Nowadays, a popular terminology is often used to describe the interconnectivity of our world; It’s called the “Global village”. Despite the cultural differences this integrated world has given rise to a common lifestyle phenomenon all around the world, online shopping. People are shopping online globally to shop for their needs, from small things like mobile covers to expensive furniture. However, while the importance of ecommerce is realized around the world there is a significant difference in the dynamics of this industry in developed and developing countries.
Varying dominance around the world
On a global scale, ecommerce sales account for around 20% of retail sales, while for a developing country like Pakistan, the market share is only around 2%. But why is that so? Why are developing countries so behind in when it comes to eCommerce adoption? That is the question. Socioeconomic factors play a huge part in restricting the growth of the ecommerce industry in developing countries.
Lack of computer literacy: It is one major reason that limits the ecommerce industry in developing nations. With less number of people who can comprehend the benefits, usage, and functionalities of ecommerce stores the size of the ecommerce market automatically shrinks.
Lack of resources: Developing nations lack enough resources to ensure that the internet reaches all of their population. Villages and far-flung areas lack internet access prohibiting a large proportion of the population from using webstores. Even where the internet is available it’s expensive for many to use it regularly.
Slow delivery time: Developed countries have advanced logistic and road infrastructure with warehouses expanding throughout the country. This ensures that products are swiftly delivered to customers. With inadequate infrastructure, this is not true for developing countries resulting in increased delivery time and discouraging people from shopping online.
Customer behavior
Not just the proportion of people shopping online differ from developed countries to developing countries, but how they shop and what they shop also does.
Payment method: Most people in developed countries use credit cards or other electronic payment methods, while in developing countries, people are reluctant to use these methods. Cash on delivery is the most popular payment method in developing countries.
Buying frequency: In advanced economies, customers demonstrate a greater frequency of online shopping with an average person buying at least once or twice a week. This is much less the case in emerging markets where an average person shops online once a month.
Purchasing behavior: People in developing economies usually shop for low-cost products online with an average cart value of only $30. In comparison, the average cart value in developing countries is more than double at around $70. The reason for this is the lesser purchasing power, lack of trust in Webstores, and limited financing services available in developing countries.
Some other areas where the ecommerce industry differ
Ecommerce is a complex industry where many factors are at play. Some other areas where the ecommerce industry presents differences between the two types of countries are:
Online store capabilities: Driven by access to high-speed internet and lesser budgetary constraints, webstores in developed countries offer advanced capabilities; such as a more interactive user interface, one-click checkouts, and virtual tryouts.
Greater market penetration: Business owners give more recognition to the importance of operating an online store in developed countries. This is reflected in the fact that even smaller and local businesses have a webstore presence. In contrast, most local businesses don’t own e-stores in developing countries.
Regulation: Compare to emerging economies advanced nations have more established regulations to protect the rights of both online customers and businesses.
Conclusion
In developing countries or developed countries, the importance of ecommerce cannot be ignored. Preparing for the future means businesses must consider setting up their online store. And If you’re looking forward to tapping into this lucrative industry and increasing your profitability, then x2x team can help you set up a webstore and integrate it with your existing business solutions. With years of experience in the ecommerce industry, our team possesses expertise that can completely fulfill the gap between now and you going digital. Reach out to x2x team for any questions or a free demo.