Posts filed under ‘International Trends’

E-commerce – penetration and value of retail sales, across 5 countries

In Q4 ’15, India surpassed the US to become the #2 market in terms of Internet users behind China. However, e-commerce sales in India are nowhere near the value they generate in the U.S. or in China. So here’s a look at internet penetration, digital buyers and e-commerce sales of the top 5 countries by total retail Sales.

We’ve been interested in this topic for a few years now ; in this post almost two years ago we tried to gauge the penetration of e-commerce in four BRIC countries by comparing the proportion of their population that was active online vs. the proportion of population that actually shopped online. In today’s post, we’ve gone one step further and looked at the value of sales originating from those that shop online, i.e. the proportion of total retail sales value that is contributed through the e-commerce channel. For this purpose, the countries that we’ve chosen are those that are the top 5 in terms of total value of retail sales, namely USA, China, Japan, Germany and India, in decreasing order of sales value.

ECom_Contrib

[Since there’s a lot of information in this infographic, here’s how to read it :

Each of these five countries is linked to two sets of concentric circles, one in the top half of the chart and one in the bottom half of the chart. The set of concentric circles on the top had population numbers and that at the bottom has sales figures. Now for the details.

Let’s consider India as an example. The outermost circle in the top set of concentric circles for India tells us that our country has 925 mn people aged 14 years or more. The circle inside it shows that of these 925 mn people, 221 million or 24% are internet users. The innermost circle shows that only 82 Mn – or 9% of the 925 mn people – are digital shoppers and make online purchases of goods and services other than travel and events.

The bottom circle linked to each country shows the total value of retail sales and the proportion that is conducted via e-commerce. For instance, total retail sales in India are estimated at 818 Bn USD, and that conducted over e-commerce is just 14 Bn USD, or 1.7% of the total.]

So in spite of all the hype around this channel and the huge spend on advertising by the e-commerce players, a mere 9 % of our population shops online, and these purchases account for only 1% of total retail sales. Why only 1% ? Either due to a lower frequency of shopping online vs. visiting a retail store and / or due to a lower value of goods being purchased online. The latter seems unlikely since a large proportion of online sales are for mobile phones and accessories, followed by apparel and footwear, so it must be the low frequency to blame. Two big obstacles for e-commerce to surmount are now clear – the low penetration of online shopping amongst internet users, and the low frequency of online shopping among those that do shop online.

On to our neighbour China. While 56% of their total population is online, over half of these make purchases online. No wonder that sales through the e-commerce channel are 15.9% of total retail sales in China, as the bottom circle shows.

Surprisingly, though the US has a far greater proportion of population that makes purchases online ( 65% of its total population buys through e-commerce), these account for only 7.1% of total retail sales. Wonder whether it’s the ugly frequency problem rearing its head again, or whether it’s due to low unit value of goods purchased.

  • Ravindra Ramavath
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July 25, 2016 at 11:16 am Leave a comment

No country for young men

[Editor’s note : Coincidentally, two friends brought up the topic of the ageing of Asia recently. One gave the link to a World Affairs Journal blogpost on his facebook page, and another wrote about the ageing of Japan on his own blog after a visit to that country. This post is a reproduction of the latter (read it here) and is being run on the Escape Velocity blog with the author’s permission.]

elderly_japanese1

Not that long ago, Japan was the cynosure of the world’s eyes – anxiously watched by the developed world, enviously admired by the developing.  It was, by all accounts, the center of technology innovation and hi-tech manufacturing prowess.  A whole cottage industry developed around Japan watching, and incorporation of Japanese principles into management.  What a difference a couple of decades makes!  At a conference the other day, someone asked a speaker “Is Japan the future of Europe?” That tone in his voice?  Closer to dread than envy.

The stagnation of the Japanese economy over the last twenty years is now a much discussed topic.  The demographic challenges of the country are also well known as one of the fundamental drivers behind the malaise.  I was as aware of the statistics as the next guy when I went for my first visit to Japan recently.  From the moment the plane landed in Osaka, though, the reality of the situation hit me as if for the first time.

If demographics is destiny, Japan is headed down a road to oldtown.  Let’s look at the statistics first.  In 2011, 23% of the population was 65 years or older.  By 2050, that proportion is expected to grow to 40%!  Two our of every five people would be over 65! The very young, i.e. less than 15 years old population is only 13%, the lowest of major countries.  And it is going down, not up.  By 2050, this proportion is expected to be only 9%.  The population pyramid of the country, which shows the distribution by age group, has been tagged by some as going from Pyramid to Kite.

japan's age distribution

This isn’t all with their demographic trouble either.  Apart from the distribution by age getting worse, the overall population of Japan, for all practical purposes, has peaked and has now started to shrink.  The population today is exactly the same as it was in 2001.

Now as I said, some of this was known to me, in broad brush-strokes if not in this detail.  But seeing it in person is a whole other thing.

Osaka is the commercial capital of Japan.  I have never been to Tokyo and I guess I was expecting the sparkling sights and bright neon lights of the capital.  The first impression Osaka makes though is not nearly as spectacular.  There are the obligatory tall buildings and well developed roads, but it all seemed just a little run down.  The hanging electrical wires, the mildly unsavory back alleys and the generally well aged buildings were my first clue that this wasn’t going to be the Japan I expected to see.

The more I looked, the clearer the images got.  This is not a country for young men (or women).  Most everyone around seems just a tad older than expected.  I took the subway a few times during my stay, and by my count, I saw no more than three kids over all my hours of subway travel.  Clearly, there aren’t enough children in this country.

It isn’t uncommon of course, for high income economies to have low birth rates.  Much of Europe is a case in point.  The way most countries end up solving that problem, is through more open immigration.  Invite more … let’s say fertile, citizens from developing countries, and you solve two problems at the same time – those of getting enough labour force for all the work of running a country, and of making enough babies to have a country in the future.  On this front, Japan seems maddeningly closed minded.

This is not a country that is very foreigner friendly.  I don’t mean the people are rude to foreigners.  Far from it.  In fact, I found the Japanese to be among the warmest, most helpful people I have ever encountered.  But somehow, the culture as a whole seems too … self-sufficient.  Too internally focused.  Closed.  All signage in the city are in Japanese.  Or almost all, at any rate.  If you don’t know the script, and have undertaken a foolhardy venture to explore the city by yourself, by subway, well – good luck to you!

I stand in line at a station along with many other patient locals, waiting for my turn at the ticket machine.  I reach there finally, only to find that every single sign on the machine is in Japanese.  I can’t make out what buttons I am supposed to press to make a darn ticket pop out!  I exit in frustration, walk up to the ticket booth attendant to ask for his help.  Only to realize that he doesn’t know a word of English either.  We do some sign language, I show him the ticket machine, say the word ‘English’ many times, and he finally gets it.  He directs to another machine on the side.  This one does have English sub-titles.  There you go!  I am sure I am on my way now.

Except of course, I am not.  Turns out, the machine doesn’t accept cards (or doesn’t accept international cards, not sure which).  It needs currency.  And I don’t have any Yen on me, having left the hotel confident in the ability of plastic to get me around the city.  But what is it I see there?  An ATM!  That should do the trick.  We are back to the patient line standing business now.  Get to the ATM finally, to discover … yup, all Japanese.  Try to figure this guy out.  A helpful old (they are mostly old) gentleman recognizes my problem and signs me some help.  Not that it gets me far though, because the machine doesn’t accept international cards either, even though it prominently displays the Visa and Mastercard logos.  Finally, I find a currency exchange counter (also manned by a lady who doesn’t speak English), get hold of some Yen, and at long last get on the train.

Walking the street later that night looking for dinner, I am reminded again that this country would rather be just left alone.  I don’t think my vegetarianism has given me this much trouble in any country as it did in Japan.  The Japanese, bless them, have a well evolved cuisine of their own, and give no room for vegetarians in it.  And going with the general trend in other matters, there isn’t much in the name of international fare in the city either.

So yes, it can safely be said that this isn’t a country that is going to willingly or easily welcome a horde of immigrants to solve its aging problem.

My short Japanese adventure over, I am on my Japan Airlines flight back, flying to Bangkok where a familiar Jet Airways to Mumbai awaits.  My seat doesn’t want to recline, hard as I try.  I call the crew member.  An elderly Japanese lady arrives, recognizes the problem in one look, and nods knowingly.  She presses hard against the recliner lever while encouraging me to push back as hard as I can.  I do, and with a soft creak of protest, the seat gives up its verticality.  “It is a very old plane sir” offers the stewardess, smiling sweetly.

A few hours later, I am on Jet Airways, moving onward to Mumbai.  Some rows behind are what appear to be half a dozen screaming children, their noises melding into one another, till it is no longer clear whether their squeals are of protest, complaint, celebration or simply ticklishness.  We seem over-weight on our kids quota today.  Yes sir, we are flying back to India.

November 30, 2012 at 6:45 am Leave a comment

From the mouths of babes and sucklings – technology and toddlers

My five year old nephew was chatting with me during a journey once, bubbling over with curiosity and a million questions about everything. Instead of entertaining myself by warping his mind with made-up answers the way Calvin’s dad does (for examples, see this link), I tried to answer his questions as simply and logically as possible. However, reality is often stranger than fiction, and some answers related to geography and astronomy sounded far-fetched to him. So the young man turned his gimlet eyed gaze on me and warned me, “Are you really sure ? Don’t lie, ok. We can go home, open the laptop and check on googil too.” Once kids relied on older and wiser ones for information, now we’re redundant since there’s good ol’ googil.

Another young 3 year old – a friend’s son, gave me the next anecdote for this blogpost. He gets confused reading books because once he’s done reading the page he swipes his finger across to get to the next page – the way he’s used to doing with pics on the iphone; needless to say, that doesn’t work at all with a book and it leaves him confused, frustrated and cranky.

While on the topic of young ones and technology, there’s an interesting anecdote in this blogpost – as an aside, you should follow the link and read the whole post, interesting example of communication going awry due to incorrect assumptions. The comments on that post are also worth reading.

But I digress, the anecdote follows :

Setting, San Francisco, where some friends recently told me how their five year old went up to a framed picture in their living room and started pinching at it with his fingers, the exact same gestures one would use on an iPhone to zoom in and out of a picture. “Broken, broken” is all the five year old said after that disappointing experience.

How much and in how little time technology is changing the reading and viewing habits of this generation of toddlers ! Paraphrasing the headline of this Forbes article, does this change herald just the death of print or will it also eventually lead to the death of reading too ? I fear that it may be the latter. What’s your point of view ?

  • Zenobia Driver

November 28, 2012 at 3:59 pm Leave a comment

Moving with the times – Tag Heuer

I often wonder about the longevity of watches as a category and whether they will eventually suffer the same fate as the humble typewriter, either in a few years or a few decades. Two close friends of mine have already stopped wearing a watch on a regular basis – their logic is that they carry a phone all the time and can see the time on their phone. What’s worse – for the global watch industry, that is – they find the watch doubly redundant when at their desk in office where they can also see the time on their laptop.

Undoubtedly, the trend towards wearing a watch as an accessory will extend the category’s life-span, but for how long ? And does the watch industry have any other tricks up its sleeve or will it fall prey to marketing myopia in a decade or two ?

[Note : We’d mentioned marketing myopia once in an earlier post; the subject of this post is somewhat similar – an attempt made by a firm to adapt to a changing market, though in this case it’s early days yet and the market verdict is not  clear.

Marketing Myopia : The term refers to the short-sightedness that leads companies to focus on their own organisation and product – line rather than on customers’ needs and wants. It leads to reluctance to change, and a failure to adjust to a changing market environment.] 

 

In this context, I felt that the launch of the Tag Heuer Smartphones by the luxury watch brand was an interesting experiment (you can read articles about the launch here, here , here and here). Tag Heuer started retailing luxury mobile phones in India from 2008. It has since launched three such devices – first the Tag Heuer Meridiist and Link, and recently the Racer. The Tag Heuer Racer Smartphone (pics on extreme right in the image above) was the one launched a few months ago; in keeping with the Tag image, the phone looks top-end  – really sleek, it’s supposedly styled after race cars. Buyers can customize their phones’ cases in a variety of materials, from rose gold to titanium,  just as they would a TAG watch. They can even add Calfskin-leather trim, or a sprinkling of diamonds, for good measure.

One fly in the ointment could be the fact that while consumers buy a watch for a lifetime – or at least to last for many years, they tend to change their phones to the latest model fairly often; at the price tag of a Tag Smartphone, that’s a bit heavy on the pocket. Will be interesting to see how this pans out. Meanwhile, kudos to Tag for not burying their heads in the sand, trying to adapt to changing consumer habits and being bold enough to experiment. A good effort, for sure.

  • Zenobia Driver

October 31, 2012 at 9:00 am 5 comments

Update – Men’s grooming

Last week’s post (link here) described the influence of Bollywood on men’s fashion and grooming trends. This post from last Sunday’s issue of ‘Brunch’ from the Hindustan Times mentions some trends that were started Bollywood heroines.

Those that enjoyed reading the post on men’s grooming (link here) and growth in various categories of products and services, will also enjoy these articles (to read the articles, click here and here).

And to end this update, the latest metrosexual trend from the West, though we aren’t sure whether to believe this article or not – check it out for yourself by clicking on this link.

By,

Escape Velocity Team

April 13, 2012 at 7:54 am 2 comments

Mineral water, spring water, sparkling water and now…ENHANCED WATER

The bottled water business can be broadly divided into natural mineral water, pure spring water, purified water, sparkling water and enhanced water. The bottled water market in the western world is at a mature stage and the category is constantly innovating and evolving.

Globally, one of the newest and fastest-growing types of specialty water on the market is enhanced water, which is spring water that’s fortified with “healthy” ingredients such as oxygen, nutrients, herbs, vitamins, minerals, electrolytes and, in some cases, stimulants like ginseng and caffeine.

The creator and leader of this segment is Glacéau, a US based beverage-maker – it first introduced an electrolyte enhanced line of water called Smartwater in 1996, followed by Fruitwater in 1998 and Vitaminwater in 2000 in the US. The Glacéau line of waters was initially only introduced in the New York City area and only in 2002 did it gain popularity and started distribution across the United States. Over time, Fruitwater was phased out from the market and Vitaminwater is now their most popular product with multiple variants of flavors and nutrients.

It was the first to catch on to the health wave and introduced several variants each with its own benefits – and put this forth in the most eye-catching manner. It created different combinations for benefits such as Endurance, Energy, Focus, Revive, Power-C (vit C), Triple-X (triple antioxidants), Defense, etc. in vibrant colors, attractive packaging and fun and funny labeling.

In 2007, Coca-Cola bought over the company. Glacéau gave Coca-Cola an instant foothold in this fast-growing niche, while the brand benefited from Coca-Cola’s considerable distribution and marketing muscle.

I noticed it on my trip to the US this summer – there were Vitaminwater vending machines everywhere, everywhere one would traditionally find vending machines for snacks, confectionary and soda. Last when I was there in 2006, they were only available in specialty grocery stores, health stores and college campuses. Earlier it was promoted through vehicle marketing program, sampling program, banners & posters, and ‘Campus Ambassadors,’ a college outreach program but the new marketing campaigns include celebrities, hip-hop singers, NBA stars, popular graffiti artists, etc.

Given the increased weight & calorie-consciousness in the US, Vitaminwater also came out with Vitaminwater 10 variant – targeting the weight conscious with their 10 calorie offering (down from the original 50 calories) which was then replaced with Vitaminwater Zero in 2010.  Vitaminwater Zero sales in its first year of sales reached US $110.3 million.

In comparison to mature western markets, is the Indian market ready for enhanced water yet? The per capita bottled water consumption is still quite low – estimates vary from 0.5 liters to 5 liters a year as compared to the global average of 24 liters. However, the total annual bottled water consumption has risen rapidly in recent times – tripling between 1999 and 2004 – from about 1.5 billion liters to five billion liters. And currently the industry is growing at the rate of 45%. Although premium water constitutes only 10% of the bottled water market, gearing up for the uptrend in the market, Bisleri plans to introduce its range of flavored waters shortly. PepsiCo is also considering the possibility of introducing flavored water in the Indian market given the consumer’s increasing discomfort with carbonated drinks.

We shall wait and watch…

By,

Roshni Jhaveri

November 7, 2011 at 5:43 am 15 comments

One Chai Frappuccino, with whipped cream please …

On my trip to the US this summer, I noticed another new trend – the craze for Chai! This isn’t chai as we Indians know it, this is Chai – an evolution of tea in a coffee culture society. They have all the variants of coffee – latte, macchiato, frappuccino – but for tea.

So, you are standing in line to get your morning fix at a typical “coffee” shop (and I’m not just talking about Starbucks, I’m talking about all the smaller chains, local coffee shops, neighborhood bakeries) and you hear orders of Chai flying all about you. And in different varieties – “A small Chai latte mocha please”, “A large chai frappuccino, very little whipped cream”, “Chai macchiato in soy milk, no sugar”. And my first reaction was a gag reflex. I’m no tea connoisseur but tea with whipped cream! In soy milk! As a Frappuccino! With Mocha flavor! – I couldn’t digest.

BUT! Curiosity got the better of me and I ventured to try it one morning to see what the craze was about, whether this chai frappuccino was worth the hullaballoo it had created. My first sip, and I thought “what is this?”, second sip “this is interesting…”, third sip “Ya, I can taste the tea in it…” and by my fourth sip “I can get used to this…” and then on I was hooked!

I visited my aunt there and noticed she had switched from using tea leaves to using some Chai Latte pre-mix. And this is an aunt who is really fond of tea, I remember her fussing over taking back a particular brand of tea from India the last time she visited us.

I went grocery shopping there and what did I find? I found a whole range of ready-mixes for Chai Latte in multiple flavors (Vanilla, Spiced, Cardamom) by multiple brands.

So, all you tea aficionados out there – are you ready to try this?

By,

Roshni Jhaveri

July 25, 2011 at 4:31 am 9 comments

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