Another BRIC in the e-commerce wall
Chicago -- During a morning keynote session on Wednesday at the Internet Retailer Conference in Chicago, former Vice President and self-described “recovering politician” Al Gore related a couple of interesting facts about how the Internet is shaping modern commerce. First, he stated that when an online network increases in size its value increases by a squared amount, so that for example a network that doubles its number of users quadruples in value.
Second, he stated that Chinese e-commerce site Alibaba.com had a higher sales volume in the last quarter of 2012 than Amazon.com and eBay, although the combined financial value of those online retailers’ sales was still much higher. In short, the Internet is bringing the world closer together and also increasing the importance of consumers in the developing world.
Wendy Jones, VP of geographic expansion and cross-border trade for eBay Marketplaces, expounded on this theme further in a later unrelated session. Jones cited some sobering statistics on how e-commerce is increasingly becoming dominated by the emerging world and particularly by the four BRIC nations of Brazil, Russia, India and China. According to Jones, by 2015 91% of new Internet users will live in emerging markets and they will account for 55% of global e-commerce growth.
“The BRIC nations represented 13% of 2011 global retail sales compared to 2.5% 10 years earlier,” said Jones. “They are buying high-end luxury goods and services as a brand-conscious middle class emerges. These new consumers are in their mid-20s, affluent and highly engaged. They follow influencers and word of mouth is powerful when it comes from their network.”
In the case of eBay, in 2012 the retailer had 6 million customers in BRIC and other emerging markets who represented $3.2 billion USD in sales. Jones said eBay’s current highest priority is Russia.
“We are the largest B2C commerce player in Russia by volume,” she said. “In 2012 we sold $400 million of goods in Russia. We get 30,000 touches daily.”
To do online business in emerging markets, Jones recommended retailers follow one of three basic models: launch their own locally targeted e-commerce site, partner with a third-partner platform site (such as eBay) or partner with a local reseller that knows customs, laws and preferences.