E-commerce in emerging markets

E-commerce is a technology ‘megatrend’ that is expected to become more popular in the future. As it achieves higher penetration rates in developing countries, it will overcome obstacles to adoption like the need for high-speed data networks that are fast enough for smartphones and inventory and shipping costs. These obstacles are only overcome with better infrastructure and greater scale. As its popularity grows, the retail sector, online businesses, logistics and supply chains and other connected industries will need to adjust.

As the table below demonstrates, a larger share of the online population in many countries will be purchasing goods online in 2018 than now. Around 50% of the online population in emerging markets will shop online by 2018, not far from the average penetration of 63% in developed countries.

The adoption of e-commerce follows a path also exhibited by other technology markets like mobility, virtualization, and online music, which gained traction with higher penetration rates. Mobile phone usage drives the adoption of e-commerce, and with global smartphone penetration expected to hit 50% by early 2018, analysts believe e-commerce will follow suit.

Moreover, the network effect is a phenomenon whereby once a critical mass of consumers and/or corporations use a technology, their peers take notice of the technology’s increasing utility and also choose to use it will further drive the adoption of e-commerce worldwide. This was seen in the global smartphone market in recent years and the Internet in years prior.

This post first appeared on The World Bank Blog

Author: Roxanne Bauer is a consultant to the World Bank’s External and Corporate Relations, Operational Communications department (ECROC).

Image: A staff inputs data into a computer at the warehouse of Konga online shopping company in Ilupeju district in Nigeria’s commercial capital Lagos September 13, 2013.  REUTERS/Akintunde Akinleye