<strong>Roland</strong> <strong>Berger</strong> Strategy Consultants Marketing and distribution – Think local but act global Meeting consumer requirements
Study 23 Online shopping and <strong>market</strong>ing on the rise The trend <strong>to</strong>ward more sophisticated information networking is certain <strong>to</strong> spread <strong>to</strong> <strong>emerging</strong> and developing nations. These countries have seen the number of Internet users increase annually by almost 50%, from 80 million in 2000 <strong>to</strong> 1.2 billion in 2010. Projections anticipate 2.5 billion Internet users in <strong>emerging</strong> countries by 2020, almost three times as many as in more advanced nations. Mobile telephony highlights how <strong>emerging</strong> country populations rapidly take <strong>to</strong> network technologies. In most <strong>emerging</strong> countries, the majority of people are under 25, meaning that they grew up using cell phones. By 2020, it is anticipated that developing nations will have 6.5 billion cell phone users, compared <strong>to</strong> just 1.2 billion in industrial countries. In less than ten years' time, 84% of the world's population will own a mobile device. Social networking is also spreading quickly. By mid-2012, there were more than 43 million Facebook users in Africa, including 12 million in Egypt, 5.4 million in South Africa, 5.2 million in Nigeria, 4.5 million in Morocco, 3.8 million in Algeria, 3.2 million in Tunisia, 1.6 million in Kenya and 1.4 million in Ghana. Internet use in general is on the rise in the developing world. Numerous African network providers are currently competing for <strong>market</strong> share. Newspapers recently reported that one in four Kenyan residents now accesses the Internet at least once a week. 4 Communication technology can also transform how business is done. In Kenya, the "m-pesa" (the "m" stands for mobile and "pesa" is Swahili for "money") is a versatile way of paying by text message where there is no Internet access. "m-pesa" gives even the poorest people access <strong>to</strong> banking services. Fifteen million Kenyans make use of the system, which has been copied from Kabul <strong>to</strong> California. The World Bank estimates that financial transactions of the m-pesa type currently <strong>to</strong>p USD 7 billion. Mobile payment systems also allow administra<strong>to</strong>rs <strong>to</strong> track national budget expenditure, such as the funds allocated <strong>to</strong> districts or <strong>to</strong>wns. of income <strong>to</strong> this channel of consumption. A recent WorldPay study finds that Indians spend 36% of their disposable income purchasing products and services online. The Chinese spend slightly less, at 31% of disposable income, and Brazilians 27%. 5 Some 43% of all <strong>consumers</strong> in the Arab world buy online, and one in every three Internet users in these regions does so at least once a month. More than 60% of those buying online report that they use the Internet <strong>to</strong> research product features and prices before deciding what exactly <strong>to</strong> buy. The <strong>to</strong>p products sold online are games, software, electrical goods and clothing, just as in developed countries. The range of products and services offered online in developing countries is broad. In 2010, Iran launched its first online super<strong>market</strong>, Meydoonak.com. The site offers 2,500 grocery and household items at competitive prices. Homegrown Indian startups including fashionandyou.com, myntra.com, snapdeal.com, dealsandyou.com, yebhi.com and HomeShop 18 are introducing India's growing middle class <strong>to</strong> Western brands. And the growth of mobile device use in <strong>emerging</strong> <strong>market</strong>s such as China, India and South Africa is driving Estée Lauder's development of m-commerce sites, along <strong>with</strong> mobile- and tablet-friendly versions of its brand websites. <strong>How</strong> do the <strong>consumers</strong> themselves view these developments? A survey by WorldPay finds that half of all users see misappropriation of data and credit card fraud as the biggest obstacles <strong>to</strong> online shopping. 6 At the same time, websites are <strong>emerging</strong> where <strong>consumers</strong> share their information about product quality and prices. These websites are also valuable sources of information for consumer-savvy companies. By analyzing candid consumer opinions, platforms such as the Indian www.consumercomplaints.in can help consumer goods manufacturers improve their product and <strong>market</strong>ing strategies. Consumers in <strong>emerging</strong> <strong>market</strong>s are looking for greater choice, convenience and informed purchasing. More and more they are finding their needs met by online shopping. Perhaps surprisingly, in many <strong>emerging</strong> <strong>market</strong>s <strong>consumers</strong> allocate a high percentage 4) Germany's Süddeutsche Zeitung (2012) 5) WorldPay (2012) 6) Discover Digital Arabia (2012)