Comparing U.S. & Foreign Ecommerce Trends 2017
China and Russia have been stepping up their ecommerce game in the past few quarters; South Korea is maintaining its dominance in online/mobile grocery shopping. Where do we stand along with other major countries and regions in the world?
We’ve been covering ecommerce trends in the United States, but in the face of an increasingly interconnected global economy, it’s important to keep an eye on where the market’s headed worldwide. These days, even things happening on the other side of the world have an effect on us here at home.
Let’s take a look at some of the largest, fastest growing, and most interesting economies today, and see how they relate to what’s happening here:
Largest Online Retailer: Amazon
Ecommerce Revenue 2016: $394 Billion
Annual Growth: 15%
Ecommerce Revenue Per Capita: $1,235
Most Popular Category: Shoes & Apparel
Here on the home front, it’s clear that we like to do our shopping from the comfort of our own homes. Ecommerce growth has outpaced total retail growth for years, and as of Q4 2016 it was holding steady at 14 percent. With our total online sales volume second only to China, the United States continues to be at the forefront of modern ecommerce.
Our consumers want goods delivered quickly and at low cost, and it’s driving massive innovation in how we get products to their destinations. From drones to courier services, our major cities are the proving grounds for ecommerce experiments. Our domestic online shopping movement is spearheaded by Amazon, the largest ecommerce company in the world. However, many of our older, massive retail corporations are adapting to the new environment by investing in their own new online marketplaces. Experts are proclaiming the death of physical retail, and it’s adapt or be left behind for old-guard juggernauts like Wal-Mart.
Lots of large international corporations like China’s Alibaba and Japan’s Rakuten are attempting to shake off the label of just being “their country’s Amazon” and challenge the status quo.
Largest Online Retailer: Alibaba Group
Ecommerce Revenue 2016: $752 Billion
Annual Growth: 26%
Ecommerce Revenue Per Capita: $557
Most Popular Category: Consumer Appliances/Small Electronics
Online retail in China is dominated by the Alibaba Group, which encompasses several major Chinese retailers like Tmall, Taobao, and Alibaba.com. According to the Wall Street Journal, the conglomerate as a whole handles more business than any other ecommerce company. It differs from Amazon in that although Amazon’s revenue is higher, Alibaba’s is more diverse. While Amazon controls everything it buys and sells, Alibaba operates more like a massive, open marketplace.
China’s ecommerce market is currently experiencing a period of explosive growth — indeed, it’s the fastest growing in the world. Just last year, online retail sales grew 26.2 percent, a growth rate nearly double that of their overall retail market.
Possibly the most interesting trend, though, is that (as of 2015) China’s smaller cities are now spending more online than their larger counterparts, and represent massive potential for future growth. According to Forbes, while ecommerce penetration in Tier 1 and 2 cities like Beijing and Shanghai is 89 percent, it’s only reached roughly 62 percent in Tier 3 and 4 cities. These cities alone carry a massive online consumer base of 257 million people.
This means that even though China already holds the crown for fastest-growing and largest overall ecommerce markets, they’re poised for even more success in the near future, with incredible opportunity outside their major cities, where the majority of their 1.3 billion citizens live.
Largest Online Retailer: Gmarket
Ecommerce Revenue 2016: $43 Billion
Annual Growth: 19%
Ecommerce Revenue Per Capita: $860
Most Popular Category: Travel
South Korea, with its relatively small population of around 50 million, isn’t notable for the size of its economy. What sets them apart is their enthusiastic adoption of “m-commerce” – that is, online shopping via mobile device. In December of last year, South Korean m-commerce accounted for 56.3 percent of all ecommerce sales. In particular, food makes up the largest portion of their mobile economy, at around 12 percent. They’re the largest market in the world for online grocery, and the trend is only strengthening as younger generations increasingly prefer fast online goods and services.
On the whole, South Korea is a country that is set up for ecommerce success. They have the fastest average Internet speed in the world at 26 MBps (comparatively, the United States only sits at 14.2 MBps) and an astounding 99.2 percent Internet penetration rate. Almost every single citizen of South Korea has Internet access, and typically at blazing fast speeds. This facilitates smartphone shopping, as Internet access is available to shoppers almost everywhere they go.
Largest Online Retailer: Rakuten
Ecommerce Revenue 2015*: $114 Billion
Annual Growth: 8%
Ecommerce Revenue Per Capita: $960
Most Popular Category: Clothing
While Japan as a country is smaller than our state of California, they boast a substantial population of 127 million people. According to a study by the Ecommerce Foundation, 91 percent of Japanese people use the Internet compared to around 75 percent in the U.S. and around 50 percent in China.
Additionally, it’s estimated that 70 percent of Internet users also shop online, a fact that has made their ecommerce market the second largest in Asia. While their online retail growth has slowed somewhat since peaking at around 18 percent in 2013, they’re still posting a healthy 8 percent in annual growth. Rakuten, their largest ecommerce company, has made recent commitments to going global with moves like changing their official language to English and experimenting with drone delivery. Though they’ve been relatively unknown outside Japan, this shows a desire to move out of the shadow of larger corporations like Amazon and Alibaba.
*2015 was the latest estimate we could find on Japanese ecommerce statistics.
Largest Online Retailer: Amazon UK
Ecommerce Revenue 2016: $203 Billion
Annual Growth: 16%
Ecommerce Revenue Per Capita: $671
Most Popular Category: Shoes & Apparel
Were it not for Brexit, Britain’s ecommerce tale wouldn’t be much different from the countries we’ve already gone over. They possess the third-largest online economy in the world, and their 16 percent growth rate puts them ever-so-slightly ahead of the United States in that regard. Amazon is their largest retailer, which, on an interesting note, has been testing its drone service in the U.K. due to more lax regulations compared to America’s airspace.
What prompts close watching, however, is Britain’s exit from the European Union. The ramifications are, for the most part, yet unknown. Even so, this speculation has caused the British pound to dip in value as uncertainty looms over the islands; how ecommerce will in turn be affected by currency and trade law renegotiation is yet to be seen. At any rate, it will likely add difficulty to anything involving shipping overseas, and force more British consumers to order their products domestically.
Largest Online Retailer: Aliexpress
Ecommerce Revenue 2016: $15 Billion
Annual Growth: 20%
Ecommerce Revenue Per Capita: $112
Most Popular Category: Shoes & Apparel
In 2010, Russian Internet penetration was as low as 37 percent. This has quickly changed for the better in recent years, with over 70 percent penetration as of 2016. Due to their large population, they now have the most Internet users of any European nation. However, they’ve still got some distance to go before that Internet access translates into the kind of online revenue we’ve seen in other countries.
The trends, though, show a Russia with upward movement in online consumership. According to a Russian report, the Russian ecommerce market grew 20 percent last year, placing them squarely between the United States and China in that category. Where Russia differs from the countries we’ve covered so far is the source of its goods. The same study states that a third of the whole Russian ecommerce market is made up of foreign sales — and that 90 percent of these foreign sales come from China.
The Russian preference for Chinese goods apparently has much to do with the fact that domestic retailers have to pay taxes on goods they import, making those goods pricier, whereas small packages ordered from foreign countries are untaxed. This is exemplified by looking at the top online retailers in the country, a list led by Aliexpress, a site owned by the aforementioned Chinese Alibaba group. The closest competition comes from retailer Ozun.ru, with revenue not even half that of Aliexpress.
Here in America, it’s important not to lose sight of what’s happening in foreign markets. Countries around the globe are positioning themselves competitively to challenge our position as an ecommerce leader. Ambitious corporations like Rakuten want to stake a multinational claim that rivals that of Amazon, and the mobile shopping economy setup in South Korea is unrivaled.
Learning opportunities abound, we have but to research and learn to take advantage of them. As international markets affect us more and more, we’ll have to be more innovative to compete. However, living in one of the wealthiest nations on Earth allows us to implement these ideas with relative ease.
If you own an ecommerce business, making your business more mobile-friendly is an excellent step in the right direction. With every generation, mobile shopping is growing. With things like drone and same-day delivery, companies that are doing things faster and newer are the ones that will be successful in the new world of online business. Ensuring the longevity of yours will eventually mean looking beyond our borders. Are you up to the task?