Ecommerce market: China rises ‒ US falls? 2016 analysis and future trends
Currently, these trends dominate the online market. Growth has been stable for years, and new technologies encourage the spread of online commerce solutions even in the underdeveloped regions.
In addition to global ecommerce, in our article we are also going to examine the most important markets one by one, and we will also look at what phenomena lie in the background.
We are going to talk about the following topics in detail:
- Global emarket is growing steadily
- American ecommerce is in excellent shape
- Expansion of the mobile industry boosts the ecommerce sector as well
- China dominates the Asia-Pacific Region
- The red dragon eats up online commerce
- The European online market brings half a trillion euros
- 3 countries generate two thirds
- What trends drive growth?
- Social networking and social proof
- Mobile revolution
- Biometric solutions spread
- The future is online
Global emarket is growing steadily
According to the most recent forecast of eMarketer, total turnover of the global ecommerce market may exceed 1.9 trillion dollars this year. According the Worldwide Retail Ecommerce Sales: The eMarketer Forecast for 2016 report, this way growth may reach even 23.7% compared to that of last year.
Although the pace of expansion is minimally slowing down according to the data, in case of such high numbers, that shouldn’t give cause for concerns for the e-merchants. The growth was 25.5% in 2015, and analysts still expect 18.7% for 2020.
What’s more interesting, is that the number of digital sales within the entire commerce sector represents an increasing proportion. Following the 8.7%, expected for this year, we will probably spend every tenth dollar through the internet in 2017, and in 2020 ecommerce will represent 14.6% within the entire turnover of global commerce.
American ecommerce is in excellent shape
Based on the most recent data, the American online commerce sector has been showing the biggest growth for the last few years. According to the report published by the U.S. Department of Commerce on 16 August, the turnover of online retail trade was 97.3 billion dollars, which represents an increase of 4.5% compared to the previous quarter. Then again, compared to the same period of 2015, the expansion is even much more significant, it’s 15.8%.
The data may sometimes be different since the Department of Commerce applies the category of “non-store sales” as well – the majority of which of course are sales realized through the web, and they also include the orders placed in email or on the phone, just as well the sales realized directly to customers by salesmen in person.
On the other hand, these latter methods can’t keep pace with ecommerce – although the unified category shows expansion, it was only 8.6% in the first quarter, while that of ecommerce was 15.2%.
The opinion of the experts is unanimous regarding that the present period is excellent for ecommerce. In particular those areas perform outstandingly well, which are connected in some way to the real estate market that’s currently showing an upward trend.
Americans spend more and more on home improvement, furniture and household devices, which is intensified by low fuel prices, high employment rate and the increase of average wages.
Expansion of the mobile industry boosts the ecommerce sector as well
According to Scot Wingo, executive chairman of ChannelAdvisor dealing with ecommerce counselling, the fact that the Americans use their mobile phones and generally their smart devices more and more for purchasing, also plays a role in the strengthening of online commerce.
Important: Users of mobile devices, even though they still bring a lower conversion rate than those browsing on desktop, actually purchase more and more on the internet each year. In 2014, purchases launched from mobile represented only 24.6% within the entire ecommerce, on the other hand, in 2015, this proportion was 29.7% already, which means that almost every third online purchase was realized on a mobile device.
China dominates the Asia-Pacific Region
The leading role in online commerce will definitely remain with the Far-East in the decade: digital sales are expected to bring more than 1 trillion dollars in the region by the end of the year, and the turnover may increase to even 2.725 trillion dollars by 2020.
Not only the rate of the turnover’s increase, but that of the expansion is tremendous, this year ecommerce of the region is expected to grow by 31.5%. And the region can produce all this growth while still having a lot of room for expansion: in South-East Asia for example the proportion of ecommerce is still remarkably low within the entire commerce, which is primarily due to the insufficiently developed online payment solutions and the poor logistic background system according to the experts.
The red dragon eats up online commerce
Most of this is already realized by China even today: they expect 899.09 billion dollars from online commerce this year.
They brought 42.8% of the total turnover of global ecommerce last year already, and they are expected to bring 47% of it this year – not including the numbers from Hong Kong. In contrast, the American online commerce sector, thought to be robust in itself, can almost be considered weak with its share of 22.2% last year and that of 20.7% of this year.
The increase is mainly due to the success of ecommerce sites like Alibaba, Tmall or JD.com, which started growing fast in the last few years taking advantage of the underdevelopment of the country’s traditional retail trade sector.
In addition to that, the growth of the middle class also plays a role in this, which implies that more and more people can afford to buy themselves smart phones which are available at fairly low prices in China anyway – thus the number of purchases launched from mobile is also increasing steeply.
[bctt tweet=”By 2020 China will account for almost two thirds of global ecommerce.” username=”aionhill”]
The European online market brings half a trillion euros
Although the growth is far from being homogeneous on the old continent, it still can be considered stable: according to the expectations of market analysts, the total European online commerce will bring 509.9 billion euros this year.
More than half of this turnover will be generated in Western Europe that already realized 525.9 billion euros on the internet last year – in contrast, Eastern Europe is lagging significantly behind, last year the region showed the lowest growth rate within the continent, and it generated an online turnover of only 24.5 billion euros.
Ecommerce Europe’s European B2C E-commerce report shows that the pace of growth has slowed down compared to that of last year regarding Europe as a whole. While an increase of 13.3% was registered in 2015, analysts expect a growth of only 12% for this year.
At present, approximately 296 million active online customers live in Europe, who spent an average of 1540 euros last year. Still, less than 43 percent of those older than 15 purchase online, and 16% of them do this outside their own country.
The proportion of those among the SMEs, who actively deal with ecommerce can’t be considered very good either: barely 16 percent of them offer their products and services on the internet, and less than half of them do this outside the market of their own countries as well. For this very reason, analysts say that the European online market is still quite far from the position where online merchants exploit its full potential.
3 countries generate two thirds of turnover
This is also reflected by the fact that two thirds of the entire European ecommerce is generated by three countries: the United Kingdom, Germany and France. Regarding the size of the B2C ecommerce market, the British played the leading role (they purchased more than 157 billion euros online), however, it’s quite uncertain what effect will Brexit have on their online market. (We wrote about this topic in detail in this article: What effects will Brexit have on ecommerce?) Although the German online customers are more numerous, their average spend is less.
The fastest growing market in Europe is clearly Ukraine, their online market is expected to expand by 35% compared to last year. They are followed by Turkey (34.9%) and Belgium (34.2%).
Despite the optimistic outlook, experts are far from being satisfied with the online market. Increase is hindered primarily by the already well-known problems: different regulations of the countries, taxes imposed on ecommerce and underdeveloped logistics infrastructure.
What trends drive growth?
Ecommerce by itself couldn’t have been able to conquer the world to such an extent:technological development, especially in the last decade, added a lot to online commerce gaining the trust of people and becoming available to them.
Social media and social proof
One of the trends encouraging the expansion of ecommerce is the spread of social networking sites. Before the appearance of social networks – even though the technology itself and the payment solutions were less developed as well – people trusted online purchasing much less.
This is understandable, since the new phenomenon took away a lot from the traditional process of purchasing – for example the personal contact and the opportunity for the customers of examining the product thoroughly and in person before they buy it.
On the other hand, today ecommerce is becoming more powerful thanks to the social networks. People see that their friends, family members and colleagues purchase on the internet, they follow their every move, even when and where they buy certain products, and furthermore, they share the best online stores and shopping experiences with each other. And all this, based on the principle of social proof, will make even the doubtful provide their personal and financial data to online merchants.
Mobile revolution
It hasn’t been a question for the last couple of years that mobile will soon rise above desktop: smart devices are becoming less and less expensive, and our internet usage habits are radically transforming. We browse the internet in the subway, while being stuck in a traffic jam, and even in the supermarket – and in addition to that, we more and more often decide to rather complete the purchase quickly and comfortably on the small screen, instead of sitting down in front of a desktop computer.
Of course, the catching up of technology was necessary to get to that. More and more ecommerce stores use responsive design solutions, user interfaces that are easily manageable even with the already well-known gestures, and payment solutions that are simpler compared to the desktop version.
Nevertheless, the conversion rate is still much lower among those browsing on mobiles, but it’s increasing. And thanks to the growth of the devices’ penetration, that’s not expected to change in the near future.
Biometric solutions spread
In 2015, the market of companies dealing with biometric identification amounted globally to 12.15 billion dollars, however, analysts prognosticate already 37.8 billion dollars for 2022.
Of course, you will be able to find the next-generation security solutions mostly in mobile devices, which will become more secure because of that. This already facilitates the increase of ecommerce even today, since people are much more willing to make payments through a device that protects their most important data not only with a simple password, but also with fingerprint identification.
Even though ecommerce still represents only a fragment of retail trade globally, and the proportion of merchants with online presence is surprisingly low, it’s beyond doubt that only those will stay alive in the long run who gain a safe foothold on the internet.
A greater proportion of the users trusting technology more and more and thus expecting more and more brick-and-mortar stores.
What’s certain is that a good quality, well operating ecommerce store can be a very profitable investment – and we can certainly declare, having examined the most recent commercial data, that this will remain like that in the near future as well.
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