Global Ecommerce sales will reach $963 billion by 2013, growing at an annual rate of 19.4%, predicts Goldman Sachs in JP Morgan’s annual Nothing But Net: 2011 Internet Investment Guide on digital commerce.
The report surveyed over 1,000 internet users to get insight into consumer behaviour and Ecommerce trends. Underscoring the growing importance of international Ecommerce, the team broadened it global internet expertise and coverage with analyst contributions from China, Russia, Japan and Korea.
As China’s Population Comes Online, Ecommerce Surges
China’s internet population is currently 420M (31.2%), an increase of 24% Y/Y, according to China Internet Network Information Center (CNNIC). China’s internet penetration rate is still well below that of developed markets like the US, Japan, and Korea (over 70%).
In China, Ecommerce is seeing wider adoption, driven by convenience, lower-price alternatives to traditional retail, and improved trust & safety. Gross merchandise volume (GMV) is expected to reach Rmb723B in 2011, or just less than 4% of all retail sales.
Japan: Internet Shopping Dominates Non-store Retail
The report estimates the size of the Japanese B2C Ecommerce market to be ¥4.5T, which is approximately 3.3% of the entire domestic retail market, worth ¥135.0T.
In the core internet user demographic (i.e., 30-to-40 age group), Ecommerce makes up a significant proportion of individual retail activity. With around 60% market share.
Internet shopping also now dominates the non-store retail channel (e.g., phone, television and catalog mail order).
Russia Gets Social but Lack of Payment Options Slows Ecommerce
With over 53.3M internet users at the end of 2009, Russia is the second-largest internet market in Europe. While the internet penetration in Russia has already reached relatively high levels – 37.8% at the end of 2009 – growth prospects for Russian internet companies remain high according to the report.
The overall target audience of Russian-speaking potential internet users exceeds 250M. Internet penetration in Russia is likely to increase to by 47% in 2012 (66.5M).
Social networking is by far the main driver of online engagement in Russia, as the average Russian spends 6.6 out of 15 hours per visitor per month in social networks (twice what Germany spends proportionately). Russian online advertising industry will expand at to 29% CAGR during 2010-13 to reach $1.75B.
Over the past year two years we have seen an increase of cards used for retail purchases of goods and services in Russia; however, the share remains negligible compared to Europe’s and the US’s – only 3.8% of purchases made via cards in 2009. This was the main reason for a slow development and lukewarm monetization of the IVAS industry in Russia.
However the lack of availability of trusted payment methods is negatively affecting users’ willingness to pay for goods and services online. In Russia, as in many CIS countries, the lack of card infrastructure is substituted by various electronic money solutions, including SMS-based billing systems (where the majority of payments on social networks are still conducted) through SMS.
Mobile is in its infancy in Russia. Limited use of mobile internet is due to the lack of subsidies from mobile operators for smartphones. Look for this to change in 2011 as more affordable Korean and Chinese smartphones flow into the Russian market.
Kent Allen is an expert on internet marketing and multichannel commerce strategies. He directs research, consulting and customer education initiatives at The Research Trust. Mr. Allen is not a Pitney Bowes employee and shares his Ecommerce insights on this blog as a paid contributor.