Again China has blown online shopping records out of the water. US$ 5.75 billion in one day! That’s nearly three times greater than all online sales on Cyber Monday in the US last year. Here’s the kicker though – it was all via one portal – T-Mall.
China’s huge online market shows the potential for shoppers in emerging markets to leapfrog traditional retail environments and jump straight in to online shopping. Why wait for your favorite brand to open a store near you, or for your uncle to travel to the States when you can get the product via your mobile?
What does this mean for retailers?
- Global presence does not always depend on the number of physical stores you have, it depends on how accessible your online offer is: For years ‘global’ retailers have expanded by putting pins on the map. Tomorrow’s winners will not need to invest in bricks and mortar, but will expand virtually.
- Your brand is more important to you now than your supply chain: Walmart has grown over the last 5 decades by virtue of its super-efficient supply chain, which has created massive returns on working capital. The retailers of the future will need strong brands to attract shoppers to them online. Amazon achieved this by building trust and a keen pricing model; Zappo’s simply blew their shoppers’ minds with the level of customer service they offered, in both cases the brand pulled people towards the site.
- Don’t wait for markets: They are waiting for you: Too many retailers are waiting for emerging markets to reach certain thresholds in development before entry. This closes down the opportunity to service the market that already exists –the hundreds of millions of internet-connected middle class shoppers all over the developing world.
What does this mean for manufacturers?
- Online is mainstream: Too many companies push the whole issue of ‘online’ into a small team in marketing and e-commerce and is often dismissed as irrelevant by sales directors. The reality is that treating online as a niche or a specialism will lead to major organizational issues when it dominates marketing and sales – make it a mainstream activity now and capitalize on the growth opportunity.
- E-commerce is not based in the US: Too many businesses focus their e-commerce attention in developed economies like the US. This is a mistake! There is more to be gained from building massive competence in the economies and shoppers in emerging markets, particularly those in Asia.
- Don’t wait for retail: Waiting for WalMart to capitalize on opportunities in emerging markets is likely to leave the door open to your competitors globally and locally. Many markets could be tapped rapidly by constructing a branded online offer.
At engage, we help various clients with their strategy for penetrating emerging markets, both through online and offline channels. If this is an area you are struggling with, please feel free to contact me for help!