Interview Stefan Merz, COO at PPRO, My 2020 Predictions

The growth of e-commerce

The e-commerce market is set for exponential growth – it is predicted that global e-commerce retail sales are set to hit $4.9 trillion by the year 2021- and the next 12 months will see this momentum continue. Its influence on the retail sector has been growing and growing, and over the next year e-commerce sales will account for 17.5% of retail sales worldwidea rise on 2019’s figures which show e-commerce sales accounted for 14.1% of retail sale worldwide. Online sales have enjoyed a consistent growth leading up to 2019 too – in 2016 they amounted to 11.6% of retail sales worldwide, while in 2017 this figure was 12.9% and in the year 2018, they accounted for 14.3%.

Another major factor contributing to e-commerce’s growth is the rise of emerging markets. India, China, Brazil and Russia, to name a few, are experiencing growing economies and their people enjoying greater disposable incomes. It is estimated that three billion new online shoppers will arise from these emerging markets and have access to the internet by 2022, equating to many new internet-based customers.

The push to create a mobile “store for one” will accelerate

Merchants will certainly have a greater focus on removing friction in the mobile phone payment experience next year. Any merchant must make the shift to mobile first customer journeys, as it will be the prime device moving forward – or they risk falling by the wayside. Slick mobile customer journeys are now more important than ever to grab the attention of potential customers, particularly at the point of conversion. Making sure the consumers’ preferred payment methods are offered is critical to offering them a personalised experience.

A major contributing factor to the rise of mobile commerce is that Generation Z (those born between 1996 and 2010) scarcely know a life without technology. They are now entering workplaces and earning their own incomes. In turn, they are reshaping the e-commerce market: in fact, this generation’s spending power currently stands at around $44 billion, but this figure will only continue to grow.

Asian and African markets rising to the fore

Next year the Asian market will experience a huge growth in e-commerce. A key contributing factor is the growing number of internet users on the continent  – in Taiwan for example, there are 20% more internet users compared to two years ago. This is opening up the market for more and more merchants to grow their customer bases. Secondly, the region’s economy is being driven by an emerging middle-class – over the next five years, 88% of the growth in the global middle-class will come from Asia. Every month, millions of people in Asia climb out of poverty into the middle-class, giving them greater spending power.

Like Asia, Africa is emerging as a hotbed of opportunity. In Ethiopia for example, which has a population of 113 million,  the middle-class will boom to 9.6 million people – a growth of more than 1,200%.  Africans, largely unburdened by a history of legacy banking and card use, have embraced new mobile technology to purchase goods from overseas. The region loves mobile and could reasonably be declared ahead of the worldwide curve when it comes to mobile internet: research has identified 444 million African mobile subscribers and nearly 300 million more are expected to join networks in the next few years. Many in Africa now shop online, usually via smartphone, and an important consequence of this has been the development of e-wallets. These are usually administered via mobile phone accounts, i.e. the user opens a mobile account, regularly tops it up with cash and then uses the balance to buy goods and services online, send money to relatives, etc.

This has removed many of the previous barriers to e-commerce and is fuelling growth that mirrors the early days of the dotcom boom in more developed regions, offering comparable opportunities. With the added influence of a rapidly-growing and youthful middle-class, this presents a major opportunity for merchants to tap into this diverse and strengthening market. In fact, the African Development Bank estimates there will be 56 million middle-class households with disposable incomes of nearly $680 billion, by the end of 2020.