical approach towards market size, payment infrastructure and talent pool. This will have an impact on your operations and, ultimately, your success.
Simon Banks, APAC Managing Director and SVP, Hyperwallet
