January 20, 2014, 9:31 AM

Why online retailers may want to explore the East

China, Japan and South Korea rank high in e-commerce readiness, according to a new Forrester report that looks at such factors as shipping and technology infrastructure and disposable income to rank 55 countries on their e-commerce potential.

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E-retailers looking to grow their sales beyond U.S. borders might want to head East. After the U.S., China, Japan and South Korea round out the top four countries with the best e-commerce readiness index scores, according to Forrester Research Inc.

Forrester scored 55 countries and regions to assess e-commerce readiness for its report “Forrester Readiness Index: 2013 eCommerce Global Study.”  The study looks at factors including consumer payment behavior, shipping and technology infrastructure, disposable income and the size of online retail to rank countries’ e-commerce readiness.

China presents strong potential for online sales growth, Forrester says. The U.S. and China together comprise about one-third of total retail spending in the world.  The U.S. accounts for 19.4% of spending while China accounts for about 13.6%. However, more than 50% of U.S. consumers buy online compared to less than one-fifth of Chinese consumers.

China’s e-commerce potential lies in its massive population, nearly four times the size of the U.S., and the fact that Chinese consumers are turning to e-commerce in increasing numbers. “With 1.4 billion people, the nation’s retail opportunity is the second highest following the U.S.,” the Forrester study says. “As disposable income and population continue to grow in China, demand for goods will also continue to expand to compete with the U.S. as the largest retail consumer in the world. Depending on the success of the Chinese government in restructuring economic wealth policies in the coming years, China could be a serious contender for the most e-commerce-ready country.”

Japan, meanwhile, accounts for 7% of the world’s total retail sales, making it the third-largest retail market in the study, despite having a population of only about 127.6 million compared to about 313.9 million in the U.S.  Japanese shoppers are relatively wealthy, Forrester says, and the country shows a preference for durable goods. For example, about 53% of the world’s total retail sales are non-food sales. In Japan however, that figure is 71%. This, Forrester says, illustrates its high demand for durable goods, which can more easily be sold online than food-related items. “The country’s tech-savvy population, high retail sales per capita and high affinity for debit and credit card ownership demonstrates its consumption power and online presence,” the report, says. Japanese consumers own an average of 6.2 payment cards each, the highest per capita average in the world, Forrester says. 

Forrester says the top four ranking countries in the index with the exception of China have high Internet penetration rates, strong economies and have high or mid-ranking disposable income per household. South Korea ranks near the middle of the list for income per household, but it ranks third among the countries and regions studied for average number of debit and credit cards per capita, which Forrester says suggests a high willingness to spend.

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