How to reach emerging market consumers with new ... - Roland Berger

Study 23
Online shopping and marketing on the rise
The trend toward more sophisticated information networking is
certain to spread to emerging and developing nations. These
countries have seen the number of Internet users increase
annually by almost 50%, from 80 million in 2000 to 1.2 billion in
2010. Projections anticipate 2.5 billion Internet users in emerging
countries by 2020, almost three times as many as in more
advanced nations.
Mobile telephony highlights how emerging country populations
rapidly take to network technologies. In most emerging 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 to 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 market 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 to banking services. Fifteen million
Kenyans make use of the system, which has been copied from
Kabul to California. The World Bank estimates that financial
transactions of the m-pesa type currently top USD 7 billion. Mobile
payment systems also allow administrators to track national
budget expenditure, such as the funds allocated to districts or
towns.
of income to 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 consumers 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 to research product features and prices
before deciding what exactly to buy. The top 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 supermarket,
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 to Western brands. And the growth of
mobile device use in emerging markets such as China, India and
South Africa is driving Estée Lauder's development of m-commerce
sites, along with mobile- and tablet-friendly versions of its brand
websites.
How do the consumers 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 to online shopping. 6 At the same time, websites are
emerging where consumers 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 marketing
strategies.
Consumers in emerging markets 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 emerging markets consumers allocate a high percentage
4) Germany's Süddeutsche Zeitung (2012)
5) WorldPay (2012) 6) Discover Digital Arabia (2012)