The shift to mcommerce in emerging economies
Rising disposable income and wider use of smartphones put emerging economies at the forefront of digital adoption
The popularity of ecommerce – accelerated by the pandemic – has seen many Western markets saturated by online brands. Now, with some of the world’s youngest populations and fastest-growing economies, many emerging markets are at the forefront of digital adoption.
With a smartphone penetration rate of just 44%, Brazil’s ecommerce sector has a staggering level of potential growth, while already being the second-fastest growing in the world.
Hootsuite and We Are Social’s Global State of Digital in 2022 report shows that 92.1% of global internet users connect to the internet with a mobile phone, with 90.7% using a smartphone. Emerging markets South Africa (97.7%), Philippines (97.5%) and Brazil (97%) are in the top five countries with the largest number of users connected via their mobiles.
The research also shows that 57.5% of global internet users purchase a product or service online each week. Emerging markets Thailand (66.5%), Turkey (65.7%) and Mexico (65.3%) rank as the top three countries with the biggest percentage of weekly online purchases.
Mobile payments (for example, Apple Pay) are also on the rise in emerging markets, with Saudi Arabia (35.5%), Thailand (34.3%) and India (33.9%) all above the global average (25.5%) of internet users who use mobile payment services each month.
The reason for this? Competitively priced Android handsets make it far more cost-effective for consumers to obtain a mobile device than a desktop internet connection, explains Dimitris Maniatis, CEO of Upstream, a mobile marketing platform provider focused on emerging markets. Indeed, Android accounts for nearly 90% of the mobile market in South America, 85% across Africa and 82% of Asia.
In addition, the cost of building a physical network infrastructure involving copper and fibre optics is also prohibitively expensive in many emerging markets, especially in more remote regions.
“Mobile networks are quicker and less expensive to deploy, with issues such as speed and latency that previously held back mobile connections now much less intrusive than they once were,” says Maniatis.
Arunabh Madhur is regional VP and head of business EMEA at SHAREit Group, which enables people to send rich multimedia such as files, music, pictures and games to other devices without using Wi-Fi or mobile data consumption. He says that despite the proliferation of smartphones and tablets, millions could be excluded from the benefits of digital payments and ecommerce. Therefore, it is in the interest of sellers and governments to find ways to include them.
“For mobile commerce to continue to grow, it’s increasingly important for brands to take into consideration data, design and how consumers behave,” he explains. “With this knowledge, mcommerce helps brands to break into emerging economies, alongside established brands that aim to expand their footprint.”
That said, how to reach these consumers via mobile can be a challenge for companies. But certain technologies make engaging with consumers via mobile easier and are helping to drive the growth of mobile-first commerce strategies in emerging markets. For example, rich communication services (RCS) are likely to play a larger role in emerging markets considering the popularity of RCS-capable Android devices.
RCS enables brands to engage with consumers through photos, videos, carousels and pop-up messaging. With greater accuracy for personalised ads than third-party cookies, RCS can support a wider range of actions for consumers. For instance, they can respond to messages, save events to their calendar, click to dial or share their location.
With Google actively promoting RCS, Juniper Research predicts that 3.8 billion people will subscribe to RCS services by 2026, up from 1.2 billion today.
“Combined with automated retargeting technology to push different and personalised, messages to consumers, depending on where they are in their purchase decision-making, RCS is a powerful way to get consumers’ attention and keep them engaged through the sales cycle. In Brazil alone, Upstream handles over 54 million RCS messages every month,” says Maniatis.
But despite the surge in smartphone adoption, basic handsets are still critical lifelines for billions of people. So can users of ‘dumb’ phones’ still benefit from mcommerce applications? The answer is yes, with mobile payments able to be accessed from devices thanks to SMS technology and ‘quick’ or ‘feature’ codes, as unstructured supplementary service data (USSD) is sometimes referred to. USSD allows real-time connection to the mobile network that can be used for browsing, banking and location-based services.
“USSD and SMS messaging create a way to provide the unbanked with mobile-phone-agnostic access to basic banking services on mobile phones, without any internet coverage, and without consuming data or call credit,” explains Ilyas Berrajâa, chief growth officer for global payments processing firm BPC in the Middle East and Africa.
Barrajaa adds that the ‘phygital’ model can also help users in emerging markets to access mobile payment services. Phygital describes the blend of physical and digital and the subsequent possibilities for brands to attract and retain customers. So, people use a mobile channel to access services but move to a network of agents when necessary. The Bank of Africa, for example, offers mobile payment services to support financial inclusion in countries with low banking.
In most economies, including emerging markets, the pandemic has accelerated the push of consumers towards digital commerce. Many consumers likely won’t return to making as many physical transactions as they did before the pandemic.
“For brands wanting to grow their presence in an emerging economy, the high, and growing, level of smartphone users combined with increasing amounts of disposable income, and demand for goods and services, makes mobile-first commerce strategies essential if they are going to make an impact,” says Maniatis.
Deploying a strategy that incorporates mobile marketing channels such as RCS will help ensure brands can engage with the booming number of potential consumers living in emerging markets.