As the e-commerce growth rate slows in maturing markets such as the UK and Germany, Brazil copes with an economic downturn, and the ecommerce landscape in China becomes increasingly competitive, forward-thinking cross-border sellers should look at what smaller markets such as Thailand and Colombia have to offer. Both of these countries are positioned for large ecommerce gains–if consumers’ product preferences are served and their security concerns are addressed.
Offshore merchants have the opportunity to earn an early-mover advantage with Colombian and Thai shoppers if they localise their offers, support local payment methods and cope with the changes young markets go through as they develop. In both markets, there are rising number of young shoppers who are comfortable buying on mobile devices and from offshore sellers.
Colombia’s consumers: young and mobile, seeking quality
Only 15% of Colombia’s population is over age 55; 42% is in the 25 to 54 age group, and ecommerce penetration tops 50% across that age group. These consumers are increasingly shopping on their smartphones and tablets, but they are also concerned about credit card security. Almost half of Colombian men and more than 65% of Colombian women surveyed said safety concerns discourage them from making online purchases. Merchants that promote their site’s payment security measures increase their chances of earning Colombian shoppers’ trust.
Despite Colombians’ security concerns, they make most of their online purchases with credit and debit cards. Visa holds 50% of the country’s credit card market, while MasterCard has a 40% share. Other preferred payment methods are bank transfers in various formats and e-wallet payments. Merchants that support preferred local card and bank transfer methods, especially on mobile platforms, will have an advantage.
Cross-border merchants may have another advantage with the middle- and upper-class Colombian shoppers who want high-quality goods, because the domestic ecommerce market is still developing. The top four product categories are electronics, fashion, entertainment (cinema and concert tickets) and travel. Many Colombians say they would prefer to shop with domestic merchants, but almost half are willing to make cross-border purchases online. The most popular offshore markets are the US, China, Mexico and neighbouring Brazil.
Altogether, Colombia’s ecommerce market was worth USD 2.5 billion in 2014, with year-over-year growth of 40%.
Thailand’s market: young, mobile, seeking deals and fast delivery
Thailand’s e-commerce market was smaller than Colombia’s in 2014—valued at $1 billion with 16% growth, but A.T. Kearney expects Thailand’s e-commerce value to grow at 25% year over year through at least 2017, with an ultimate potential value of $12 to $15 billion. Like Colombia, Thailand has a young population, with 47% between age 25 and 54. Nearly 1/3 of the Thai population is under 25, meaning there’s a large wave of future online consumers waiting to come of age.
Analysts say mobile will be the major driver in e-commerce growth. As of 2014, broadband landlines only reached 7% of Thai consumers, compared to the 51% with mobile broadband access, primarily with 3G and 4G service. Seventy-five percent of Thais with some form of internet access are already shopping online, and more than half of them make purchases on their phones. Merchants that offer lightweight, mobile-optimised shopping experiences will be in the best position to cater to Thai consumers. (It’s worth noting that Blackberry is more popular than iOS in Thailand, although Android is by far the most common mobile operating system.)
More than 30% of online buys are from offshore sellers, particularly in the categories of mobile apps, hotel reservations and toys and gifts. The two most popular e-commerce destinations in the country are Amazon and Apple. Overall, the leading ecommerce categories are electronics, appliances, food and drink, and fashion, and shoppers typically seek out competitive prices, sales, and items that can be delivered more quickly when bought online than if they were purchased in person.
While Thai shoppers have shown a preference for offshore merchants and marketplaces to serve niches that local merchants have yet to fill, they’re also markedly reluctant to pay by credit card. More than 60% of online shoppers surveyed said they don’t feel secure sharing their card information online, which may be one reason why bank transfers are the most popular online payment choice, ahead of cards. Still, card use is on the rise (Visa leads the market), and merchants who demonstrate their data-security commitment can assuage shoppers’ concerns about fraud.
Thailand and Colombia are not the only young and mobile ecommerce markets, but their growth potential and offshore shopping habits make them worth considering. Companies that offer highly secure payment options, mobile-optimised shopping experiences, and quality, selection or prices that outperform domestic players can effectively compete for business in these growing markets.
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Kirsty Tull is Director Marketing & Communications for BillPro (www.billpro.com), follow on twitter at @Billpropayments
