In a new study released yesterday by A.T. Kearney’s Global Consumer Institute, it was confirmed once again that when it comes to global expansion, China is the emerging market where retailers are most focused. The 2012 Retail e-Commerce Index, “Online Retail: The New Frontier for International Expansion” assessed the e-commerce potential of 30 countries and found that when it came to testing brand presence via online (before investing in brick and mortar space), China, followed by Brazil, Russia, Chile and Mexico emerged as the most popular. The methodology behind A.T. Kearney’s rankings took into consideration many different factors (18 in all) across several areas, including digital and delivery infrastructure, barriers to investment entry and others relating directly to the retail process.
China, with its second-largest-in-the-world $23 billion online retail market, provides far and away the most lucrative opportunity of any country on this list. Some brands are discovering, however, that the reward China might offer does not justify the many risks it presents. This shying away from China is particularly prevalent among smaller brands with more limited financial resources. Instead of competing with well-heeled major corporations that can afford to take chances and lose a few million (or more) dealing with China’s inconsistent delivery standards and customer service challenges, boutique lines are opting to focus their digital efforts instead on less obvious, less catered to markets in South and Central America and eastern Europe.
Why these regions? Because, as the report is quick to point out, countries like Brazil, Russia and Mexico all come ready with high internet penetration that provides e-retailers with a built-in, captive customer base. Also, because cities in these countries (especially the second and third-tier cities that have little to no access to storefronts), are filled with people hungry to prove customer loyalty to companies that show them special attention.