Emerging markets, led by strong growth in the UAE, Malaysia, Saudi Arabia and Thailand, represents a massive opportunity for premium brands as the Global Luxury Goods sector continues its steady decline halfway through 2016.
As retailers’ scavenger to create footprints in new markets, e-commerce continues to boom, driving and leading sales in regions of the world that have dense populations with lagging infrastructures.
The combined ecommerce markets in GCC countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – and Southeast Asia –Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – are expected to grow to $45 billion by 2020 from $9 billion last year in 2015.
Despite astronomical growth, consumers in both regions remain hesitant to process payments digitally, with over 60 percent of online orders paid with Cash on Delivery (COD). Additionally, lagging infrastructures pose sizable barriers to entry when considering delivery and fulfillment.
Below are four final mile hurdles retailers must account for before entering these markets:
1. The Middle East and customary traditions
Challenge: For brands that don’t consider socioeconomic factors such as Sharia Law, market penetration will remain cumbersome. In Saudi Arabia, most women will not answer the door to men unknown to them—making it difficult for male delivery drivers to complete COD transactions.
Solution: Fetchr, a Dubai-based app startup, remedies obstacles unique to places like Saudi Arabia, where COD, in combination with other cultural factors—such as restrictions on interactions between unrelated men and women—complicate final mile delivery. Fetchr’s solution has been to employ female package handlers, not only providing fulfillment solutions for retailers but also employment opportunities for women in the region. Being the first to employ female drivers in the Middle East, Fetchr currently offers solutions in the UAE, Bahrain and Saudi Arabia.
2. Credit Card processing in Southeast Asia
Challenge: Despite a relatively young ecommerce market in Southeast Asia, credit card ownership stands at less than 7 percent throughout the region. Additionally, more than 50 percent of the population is unbanked, making payments all together a daunting process.
Solution: Retailers must provide solutions that leverage AliPay and WeChat to better position themselves in an environment, where according to a Google, over 30% of the region’s population access internet via their smartphone. Retailers that have adopted this method, in China most recently, have decreased COD orders from more than 70% of total payments in 2008 to less than 21 percent during last year’s Singles’ Day mega sales.
3. Geography, geography, geography
Challenge: Over 70% of countries considered “hotspots” or areas of interest for retailers do not provide safe and/or secure final mile solutions. In Southeast Asia, specifically Indonesia and the Philippines, retailers are faced with complex geographies. In the Middle East, customers do not have established physical addresses, requiring country-specific logistics strategies.
Solution: Singapore cross boarder e-commerce provider Anchanto is now providing fulfillment technology and infrastructure to help globally recognized retailers like ASOS scale on demand. Since 2014 they have become the first in Southeast Asia to offer an end-to-end fulfillment platform that is technologically integrated – 100% effortless and seamless.
4. Understanding how consumers buy in emerging markets
Challenge: In emerging markets, 80% of consumers buy on marketplaces such as Lazada and MarkaVIP, which have tailored in-country customer service/support to account for everyday norms; product returns and payment hurdles. Moreover, these marketplaces have elevated customer service expectations for receiving products in a timely fashion. For Brands without an in-country team or strategy, the results can be disastrous.
Solution: Elliot, our Omnichannel software makes selling into emerging markets simple and seamless. With an array of solutions and tools built in, Elliot provides enablement for global brands looking to connect or better manage their channels of distribution.
In order for retailers to capture the opportunity presented by emerging markets, their go-to-market strategy must consider the following:
- Alignment with in-country marketplaces to increase initial market adoption
- Multiple forms of delivery and payment at checkout
- Optimizing websites for slower internet connection speeds
The future of e-commerce in the emerging markets continues to shine. But retailers must build trust with customers in the region in order to be successful. In order to do so, retailers need to adapt and modify their go-to-market strategies to account for pre-existing final mile hurdles.
Reach out today to get your emerging market assessment and go-to-market strategy guide.