The Global Ecommerce Expansion Will Change Everything – How China, India And Others Are Doing

 

Ecommerce is booming both in and out of the US.

It’s pretty incredible stuff, and it feels like nothing in the media so far has properly captured the raw magnitude of it. Entrepreneur.com put together an infographic about it. Business Insider wrote about it, too. And so did eMarketer. Lots of numbers, all of them going up. What should we be focusing on?

Here’s a telling graph from eMarketer:

b2c-ecommerce-worldwide
This graph merely addresses B2C. I wonder what it would look like if it included B2B?

One of the most exciting things about ecommerce is how it has been breaking boundary after boundary.

 It has already transcended many existing limitations, allowing people to shop from any location at any time of the day, and other technological advancements will break even more boundaries. A lot of the assumptions that we would’ve held about the world twenty or even ten years ago are no longer true. (Ask an Encyclopedia Britannica salesman what he’d have thought of Wikipedia.)

But perhaps the most amazing ecommerce story is the burgeoning of the non-US, non-UK world.

the “Rise of the Rest”, as Newsweek editor Fareed Zakaria described in his book The Post-American World. While we’ve been familiar with Google, Amazon, eBay and Facebook, firms and tech companies from around the world have been exploding in size and scope- to a degree that would shock and awe many, if not most.

Let’s talk about them now.

China:

  • Largest population in the world. 1.351 billion people in 2012, which is over 4 times as many people as there are in the USA.
  • Rapidly urbanizing. Over 160 cities with over 1 million people each. 7 of them have over 10 million. In contrast, The USA’s most populous city is New York, which has about 8.3 million people, followed by Los Angeles, with about 4 million people. Shanghai, Beijing and Chongqing have 22, 18 and 15 million people respectively.

Alibaba Group (Includes TaoBao + AliPay):

  • Founded in 1999, and valued by The Economist to be worth between $55 to $120 billion. (Amazon.com was valued at $119 billion in 2013, according to Forbes.)
  • In 2012, Alibaba handled US$170 billion in sales (That’s $170,000,000,000!). That’s more than eBay and Amazon did together that year! [source]
  • Alibaba is about to file for IPO, an event that’s going to be hotly watched and analyzed by observers and pundits both in Asia and in tech circles worldwide.
  • Alibaba has 24,000 employees. (Amazon, in comparison, has over 80,000 employees around the world.)
  • AliPay (the payments service, roughly analogous to PayPal) accounts for half the online payments in China.
  • Looking at projected growth rates, Alibaba looks set to be the first ecommerce firm to handle US$1 trillion dollars in transactions.
  • Founder Jack Ma was Financial Times’ Person Of The Year 2013.
  • By 2020 China’s e-commerce market is forecast to be bigger than the existing markets in America, Britain, Japan, Germany and France combined. [source]

TenCent:

  • TenCent is the 5th largest Internet company in the world after Google, Amazon, Ebay and Facebook.
  • Valued by the Hong Kong Stock Exchange at $150 billion. [source]
  • TenCent owns WeChat, which is roughly the Chinese equivalent to WhatsApp. It has over 355 million monthly users, which is more than the entire population of the USA. (WhatsApp has 450 million.)
  • Interestingly (for gamers), it has a minority stake in Epic Games (which made Gears of War) and a huge stake in Riot Games (which made League of Legends).

India:

  • Exponential growth: India’s ecommerce market was worth about $2.5 billion in 2009,  $6.3 billion in 2011 and to $14 billion in 2012. About 75% of this is travel related (airline tickets, railway tickets, hotel bookings, online mobile recharge etc.).
  • Huge market. India has close to 10 million online shoppers and is growing at an estimated 30% annually. (If you’ve been to Quora, you may have noticed that there’s some friction in the broader community because of the influx of large numbers of Indian users. This is going to be an irreversible phenomena across the web.)
  • English-speaking. This is probably what will interest US and UK ecommerce folks the most– India is a lot more accessible than China when it comes to language.

Flipkart.

  • One of India’s top 10 most visited websites. [source]
  • Founded in 2007 by 2 former Amazon.com employees.
  • Grew to over 4500 employees, which is about a quarter of what Alibaba employs.
  • Surprisingly, Flipkart’s CEO Sachin Bansal has only 5000+ followers on Twitter. For now.

Global interconnectedness, Predictions & Pitfalls

The Internet has largely been a good thing for the world.

It’s allowed an exchange of ideas and information that has been nothing short of spectacular. But the bulk of its significance is still ahead of it.

According to InternetWorldStats, only 2.4 out of 7 billion people in the world have Internet access. Despite having less than half the penetration rate of North America (27.5% vs 78.6%), Asian Internet users outnumber North American Internet users about 10 to 3.

The internet is going to become multicultural, multilingual and stupendously diverse.

Those of us in the “English-speaking” corners of the Internet might be biased to see things from an American or UK-centric perspective.

But consider Southeast Asia, Latin America, Africa, and the Middle East. All of these billions of people are rapidly getting online, and they will be spending online, too. (According to the Business Insider article, 20% of cosmetics purchased in China are bought online, vs. 5% of cosmetics in the US.)

Is collision inevitable?

It’s really hard to predict the future from here, because it’s such uncharted territory and it involves so many moving numbers. Everything is happening at an unprecedented scale.

Once all the social networks and mobile chat apps have saturated their “local markets”, will they inevitably clash, compete and chafe against each other?

To what degree will international retailers be able to benefit from these emerging markets, and to what degree will they be crowded out by local brands, companies? (And who will fund those companies, anyway?)

To what extent will things like language and cultural differences come into play?

What we can be reasonably certain of is that for the foreseeable future (10 years at least), we’re looking at tremendous growth that will dramatically change things.

4,600,000,000 more people are going to come online. It’s going to be messy, it’s going to be chaotic, and there’s going to be a lot of money to be made. Just researching all of this makes me thing that ecommerce (and almost anything digital, really) is an incredibly exciting place to be working in.

Reality is morphing at an accelerating rate, and we are going to have our mental models of it rudely, wonderfully shaken.

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