The hottest hotspots in global ecommerce

With demand remaining subdued at home in the UK, there are four emerging international markets that retailers looking for growth should be investing in, says Jonathan Sheard, Vice President, Sales at ESW.

There is no shortage of stats to show how growth stalled in 2023. According to the Office for National Statistics, sales volumes fell by 2.8% in 2023 and were their lowest level since 2018.  For many retailers who did see growth, this was often at the cost of margin and profitability as they battled with higher input and supply chain costs, as Fitch Ratings reports.

With monetary and fiscal policy remaining a dead weight on the UK economy in 2024 in terms of inflation and taxation which will dampen consumer demand in retail, several other challenges will impact retailers into 2024.  These include rising cost pressures on their businesses, including National Living Wage and Business Rate rises; weakened consumer demand due to the ongoing squeeze on households through higher interest rate mortgage refixing and rising rent costs, wage growth rising against static tax brackets, and household debt servicing costs.

Retailers must look not only further ahead but further afield.  As domestic demand ebbs and flows, opportunities exist across the Middle East, India and Asia Pacific – which have been consistently popular markets for UK brands over the past two years. As Lumina Capital Advisers says, “The Middle East represents a rare global bright spot for UK companies.” International demand for British brands in 2023 was driven by cross-border shoppers in the UAE, where more than a third of shoppers (36%) purchased cross-border from the UK, followed by Australia (28%), South Africa (26%), India (26%) and Spain (23%).

ESW’s latest report, Growing International Ecommerce Markets, looks at emerging hot global markets for ecommerce, specifically Mexico, India, Japan and South Korea, all of which demonstrate a shift away from once predictable international markets for UK goods, such as  China and the US, neither of which featured in the top five markets purchasing from the UK in 2023.

Mexico

In Mexico, shoppers think highly of brands but prioritise price and discounts when they shop online.  Price and product availability are the main drivers of cross-border shopping.  80% of online shoppers made cross-border purchases in 2022.  Facebook and WhatsApp reach 93% of the population, while 68% plan to spend as much or more online in 2024.

Japan

Japan is the 4th largest ecommerce market in the world.  Consumers want online prices to be lower than they can find in-store and they expect shorter delivery times than the global average.  The Japanese ecommerce market has doubled in the last 9 years, and 61% of consumers plan to maintain online spending in 2024.

India

India is one of the largest ecommerce markets in the world with 125 million online shoppers.  The ecommerce market is expected to grow by 18.29% between now and 2026.  More than a quarter of shoppers make more than 72 online purchases per year (second only to China in APAC).

South Korea

Online retail is the largest sales channel in South Korea.  Consumers are likely to shop cross-border because they can get better prices from both neighbouring and Western countries.  60% of purchases are online with only 40% of purchases in-store.  In 2022, cross-border ecommerce reached $4.7billion with 66% of shoppers planning to spend as much or more online in 2024.

Engagement

To engage successfully with consumers in these markets, brands must navigate diverse cultures and consumer expectations. For instance, in Japan, customer service is based on ‘Omotenashi.’ It means focusing on details, anticipating needs and being hospitable without expecting anything in return. It manifests in politeness and promptness.

On the other hand, in the United States, customer service tends to be more direct and informal. The American customer service experience typically values efficiency and problem-solving, and encourages open communication between customer and service provider. A satisfied American customer is one who has had their issue promptly resolved and received a ‘customer is always right’ treatment.

To truly be successful, you must therefore localise the customer experience, working with partners that have the expertise to make shopping better, safer, simpler, faster and end-to-end. This should include hiring local customer service representatives so that your brand can legally recruit and hire workers in local markets. Brands should also make sure that customer service representatives are available during local business hours. Shoppers should not have to wait for a response because reps are working from distant time zones.

Growth, as they say, is where you find it. Fortunately, it is now easier to act on the opportunities; brands now have a wealth of external data to show where the opportunities are and they no longer have to go it alone. There are partners that can manage the entire order arc from compliance, data security, fraud protection, taxes, and tariffs to checkout, delivery, returns, customer service, and demand generation.

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