In 2017, total e-commerce sales worldwide amounted to 2.3 trillion US dollars; this is a 15% increase from the previous year and almost twice as much as in 2013. In 2021 it is expected that global e-commerce revenue will reach 4 trillion US dollars with an estimated CAGR of 10%. However, globally there is a strong contrast between companies who are leading in their respective categories and those lagging behind.
As of now, China’s Tmall is a leading E-commerce platform based on gross merchandise volume (GMV) but still only has a 14% share whereas Amazon accounts for 50% of the market share in the United States (US). The reasons for these huge differences are due to the fact that various factors are influencing the market growth in different countries.
Barriers in E-commerce
One of the main barriers to global e-commerce sales is language. The inability of consumers abroad to purchase products due to difficulty understanding foreign languages is one of the key issues that need to be addressed if international online shopping is going to become more popular over time.
Significant progress has been made, particularly with regard to translation software but there is still plenty of room for improvement before localizing platforms becomes a widely used strategy employed by E-commerce businesses looking to expand beyond their borders. Another important barrier, especially in emerging markets, are credit card ownership rates which are still relatively low in some countries making it difficult for certain population groups or consumers in general from buying products online.
Cultural differences are another important reason for the lack of success online shops experience in certain markets. Shopping online is often considered to be a convenient method of buying products or at least seen as an alternative to shopping in physical stores. However, in many cultures, it is not normal for people to buy clothes or shoes without trying them on first.
Another barrier limiting the international reach of E-commerce companies is the process involved in making payments online. Many consumers prefer having certain items shipped abroad rather than purchasing their products locally because they perceive shipping fees, if any, to be too expensive whereas others will always opt for local E-commerce businesses due to heavy import taxes that apply when importing products into their country which can sometimes double or triple the original price.
Other issues that need to be taken into consideration are cultural differences such as what products people prefer and also cultural preferences such as color preferences, the size of clothing people buy and trust levels for online shopping websites. It is important to consider these factors when marketing products abroad because if they do not appeal to the target market they will not make a purchase and instead choose another brand or retailer which does meet their expectations.
Nike found it difficult to expand its business due to major competitors like Adidas who dominate large emerging markets like China whereas Nike spent very little time trying to establish itself in those markets. This meant that Nike’s share of the Chinese athletic footwear market was only four per cent as opposed to Adidas’ 30%.
The difficulty for smaller companies to expand their reach globally especially with regards to reaching new customers are the same barriers that E-commerce big players have faced. However, E-commerce websites are now using new strategies & tools that help them enter new markets quickly.
Noombers, a Swedish E-commerce company launched recently and is an online platform where people can purchase unique Nordic products such as clothes, stationery and other decorative goods. The website makes it easy for consumers who prefer shopping online from home without having to go out because instead of just purchasing items they can also order food or book tickets for various events all within one website which eliminates the need to visit multiple sites every time a consumer wants to purchase something as per RemoteDBA.com.
Another reason for the lack of success experienced by international E-commerce websites in some markets is because people are not aware of certain brands or products, even though they may be highly successful in other regions around the world. One way for this problem to be fixed is through strategic marketing campaigns that will cause more people to become familiar with a company’s products and services, making them trust it enough to make purchases online instead of visiting local shops where they would pay double or triple if there were high import taxes.
Can translation tools help?
The benefit of using translation tools when entering new international markets has been well documented but another method that can be used alongside translation software is having an intelligent machine learning algorithm learn about what customers want while they browse certain websites. For example, if someone is browsing Nike’s website and are interested in purchasing a pair of shoes the website could recommend other products that customers who buy similar items end up purchasing such as socks or sports bras.
This method is used by Alibaba Group which also owns Aliexpress and Tmall and they use AI recommendations to offer special deals and discounts on products that customers may be interested in buying instead of spending time searching for them. Their data shows an increase in customer engagement which makes it easier for consumers to find what they want while still enjoying deals & offers from companies like Flipkart which has recently launched its own artificial intelligence-powered chatbot called ‘Flipkart Smartbuy’ which makes it easy for people to find and purchase new products from the website.
The e-commerce industry is rapidly growing across the world, with international companies scrambling to expand their reach. Websites such as Amazon, eBay and Alibaba have had a major impact on global markets due to their online presence that attracts customers worldwide.
In 2005, market research group Euromonitor predicted that e-commerce retail would only account for 0.7% of India’s total retail sales by 2020 but a recent report suggests it has reached 5% in 2018 alone due to an increase in internet users from 300 million in 2017 to 344 million expected this year according to Internet Live Stats This means that there are close to 20 million new online customers in just a year.
Decrease in sales
On the other hand, India is one of the countries where there has been a significant decrease in sales at traditional retail outlets due to a lack of physical shops and people preferring digital stores instead which could lead to problems for E-commerce companies because they need customers from offline stores also or else their numbers will constantly remain stagnant.
In fact, an article published by Mint states that “after years of rapid growth, e-commerce firms are bracing themselves for tougher times ahead as industry leaders cut prices to get more business in the festive season” and this means that they should seek alternative markets such as China where online shopping accounts for 26% of total retail spending according to