The State of E-Commerce – 4 Key Markets

- Posted by to E-Commerce

As we all know, e-commerce is here to stay. The worldwide e-commerce retail sales are expected to reach $1.915 trillion this year, while manufacturers, wholesalers and distributors are expected to sell $780 billion worth of goods and services to other companies via the web in the U.S. alone. And the market keeps growing. The total e-commerce growth is expected to be more than 6% this year, with B2B e-commerce growing even faster than that.

Much of the growth is due to “channel-shifting” – buyers are moving away from ordering via phone or traditional offline channels to conduct more transactions online.  This gives the opportunity for companies to increase operational efficiency, automate functions and possibly even reach new markets. However, the global e-commerce space isn’t as integrated as one might think. Challenges are created by diverse regulatory environments, varying payment systems, and language barriers.

In this article, we take a look at the state of global e-commerce and the opportunities it provides in China, India, the U.S. and Europe.



All eyes on China

China surpassed the U.S. as the world largest e-commerce market in 2013. China’s aggregate online retail sales reached $622.5 billion USD in 2015 and the market is expected to reach $1.3 trillion by the end of 2020. As you can see from the numbers, China is no longer just a source of cheap imports, but a lucrative market itself. However, due to the unique online ecosystem of the country, expanding your e-commerce presence in the country could prove to be tricky.

The B2C market is dominated by large players such as (owned by Alibaba) and, which together share 82.8% of the market.  B2B market is slightly less concentrated, but the nine largest companies (Alibaba being the largest) still consist 54.4% of the total market. There is a general underlying tendency for Chinese buyers to be highly skeptical of purchasing from companies’ own websites and especially unknown brands find it almost impossible to generate sales from their own platforms. Companies looking to establish their e-commerce operations in China often need to go establish themselves on 3rd party platforms in order to generate reasonable traffic and sales. This has an obvious effect on companies’ marketing tactics as well. Google SEO and Adwords, as well as Facebook and Twitter ads, are completely useless since the access to these platforms is banned by the central government. SEO and advertising within the 3rd party e-commerce platforms and on Chinese search engines (Baidu, 360 and Sogou) can be effective, but on average, requires more resources than achieving similar results in the Western world.

Large brands have the greatest chance of success, while smaller independent players often face an undesirable cost of entry due to regulatory burdens and localization and advertising costs. However, the China pie is large and well thought China strategy for particular niche markets can lead to high revenues. Using the cross-border e-commerce model with Alipay payment integrations is the way forward for many.

Presenting India – the e-commerce giant of the future

India’s e-commerce market size, totaling at $16 billion USD, is currently dwarfed by the markets of U.S. and China.  But with a rapidly growing middle-class and increasing Internet penetration rate, the future of Indian e-commerce sector looks bright. Percentage of Internet users who shop online is expected to grow to 36% by 2020 with the total sales reaching $101.9 billion USD. Notably, 78% of shoppers are accessing e-commerce platforms with their mobile devices. As it is often the case in emerging economies, the development of cheap smartphones has raised a generation of users whose primary access to the Internet is via mobile devices, making a well-designed mobile experience crucial for success. Another notable difference in online buyer behavior between India and more developed economies is the primary choice of payment method. Credit cards, online banking and online wallets dominate in developed markets, whereas in India more than 60% of deliveries are paid cash on delivery.

Currently, the largest players on Indian retail e-commerce are Flipkart, Amazon and Snapdeal, but roughly a quarter of the market is taken by various other e-commerce sellers, and different verticals have their own key players. India, with its huge working age population and increasing mobile Internet penetration rate, is an e-commerce market of the future.

The U.S. is experiencing a rapid change from offline to online

World’s 2nd largest e-commerce market, the U.S., was worth $341.7 billion in 2015, growing 14.6% compared to the previous year. According to InternetRetailer, the total retail sales grew only 1.5% during that time period, meaning that e-commerce sales contributed to 60.4% of the total sales growth. The U.S. consumers are rapidly shifting from brick and mortar to online shopping and B2B e-commerce is following the trend as well. According to U.S. B2B online market is expected to grow to whopping $1.2 trillion by 2020.  Another notable trend is the increasing use of mobile devices. Roughly 30% of all retail e-commerce sales were made on a mobile device, although the use of desktop computers is still much more common than in the Asian markets.  The e-commerce ecosystem is more diversified than in China or India, but the majority of sales are still made by the 1000 largest Internet retailers. We expect the use of mobile to increase and e-commerce sellers should pay special attention to the mobile shopping experience and search visibility on mobile devices.

The EU is much more than just Germany and France

The total e-commerce market size in EU was $502.51 billion USD in 2015. Even though the EU can be considered as one economic area, e-commerce sellers have to consider each country as a separate market and focus time and resources on localization. On the other hand, the free movement of goods and services within the EU zone offers a relatively low barrier of entry when expanding your e-commerce presence from one EU country to another.

ecommerce growth

For foreign online sellers, the Nordic countries (Denmark, Finland, Sweden and Norway) are presenting an interesting opportunity, as buyers in these countries have shown great willingness to purchase goods across the border online. For example, in Finland and Denmark over 35% of all e-commerce transactions happened outside the countries’ borders in 2015. With an extremely high Internet penetration rate (94%) and high purchasing power, Nordic countries provide great opportunities for those who are willing to spend the necessary resources on localization and content optimization.

Are you interested in making a move to the Nordic market? We here at SEOSEON specialize helping businesses to grow their business and online presence in Danish, English, Finnish, Norwegian and Swedish speaking markets. Send us your questions, we’re happy to help!