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Digital Disruption in 2016-2020:
Where Is Growth Coming From – and Is That Where You Want to Be?
Dr. Kati SuominenFounder & CEO, NextradeGroup & TradeUpCapital Fund
Adjunct Fellow, Center for Strategic and International Studies (CSIS) 11 August 2016
eCommerce Day, Buenos [email protected]
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Ecommerce is still driven by only a handful of humanity…
7.4bn people
5.2bn mobile phones
3.2bn online
1.1bn high-speed
Internet
• Wealthy• Urban• Young• Male• Developed
countries
?
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Megatrend 1: Huge Growth in Internet Users
270m in LatAm
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More & More of LatAm Netizens =Digital Buyers
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Megatrend 2: Incomes Are Growing
Per capita income, 2016 and 2020
• 75% of consumption growth is from income growth
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Income Growth Internet Use, Consumption
LatAm 2016
LatAm 2020
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Strong Income Growth in LatAm 2016-2020
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Megatrend 3: More Low Income Online Shoppers – do you buy online?
Before
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Megatrend 3: More Low Income Online Shoppers
Now
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Ecommerce as % of LatAm Retail Growing
• UK: 14%• US: 8%• China: 13%• Brazil: 4%
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By 2020
• 270m new Internet users in LatAm, 3bn globally Most lower income
• LatAm shopper is wealthier by 10-15%
• More low-income Latin Americans shop online
How do you get at this massive market?
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Global Income “Pyramid”
1bn people<$1 / day
3bn people$1-$8 / day
2bn people$10-$60 / day
1bn people>$60 / day
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Global Income “Pyramid”
1bn people<$1 / day
3bn people$1-$8 / day
2bn people$10-$60 / day
1bn people>$60 / day
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Mobile Use Is on Fire
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Smartphone Usage Rates 30-50%
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Low-Income People Connect Online on Mobile
Go “Mobile First”
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Buy online to save time
Buy online to find best fit, save money
Know Your Customer & what drives them
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And Do Customer Analytics
Source: McKinsey.
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Know Where Your Customer IsSource: Esri data.
2016
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And where she is tomorrowSource: Esri data.
2020
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Cross-Border Ecommerce Grows Much Faster
Cross-border ecommerce growth = 5x domestic ecommerce growth in 2016-2020
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Digital Disruption in 2016-2020:
Where Is Growth Coming From – and Is That Where You Want to Be?
Dr. Kati SuominenFounder & CEO, NextradeGroup & TradeUpCapital Fund
Adjunct Fellow, Center for Strategic and International Studies (CSIS) 11 August 2016
eCommerce Day, Buenos [email protected]
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$
Legal and regulatory frameworks
Ecommerce strategies Ecommerce logistics
Online payments
ICT infrastructure and services
Ecommerce skills
Much has to go right in the “enabling environment”
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Ecommerce is still driven by only a handful of humanity…
Demographics
Geography Psychographics
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Ecommerce is still driven by only a handful of humanity…
Demographics
Geography Psychographics
Demographics
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Know Your Customer
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Internet is used more by some demographic groups
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32Source: UNCTAD
% of individuals purchasing products online, 2013
Most emerging market shoppers have not bought online
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…and only some companies sell online
% of companies with online sales
Typically these are: Larger, fast-growing, skill-intensive, export-oriented, urban
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Source: Author based on Eurostat.
Even most EU companies are offline
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Cross-Border Trade Is Growing
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Who’s Driving This? B2C Ecommerce Markets in 2015
Source: eMarketer.
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Emerging Markets Catching Up
% of people using the Internet
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Megatrend 2: Incomes Are Growing
Per capita income, 2016 and 2020
• 75% of consumption growth is from income growth
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China’s $24,000 Club
• Higher incomes: more discretionary income, purchases of luxury products
• 100 million by 2020
• Highly connected
• Buying ~$6.5T
• 53% of the millennials – who buy 40% more than older people of same incomes
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Womenomics
• Women drive 65-80% of all B2C purchasing
• Women have money to spend: incomes at $18T by 2018
• U.S. women make 61% more online purchases than men and make up 58% of online spending
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Asian women emerging as spenders –and breadwinners
Source: EIU.
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Huge Mass of Urban Consumers
• Want to reach 80% of consumers by 2020?
Be in 430 world markets = cities
• 410m people & 61% of world GDP by 2030 in 750 mega-cities
• 91% of growth in consumption comes from cities
• Large young & urban populations in Nigeria, China, India, Brazil, U.S.
• Most urban consumption still in China + North America: 315 cities make up 40% of consumption growth
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Biggest spenders: today’s millennials
Source: McKinsey Global Institute.
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Source: McKinsey Global Institute.
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Surprise! Rural ecommerce growing fast
• Rural consumers: 80m new online buyers in 2015 alone
• Rural buying growing with rise of smartphones: physical retail not near, while phones are
• India: more and more demand from 3,313 tier II & III cities & 1,233 rural hubs
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Cities
What Is Your Strategy?
New Spending Power
New connectivity
China $24K Club
B2C & B2B
Emerging markets of Africa, LACB2C, B2B
Emerging market women
B2C
Advanced economy
women and men B2C
Advanced economy
businessesB2B
Rural, BOPB2C, B2C
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LatAm Companies: Already in Crossborder
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LatAm Companies: Already in Crossborder
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LatAm Companies: Already in Crossborder
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Most consumption still in advanced economies
% of world GDP per capita, 2016 and 2020
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• B2B ecommerce at $6.7T by 2020: manufacturers and wholesalers getting online
• Smartphones accelerate this: already, 42% of B2B purchase researchers use a mobile device during the purchasing process
• >50% of B2B decision-makers in 2020: Millennials
B2B Is Exploding
Source: Google.
2012 2015
3x growth in B2B searches from mobiles
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In B2B too, Think of Millennials & Mobile: Shift in B2B Researcher Demographic
Source: Google.
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How Do People Buy (or Browse)
Source: Nielsen.
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What Sectors – and Where?
Source: Nielsen.