The entire scenario of trade and commerce has been transformed in the last twenty years or so. The e-commerce industry is without a doubt the most lucrative business of the 21st century. It had long ago shifted from the reluctant offline experience to the easier and comfortable immersion. Here everything could be bought or sold just by clicking a button.
The global e-retail is in constant growth since 2014. In 2017, e-retail commerce sales worldwide amounted to $2.3 trillion and e-retail revenues are projected to grow to $4.88 trillion in 2021 in 2018 e-commerce grew by 18 percent globally.
Consumers worldwide spend nearly $3.46 trillion online in 2019, up from $2.93 trillion in 2018, according to the forecast from Internet Retailer, a Digital Commerce 360 brand. The expected 17.9% year-over-year growth in global web sales would be a slowdown from the 20.7% jump last year. However, global web sales are still growing faster than the more saturated US ecommerce market. The Internet Retailer projected an increase of 14.0% during the year.
Online shopping is growing so fast that the global online shopping market size is predicted to hit 4 trillion in 2020. And in the US alone, we’re expecting to have 300 million online shoppers in 2023. That’s 91% of the entire country’s population. So far, 69% of Americans have shopped online, and 25% of Americans shop online at least once per month. But Americans aren’t the only ones who shop online. People all over the world understand the benefits. According to Invesp, the countries with the leading average eCommerce revenue per shoppers are: USA ($1,804), UK ($1,629), Sweden ($1,446), France ($1,228), Germany ($1,064), Japan ($968), Spain ($849), China ($626), Russia ($396), and Brazil ($350).
Global retail sales through all channels are likely to hit $21.00 trillion by the end of the year, a 3.4% uptick from $20.31 trillion in 2018, according to Internet Retailer estimates. This would increase online’s share of total retail sales to 16.4%, and ecommerce would account for more than three-quarters of overall retail gains. The top 10 global e-commerce retailers are Amazon.com, JD.com, Suning Commerce Group, Apple, Walmart, Dell Technologies, Vipshop Holdings, Otto Group, Gome Electrical Appliances and Macy’s. Half of the top 10 are from the US, four are based in China and one in Germany.
The top 5 online stores global net sales amounted to more than $200 billion in 2018. Out of the top five world e-retailers ranked by online sales in 2018, three are from the US and two are from China. The biggest growth in 2018 is made by China’s Suning and Jd (EcommerceDB). Apple also noted a high growth of 22% in 2018 comparing to 2017. The Chinese e-retailers show significantly higher growth rates in 2018 compared to the US ones. China is poised to become the world’s top retail market in 2019, surpassing the US by more than $100 billion, according to eMarketer’s latest worldwide retail and e-commerce forecast. E-commerce exceeds 35% of China’s retail sales—the highest in the world.
First Story: Amazon
Amazon is based in Seattle, USA. Itwas started in the 1990s as online book store with aims to revolutionize the market place. Mr. Jeff Bezos, the CEO of Amazon, become the first centi-billionaire of the world with a net worth of $137.1 billion. He inexorably maintains focus through the years, along with some invaluable lessons for all those who are pursuing organizational excellence. Here are a few highlights:
- Focus on delivering value: Amazon, has been extremely focused on providing value to their customers. Since inception, their focus has been on offering our customers compelling value. They brought customers’ much more selection than was ever possible in a physical and presenting it in a valuable, easy-to-browse, and easy-to-search format in a store which is open 24/7/365.
- Long Term Relationship: Amazon’s emphasis on the long-term. They have made investment decisions in the light of long-term market leadership considerations rather than short-term profitability considerations or short-term reactions.
- Continuous Learning: Another critical reason why Amazon has rose-up to the top is their willingness to learn from their mistakes.
Second Story: Walmart
Walmart is world’s largest retailer founded by Mr. Sam Walton in 1962. Its products are manufactured in more than 70 countries and managing an average of $46.18 billion in inventory throughout its 11,695 stores, operating in 28 countries.
Reasons for success:
- Stay true to your purpose: Walmart has one simple goal “help people save money so they could live better.” Even today, helping its customers save money and that is central to everything Walmart does.
- Execute your purpose: Every employee of Walmart adheres to the vision of their founder, Sam Walton; “Each Walmart store must reflect the values of its consumers and support the vision they hold for their community.” Everyone at Walmart is coherent with this vision. This sheer resilience and the ability to execute its purpose is what distinguishes Walmart even now.
Third Story: Alibaba
Alibaba is hailed as “the Amazon of China” because of its dominance in the worlds’ most populous country. With entities almost everywhere, (movie production, music and movie streaming, online learning, micro-blogging, online maps, travel booking, mobile apps, and so much more), the Alibaba Group has shown the world that China is a force to be reckoned with.
Factors accountable for this incredible growth:
- Alibaba doesn’t charge a single penny for admission and only charge for their services in marketing and technical support. This contributes to a significant and robust market-share made up of loyal customers. Alibaba’s profits mainly come through keyword bidding and advertisements, which represent 55% of its total profits. Whereas 25% profit comes from the technical services based on big data of the consumer behavior.By eradicating intermediate fees and allowing sellers to register for free, Alibaba has been able to cultivate an online transaction habit among its customers.
- Alibaba has always excelled at identifying and seizing unique business opportunities and thus cleverly positioning itself as a leader in developing customer loyalty.
Fourth Story: JD.com
JD.com, Inc. also known as Jingdong and formerly called 360buy, was formed in 1988 by Mr. Richard Liu Qiangdong . It is supposed to be a major competitor to Alibaba. JD is in a strategic partnership with Walmart that was extended this year to further the integration of their resources, platforms, and supply chains within China. Mr. Liu Qiangdong, took risks that paid off heavily, mounting his startup JD.com into the ranks of Chinese e-commerce giants.
Motives behind success:
- Focus: The key reason for success is focus. For Mr. Liu, e-business is everything.
- Innovation: JD.com has established themselves at the helm of the newest technological innovations. Mr. Liu predictsthat soon his company would be 100% automated; i.e. there would be no human beings anymore, 100% operated by Artificial Intelligent and Robots.
Fifth Story :Booking Holdings
Booking Holdings Inc. was established in 1997 by Mr. Jay S. Walker in Stamford, Connecticut, USA. It is the only travel fare aggregators that has made it to this list dominated by retail giants. It operates websites in about 40 languages and 200 countries. In 2017, consumers booked 673.1 million room nights of accommodation, 73 million rental car days, and 6.9 million airplane tickets using websites owned by Booking Holdings.
- Market Reach:
Booking.com had a total of roughly 29 million reported listings, of which 23 million were listings in hotels, motels, and resorts and almost 6 million were listings in homes, apartments, and other unique places to stay.
- Customer Service:
Booking Holding’s reliable customer service and their competitive pricing with easy-to-use user interface draws repeat purchases.
According to the Pakistan Telecommunication Authority (PTA), there are 162 million mobile and 71 million 3G/4G subscribers in Pakistan. However, still e-commerce remains an untapped resource. It is evident that there is a dark side of e-commerce in Pakistan where customers are ranting over many issues continuously. There are many obstacles that lie in the way hindering a smooth running of this industry. The information technology industry needs to do more to ensure that e-commerce is propelled towards the right direction. Perhaps they can begin by laying down regulations and rules by which the industry players can operate.
There are many reasons for this, like:
- Lack of awareness amongst the masses
- Trust-deficit between the customers and owners of e-commerce brands.
- Government’s disregard to promote e-commerce
If we really wants to create ripples on world’s e-commerce scenario then government must promote and encourage entrepreneurs for the following reasons:
- To facilitate the people to get their desired goods/services at their door steps without hassle.
- To have products at the competitive prices.
- To have a source of employment generation.
- To have more exportable products that can earn foreign exchange.
- To boost country’s economic activities.
It is high time that the government promotes e-commerce for the benefit of the citizens, entrepreneurs and boosting the crippling economy. Above all, it is state’s responsibility to provide the opportunities to the citizen’s for tapping the emerging e-commerce market and utilize it to the optimum level in the globalized world.
Last year, Pakistan’s e-commerce sector performed better than ever before as digitalization and larger internet accessibility paved the way for almost 100% increase in sales of local and international merchants. According to a State Bank of Pakistan (SBP) report released in late October, the sales reached Rs40.1 billion in FY18 compared with Rs20.7 billion in FY17, an encouraging growth of 93.7%. The online market witnessed a boom in the outgoing year owing to the services sector, which now has a 60% contribution to the gross domestic product (GDP), increasing from the previous 52%.
This is the data which the central bank has compiled through digital transactions like credit/debit cards, interbank fund transfers (IBFT), prepaid cards and mobile wallets. However, market estimates that cash on delivery (COD) settlements are about 90% of the total volume and about 60% of the total value of B2C e-commerce. COD is hindering the growth of e-commerce in Pakistan, though it is a general phenomenon in most of the developing countries. Buyers do not trust sellers as products, which they receive, are usually not what they see on web portals. In this scenario, logistics centres can help resolve these issues.
The above obstacles present a huge challenge especially to start up e-commerce platforms. Dealers can easily work towards improving customer experience by carrying out extensive research. Borrowing ideas from successful e-commerce ventures can give them an overview on how to improve their businesses. With the arrival of multiple international brands like Fashoq and Alibaba, we are going to witness an era where e-commerce will be the most thriving industry in Pakistan.
[box type=”note” align=”” class=”” width=””]The author, Mr. Nazir Ahmed Shaikh, is a freelance columnist. He is an academician by profession and writes articles on diversified topics. Currently he is associated with SZABIST as Registrar and could be reached at firstname.lastname@example.org[/box]