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Digitally influenced spends in emerging markets to more than double by 2022: BCG
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Digitally influenced spending in emerging markets will more than double from $1.8 trillion (Rs 130.5 lakh crore) last year to $4 trillion (Rs 290 lakh crore) by 2022, amounting to about 50% of all retail spending in Asia, Latin America, and Africa, said a report by Boston Consulting Group (BCG).
The study is based on a survey of more than 15,000 urban internet users in Brazil, China, India, Indonesia, Kenya, Nigeria, Morocco, the Philippines, and South Africa.
For 2017, e-retail revenues in emerging markets rose to $800 billion, or 15% of all retail revenues in those markets. But that number is dwarfed by the $1.8 trillion worth of digitally influenced purchases made last year.
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China is leading emerging markets in internet usage, with 20% of its retail sales already coming from e-commerce.
The report says that e-commerce in emerging markets will grow from about 15% of all retail sales in 2017 to 20% in 2022. The online portion of retail in China already exceeds that of the United Kingdom (16%), the United States (13%), and Germany and France (11% each).
About 39% of the shoppers in China purchase online or are influenced digitally. India is at 14% after Brazil, which is at 34%, the report added.
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Social media is a big part of digital influence in emerging markets. In a survey by BCG’s Center for Customer Insights (CCI), 95% of Filipinos and 74% and 73%, respectively, of Kenyans and Moroccans say they sometimes use social media to guide their retail purchases. At 37%, Indian consumers are the least apt of all emerging-market consumers to use social media to guide them in making a retail purchase; if they are looking for an online source of information, internet users in India are much more inclined to go to a shopping website.
The report said that half of the population in emerging markets is now connected to the internet and, by 2022, nearly 900 million more emerging-market consumers will be online, versus just 80 million new internet users in developed markets.
The report was presented at the World Economic Forum on Tuesday.
According to the report, more than 90% of all internet newcomers during the next four years will be from emerging markets.
Smartphone penetration doubled in emerging markets between 2013 and 2017, from 22% to 44%, and smartphones are the preferred way for people in these markets to access the internet.
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“Emerging markets are on the brink of a major digital revolution. The share of digitally influenced retail in total retail spending will surge from 33% in 2017 to 47% by 2022. There are major differences across emerging markets, however—and in order to succeed in those markets, business-to-consumer companies will have to approach each one differently,” said Nimisha Jain, a BCG partner in New Delhi, who leads CCI in emerging markets.