Global retail e-commerce sales projected to hit $4 trillion in three years

Global retail e-commerce sales are projected to hit an all-time high of $4 trillion in three years, say researchers in a report published by Fletcher School at Tufts University and Global Enterprise Risk and Security, in collaboration with the Harvard Business Review (HBR) and the World Economic Forum.

According to emarketer, an online marketing news platform, retail e-commerce sales across the globe continued a steady rise in 2016, increasing 23.7 percent to $1.915 trillion. While digital purchases accounted for just a fraction (8.7 percent) of total retail sales and that share will increase to 14.6 percent by 2020, when sales will top $4 trillion.

China and the United States of America (USA) account for over 55 percent of global e-commerce, but digital consumption is growing around the world even in markets that still heavily operate on a cash-on-demand basis, like Nigeria and India. The major American e-commerce platforms Amazon and eBay are growing their share in overseas markets but they face stiff competition from companies vying for new online shoppers around the world.

The report highlighted that digital technology companies exceed expectations and lock enormous market value. For instance, as at July 6, stock prices for Apple, Alphabet, Microsoft, Amazon, and Facebook were the five most valuable companies in the world.

“The most valuable non-American company, 7th overall, was China’s e-commerce giant, Alibaba Group. With products that rely on network effects, these players enjoy economies of scale and dominant market share. They have deep resources for innovation with the ability to accelerate the penetration and adoption of digital products,” the report stated.

Niyi Yusuf, country manager of Accenture, a global technology and strategy firm in a recent interview with BusinessDay pointed to the enormous potentials resident in online retail. He said “during the Black Friday, Konga had a turnover of over N100 million in one day. So, that tells you about the size of the market. E-commerce is retailing enabled by technology.” This is only a segment of the retail market in Nigeria.

“We expect that the next chapter of emerging middle class growth will be in the retail sector. Fueled by a new generation of Nigerian consumers, wholesale and retail sales are already the third largest contributors to Nigeria’s GDP, contributing 16 percent to the total, albeit mostly through informal markets.

We estimate that between 2008 and 2020, there is a $40 billion growth opportunity in food and consumer goods in Nigeria, the highest of any African nation.

Despite the fact that Nigeria’s GDP per capita is $1,443, we believe that formal retail chains have a significant opportunity to capture the growth in this market” a McKinsey report said.

A deeper drill reveals that every square foot of Lagos, Nigeria’s largest city is put to use for buying and selling, cooking, building, and living. The crowded, energetic activity never stops. Purchases are made in stalled traffic and on congested street corners.

Locals can find products from food and clothing, to cell phones and tire irons right in the midst of the sprawling, bustling foot and car traffic.

The retail “market” in Nigeria is not contained. It is everywhere, contented a Nielsen report.

Lagos is home to a young and educated population. In fact, over 50 percent of Nigeria’s population is under 20 years of age. Nielsen survey results reveal that this young crowd is academically oriented and conscious about its personal appearance, with almost one third of their total household spending on education, clothing, and personal care.

Nigerians love entertainment as 86 percent of those surveyed own a colour television. Nigerians are increasingly getting connected through mobile phones. At 93 percent, penetration of mobile phones amongst respondents in Nigeria is higher than the African average.

To unlock potentials in the retail market, a number factor must align. BusinessDay’s analyses show that economic policies of Nigeria’s President Muhammadu Buhari are failing to spur growth and instead leading to a rise in inflation and unemployment. Nigeria’s misery index, which combines the unemployment rate and year-over-year growth in its consumer price index recently, spiked to over 21.3 levels, a blow to the president’s economic philosophy or Buharinomics.

Digital technologies are poised to change the future of work, automation, big data, and artificial intelligence enabled by the application of digital technologies could affect 50 percent of global economy.

“There is both anticipation and apprehension about what lies on the other side of the threshold of the ‘second machine age.’ More than 1 billion jobs and $14.6 trillion in wages are automatable by today’s technology, which could open the door to new ways to harness human energy as well as to displacing routine jobs and increasing social inequities,” the report stated.

STEPHEN ONYEKWELU