E-commerce taking the Global Economy by storm
If there is an industry that has embodied globalization, it is the e-commerce industry. E-commerce was initially popular only in developed economies like the US and Europe. Now, e-commerce is a global phenomenon and has even caught the fancies of some of the fastest-growing developing economies.
Rising consumer demand, increasing technical & logistical capabilities, developing infrastructure supporting cross-border business operations, and increasing adoption of internet services worldwide have truly enabled e-commerce to dominate the global markets.
With countries like China, South Korea, and India ranking amongst the top 10 countries for their e-commerce retail sales, Asia-Pacific emerged as the biggest e-commerce market in 2020. Latin America and Southeast Asia show great promise, with countries like Argentina, Singapore, Brazil, and the Philippines registering the said year’s highest e-commerce growth.
(Read also: E-commerce: An industry that thrived globally through the pandemic from Rocket Equities)
Asia-Pacific is the Biggest E-commerce Market
Insider and eMarketer also reported that the largest E-commerce markets are Asia-Pacific, North America, and Western Europe. More than half (63%) of the worldwide retail E-commerce sales come from Asia-Pacific. This is thanks to the colossal transaction volume coming from China, estimated at around US$ 2 trillion.
Countries with high e-commerce retail sales are seen to have an extensive and efficient logistics infrastructure, high online shopping demand, and sizeable digital and financial inclusions statistics.
Countries with the Highest E-commerce Sales
China tops e-commerce retail sales thanks to its massive population with a voracious online shopping appetite. Plenty of China’s e-commerce consumers are cash-rich millennials that are avid patrons of luxury brands and other high-end goods from foreign brands. As per Insider Intelligence and eMarketer report, the country’s e-commerce growth will still be the top market for 2021 (23% CAGR). And it looks like it will always be the e-commerce market to beat for years to come.
The second goes to the United States, the birthplace of online marketplaces. As such, Americans already have a strong trust in online shopping.
The United Kingdom is in third place thanks to its millennials who love fast fashion and shop online to find the best bargain. UK online shoppers have high expectations for foreign brands and want fast shipping and a flexible free returns policy.
Highest E-commerce Growth for 2020
In terms of growth, the top e-commerce market is in Argentina. This Latin American country experienced an outstanding growth of 79% for 2020. Argentina also made it in the eMarketer’s Top 10 list of highest E-commerce growth for 2019 (18.8%, Rank 8) together with the Philippines (31.0%, Rank 3) and India (31.9%, Rank 2).
Looking at the current internet and online shopping populations, we could expect high growths from Argentina, Brazil, the Philippines, and India. These countries still have low internet penetration rates, and relatively only a handful of people have tried purchasing online. Compared to the developed nations such as the United States and the United Kingdom, these countries still have an enormous untapped market.
India will most likely be an e-commerce powerhouse in the future and may beat China off the top spot. Currently, India registered US$ 55 billion in e-commerce sales, and this is only coming from 4.3% of its internet population. India has a comparable population of China (1.44 billion) and internet penetration rate (59%), but China only has a more prominent internet population that buys and pays online (49%).
Highest Growth Potential in E-commerce
When it comes to the next e-commerce market to invest in, most often than not, the highest returns are not found in established and massive markets. The smallest e-commerce markets are in Central & Eastern Europe, Latin America, and the Middle East & Africa (when combined, only comprise 5% of worldwide E-commerce sales).
Looking at the chart, we can see that Latin America has the highest e-commerce sales growth in 2020 and is also projected to have the highest digital buyer growth for 2021. We could expect great returns in this region for 2021. E-commerce growth in this region will be attributed mainly to Argentina and Brazil.
If going to small markets is too risky, it would be a safe bet to go into Asia-Pacific. Having the third-highest digital buyer growth for 2021 of 5.1% and established e-commerce infrastructure, substantial returns can be monetized in this region. Markets to get into this region are the Philippines, Indonesia, Singapore, and of course China.
In my next post, I will publish Rocket Equities' full Global E-commerce Report that will detail all crucial aspects of the industry: the different sectors, business models, regions, sales & growth figures, investors & investment activity.
About Rocket Equities
Rocket Equities, a corporate finance and M&A advisory firm for fast-growing mid-sized companies in Southeast Asia.
Latest fundraising news on E-commerce from Rocket Equities- Great Deals raises US$12M from Navegar to be the Alibaba of the Philippines.
