Marketplaces: The Evolving Landscape — Part 1 of 2

Portfolio Marketing Manager

 

In Part 1 of a 2-part blog on marketplaces, Zac reviews the current global eCommerce Landscape

Global eCommerce is exploding. Total online retail sales will almost double in next four to five years and will represent 12.5% of total retail sales in 2020, compared to 7.5% of total retail sales today.

This phenomenal growth is attracting vast numbers of online retailers. There are already millions of online retailers across the globe. Of the $3.5 trillion total volume expected by 2020, marketplaces are expected to own almost 40%.

New marketplaces

While the well-known online marketplaces such as Alibaba, Amazon and eBay will maintain their dominance, new regions and platforms will appear as internet usage grows in emerging markets.

Indeed, well-known brick and mortar retailers such as Sears, NewEgg and WalMart are looking to take advantage of the growth opportunity. WalMart recently announced their purchase of Jet.com for $3.3 billion.

Emerging regions have a huge potential upside for the growth in online marketplaces. For example, India has only 34.8% internet penetration in a total population of 1.3 billion, meaning there’s hundreds of millions of potential consumers waiting for connectivity.  Two of the top 10 most trafficked sites in India are marketplaces: Amazon and Flipkart.

Sanjeev Aggarwal of Helion Venture Partners states “India never had really modern retail, so the leapfrog that will happen [into eCommerce] is quite compelling…this is day one of India’s consumption going digital.”

While it’s difficult to know which players will dominate, brands should keep their eye on trends. The challenge, with so many new marketplaces coming onto the scene, is knowing what approach to take. We recommend brands look at web traffic to monitor big players in all regions and identify where sales are occurring. Brands can also track developments in counterfeit sales through complaint calls to their customer service centers that often signal a spike in fraudulent activity via a new marketplace.

Growth regions

Asia has long enjoyed a deserved reputation as a region with huge online growth potential, a $1.4 trillion market is predicted by 2020. China and India are the fastest-growing eCommerce markets in the world. Today, eCommerce  in China is 16.4% percent of total retail sales compared to a worldwide average of 7%.

There are 80 million internet users in Russia with a predicted growth of over 50% in the next five years when revenue is expected to reach over $50 billion in 2020. China has a huge influence on the eCommerce landscape of Russia. The top eCommerce site in Russia is Alibaba with over double the volume of Russia’s Yanex, the next largest site. In fact over 70% of all cross-border eCommerce that flows into Russia comes from China. Over 1 million packages are imported on peak days! Popular categories of goods Russians purchase from China include clothing, children’s items and mobile phones. These are growing at double digit rates.

An overlooked emerging market is Africa. It will have 100% growth in the next five years. Revenue is expected to grow to over $35 billion in 2020 from $18.7 billion this year. Nigeria leads when it comes to online shopping, where 65% of online users shop online.  Mobile shopping is important in Africa as consumers become more comfortable shopping via mobile devices.

In Part 2 of this blog Nancy Merritt will examine emerging  trends, enforcement actions and best practices.

To access a recording of a recent webinar where this topic is discussed in more detail click here.

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With more than 13 years’ experience in the domain industry, Alison has managed all aspects of Corporate Domain Managem... More