The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
Beyond North America and Europe: Catering to online shoppers throughout the globe
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Brazil: Consumer electronics and home appliances dominate. In Brazil, many of the top online retailers are big local multichannel retailers including those owned by B2W (Submarino, Americanas), CBD (Ponto Frio, Casas Bahia) as well as Magazine Luiza. The exception is MercadoLivre, part of the broader MercadoLibre network of sites.
Some categories have been far more successful in the shift to the online channel than others. Unlike in the U.S., for example, computer hardware and apparel are not driving online sales in Brazil—lower PC penetration has limited online sales of PC hardware while a perception of inconsistent sizing and strong offline retail shopping culture have prevented apparel from reaching any critical mass online.
Instead, two categories that dominate the online channel in Brazil today are consumer electronics and large home appliances. Online retailers hoping to target the online consumer in Brazil need to understand that installment payments are extremely common, both online and offline: Visa estimates that some half of all credit card purchases in the country are done through a series of installments. Additionally, Boleto Bancario, a local bank transfer service, is a popular online payment option for those consumers who do not own credit cards—a significant portion of the population.
United Arab Emirates: Big spenders, few online retailers. Many retailers’ forays into the Middle East start with the United Arab Emirates and with good reason. The World Bank rates the UAE as the third wealthiest country in the world in terms of gross domestic product per capita; the overwhelming majority of Emiratis speak English.
Online penetration is close to 60% and is topped in the region only by Israel. A 2007 MasterCard report put credit card penetration in the country at almost 60%. Yet e-commerce is still at the early stages in the UAE, largely because the traditional retail infrastructure is highly developed and shopping remains a popular leisure activity among locals and tourists alike, a phenomenon seen in other markets in the Gulf like Qatar as well as most notably in Hong Kong.
Those consumers who do shop online tend to shop cross-border given the dearth of local players in the market—indeed, even online giants like Apple and Dell do not operate e-commerce sites for the UAE, instead directing users to resellers. Companies that wish to tap into the wealthy, connected UAE online user will find themselves facing limited local online competition but a challenging market.
One underexplored area remains in multichannel functionality. The myriad retailers with an offline presence in the UAE would do well to extend their connection to the consumer online, as few today provide any local content aside from a store finder on their web sites.
Today’s online retailer is looking increasingly to international markets for growth, with countries beyond those in North America and Europe becoming more popular target markets. Indeed, the less developed supply side and rapid online growth rates in some of these areas can make them more attractive to online retailers than countries on the more traditional global expansion path.
For those retailers that are willing to put in the time and effort to tailor their offerings to different audiences and market to online users around the globe, the opportunity can be substantial.
Zia Daniell Wigder is a senior analyst at Forrester Research Inc., serving e-business and channel strategy professionals. She specializes in web globalization with a focus on both B2C and B2B e-business. Her blog is at http://blogs.forrester.com/zia_daniell_wigder.