Developing Economies Drive E-Commerce Boom

Both Russia and India are among nations expected to put on e-commerce growth in the next few years as more consumers take to the internet with either cash or card.

Analysts have been busy plotting the trajectory of various economies over the next twelve months, and while financial modelling and the resulting projections are by no means foolproof, there are some trends taking shape.

Chief among these predictions points to a boom in e-commerce amongst developing nations.

Over the last three years the phenomenon has already been witnessed in China, where growth in digital markets is unrivalled and e-commerce businesses like Alibaba have had to continually scale upwards as a result.

Now, other nations are tipped to follow a similar curve as an increasing number of consumers take to the net with either cash or credit card.

Analysts from US investment bank Morgan Stanley estimates the market volume for online purchases in Russia will double in 2013, and is likely to reach nearly $40 billion by 2015. In 2012, that figure was just $12 billion.

Far smaller by comparison, the Indian e-commerce sector is currently estimated to be just $1.6 billion by Forrester Research, but that number is also expected to double in the next three years and perhaps even hit $15 billion by 2017.

The drivers of growth in both of these nations are the same – more people are using the internet to shop, and as they do so their confidence increases with the medium and the average spend per order increases. However in India’s case, the number of people that have not yet become ‘connected’ is far larger, so the question becomes a matter of how soon those people are likely to gain access to online shopping.

Other limitations with these models depend on the pace of growth and development of the infrastructure that enables e-commerce. Courier services, electronic payments and security all need to be developed further. A lack of good options in these areas has been holding both Russia and India back for some time. Particularly in India, the phenomenon known as ‘cash on delivery’ is actually the norm for many online retailers.

For international retailers eyeing new markets, this is all good news. For the nations themselves, the primary hope is that this very modern industry begins to create more jobs for locals at every level of industry.

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