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Ecommerce: how are startups adapting to its emerging market success?
As ecommerce picks up, certain interesting trends start to form that shows how startups are adapting to their individual markets. This is most prominent in specific emerging markets where the current impressive growth rates leave much room for developments in the future. Almost each country or region has its own set of advantages and disadvantages. Here are some I thought were worth noting.
Some interesting market trends
Other than experimenting with different payment methods, on the other side of the coin there’s getting access to the target market. It’s almost a given that the greater the internet penetration, the easier it is to reach more customers. With mobile internet also on the increase, companies need to adequately adapt to take advantage of these trends.
Out of 140-million people in Russia, there are only 11-million credit cards in circulation. Kupikupon and Celltick in Eastern Europe use these stats to their advantage by driving coupons to people’s phones instead. Customers can directly then use these coupons to purchase products via their phones.
In Indonesia (as well as China and South Korea) shopping on your mobile phone has also notably grown in popularity over recent years and is increasing dramatically. It’s estimated that by 2015 Indonesia’s ecommerce industry would be worth US$10-billion which is ten times more than what it is now. This is something that a company like online electronics startup Lazada takes into account.
Jana research surveyed 3 000 active online shoppers in five different countries. Though the number seems small considering the enormity of current markets, it could still be used to give us an indication of popular characteristics unique to the specific region.
When queried about the largest obstacles, delivery time stood out as being most customers’ concern. The lack of internet connectivity came in second out of the five countries, except for Kenya which stated the lack of security as the biggest obstacle.
Most countries feel that the biggest advantage of online shopping is the convenience thereof, while India felt the price of online goods to be the most attractive factor above convenience, ease of use, price, selection and the shopping experience.
Some key payment trends
According to research done by Jana in certain emerging markets, most shoppers prefer to pay Cash on Delivery while using a credit card is still the second most popular method of payment. Strangely though, mobile transfer isn’t included in the poll except for airtime payments which is the least popular in all five countries out of Kenya, South Africa, Nigeria, the Philippines and India.
In Nigeria, for example, people rely much more on Cash on Delivery than they do on credit cards however. With that in mind, certain companies such as Jumia still believe that because of Africa’s high mobile penetration rate, it’s easier to gain market reach between the online shop and online shopper.
This market, similar to other emerging ones in South East Asia, has the potential of successfully adopting ecommerce when alternative payment methods are explored, experimented with and adapted.
Jumia, which is (believe it or not) part of Rocket Internet’s global startup empire, claims to be Nigeria’s number one shopping destination. The company recently introduced 16 more cash on delivery locations across Nigeria as the country’s still “largely an offline market when it comes to retail” and is still a bit cautious when it comes to “parting with their hard-earned cash” before having the physical product in hand.
Rocket Internet’s finger in the pie
Very notably, the Rocket Internet had a big part to play in these developments in emerging markets. The massive incubator has a voracious appetite for startups in emerging markets usually associated with ecommerce.
It’s giving companies the opportunity to raise funds in markets that are still left untapped (or bought) by global giants such as Amazon or eBay. Rocket Internet funds companies on the ground that know their target markets and competition. They don’t need to necessarily compete with global big shots and if they do, they’ll have the muscle of a US$500-million incubator behind them. We also recently saw the Latin American Easy Taxi startup driving into Nigeria which is also backed by Rocket Internet.
With the growing middle class, people have more money and time to spend on luxury goods. This, and the fact that startups are increasingly gaining better access through the rise of internet connectivity as well as the potential of using popular methods such as e-payment solutions that, is unique to the specific regions.
Rocket Internet which is the biggest ecommerce incubator in the world is an example of how successful this industry in emerging markets currently is.