Today consumers feel more confident about online purchases. Luxury retailers including jewellery brands such as Tiffany & Co are expanding their business online. As different commodities compete for this growing market, Sean Huang, senior business development manager of the China branch office of Worldpay, a payment processing company listed on the London Stock Exchange, shared about the top online retail markets in terms of growth: China, Russia and Brazil. During 2015-16, these three markets have registered respective growth rates of 27 percent, 15.3 percent and 13.5 percent.
In 2013 China’s total online retail reached US$307 billion, surpassing the United States to become the world’s biggest online retail market. Out of the country’s population of 1.3 billion, there are 632 million internet users. Worldpay projects that the number will reach 804 million by 2019. Smartphone penetration rate in China is about 70 percent. In 2014, forty-three percent of Tmall’s Singles’ Day (the biggest global online shopping day in 2014) transactions were carried out on mobile devices. In terms of challenges, counterfeit goods pose a threat to online retail growth. Another challenge is China’s large geographical size, which adds difficulties to logistics. In terms of payment method, the most popular choice is e-wallets such as Alipay and Tenpay, followed by bank transfer and credit card, which is dominated by China Unionpay.
In Russia, online retail grew by over 25 percent in 2013 to US$2 billion with 30 million active online shoppers. While the country has high broadband and mobile penetration rate, consumers are price-sensitive, with low trust and low brand loyalty. Online retail in Russia is faced with challenges including the slow GDP and high inflation rate. Regarding payment choices, cash on delivery is the most preferred, followed by e-wallets such as Yandex, Webmoney, QiWi and Paypal.
The online retail market of Brazil is mostly driven by the young, educated and affluent middle-class shoppers. Similar to Russia, the Brazilian online retail market is faced with high inflation rate and slow GDP growth. Shoppers are concerned with online security and fraud and have low trust in delivery, product condition and payment. The most popular payment is credit card, followed by invoice payment such as Boleto Bancário where consumers get a financial document from the merchant to make payment in post offices, supermarkets, bank agencies, etc.
Huang reminded businesses who wish to enter these markets to pay attention to localising their web platform in terms of language and customer services, tailoring to consumers’ preference of payment and spending habits, tax laws, local culture and currency fluctuations, etc to avoid making basic mistakes.
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