E-Commerce inToday’s Marketplace
What is E-commerce?
E-commerce refers to the buying and selling of goods and services online. It happens through smartphones, computers, tablets and other smart devices. Nowadays, people can buy and sell almost anything over the internet. Some businesses choose e-commerce over having a brick and mortar establishment However, other businesses choose to maintain both a physical and online shopping presence
E-commerce Dominance in the MarketplaceToday
Online shopping played an increasingly significant role in retail sales over the years In 1974, entrepreneur MichaelAdrich invented online shopping in the U K By 2019, a report noted that the proportion of British internet users shopping online was 82%, up from 53% 6 years earlier in 2008 The UK is the world’s third largest e commerce marketplace
E commerce sales surged in 2020 during the onset of the COVID 19 pandemic despite slowing economic activity This increase was due to social distancing measures that led many consumers to work from home and avoid indoor venues AUNCTAD study shows that e commerce’s share of global retail trade rose from 14% in 2019 to 17% in 2020 Updated UNCTAD figures indicate that this e commerce boom was sustained in 2021 By 2021, e commerce accounted for nearly 19 percent of retail sales worldwide Some forecasts report that e commerce will make up almost a quarter of total global retail sales by 2026
The greatest 2020 increases in online shopping happened in developing countries due to improved internet access. In the UnitedArab Emirates, the share of internet users who shopped online more than doubled from 27% in 2019 to 63% in 2020. In Uzbekistan, the share also more
than doubled, from 4% in 2018 to 11% in 2020 In Bahrain, the share tripled InThailand, more than half of internet users (56%) shopped online in 2020, from 40% a year prior The digital development boom in LatinAmerica during the COVID 19 pandemic led to unprecedented e commerce growth across the region Brazil andArgentina, LatinAmerican countries, are the world’s first and second fastest growing e commerce marketplaces
However, 800 million people in the world’s least developed countries are still offline This lack of access hampers e commerce growth
China is the world’s largest e commerce marketplace with online sales of $2 78 trillion In China, e commerce makes up 52% of all retail sales There was a slight decrease of 0 8% during the beginning of the COVID 19 pandemic in China, matching the overall economic slump Nonetheless, online shopping for agriculture products increased by 31% compared to 2019 Online shopping for fresh foods such as meat and vegetables grew by a staggering 70%.
The U.S., the world’s second largest e commerce marketplace, reaches annual online sales of $843 billion, around 19% of all national retail sales. In 2020 during the onset of COVID-19 pandemic, revenue from online shopping grew by a record-breaking 32%. The next year in 2021, the U.S. e-commerce marketplace remained stable, growing by 14%.This growth rate was on par with the 14% average growth rate in the five years leading up to the COVID-19 pandemic.
European countries make up 4 out of 10 of the world’s largest e commerce marketplaces These are the United Kingdom, Germany, France and Spain According to the 2021 European E Commerce Report, total European e commerce in 2020 grew by 10% to €757 billion, up from €690 billion in 2019 Some of the highest growth rates in global e commerce in 2020 were also seen in European countries such as Greece, up 18%, and Ireland, Hungary and Romania, up 15% each
Other notable e commerce marketplaces are Japan, South Korea and India Japan and South Korea are the leading m commerce (mobile commerce) marketplaces in the world Countries in Asia generally do the most online shopping via smartphones India is one of the world’s fastest growing e commerce marketplaces
Biggest E-commerce Companies around the World
The following are the world’s biggest e commerce companies ranked mostly by market cap Market cap is short for market capitalization, which is the value of a company that is traded on the stock market
Other factors that determine an e commerce company’s size are total revenue, Gross Merchandise Value (GMV), and local and international traffic
Amazon.com, Inc.
Amazon.com, Inc. is by far the world’s biggest e commerce company. Founded in 1994, Amazon’s revenue grows steadily year by year.Amazon grew through founder Jeff Bezos’ strategy of sacrificing short-term profits for long-term growth.Amazon’s success gave Bezos a net worth of over $137 billion, making him the world’s second-richest person.
Image Source: statista com
In 2020,Amazon delivered record breaking revenue growth, leading to an 84% increase in profit Its annual revenue grew by 38% to $386 billion, an increase of over $100 billion This increase in revenue was part of the increase in online shopping trend observed in the global e commerce marketplace during the beginning of the COVID 19 pandemic
The next year in 2021,Amazon’s revenue growth remained stable, maintaining its pre pandemic rate of about 20%, an increase of about $80 billion This allowed it to reach an annual revenue of nearly $470 billion, the highest in the e commerce space As of 2022,Amazon’s daily revenue is about $638 million Most of its revenue comes from the United States, with other important markets being Japan, the United Kingdom and Germany In May 2022,Amazon had about 2 4 billion combined desktop and mobile visits, making it the most visited e commerce platform in the United States
Amazon’s current marketplace capitalization stands at a whopping $1 16 trillion This market cap makes it the most valuable e commerce company in the world Amazon is also the fifth most valuable company in the world
Amazon’s gross merchandise value (GMV) reached $600 million in 2021, more than doubling in three years from $277 billion in 2018. Gross merchandise value (GMV) is the total value of merchandise sold over a period of time.
Alibaba Group Holding Limited
Also known asAlibaba,Alibaba Group Holding Limited is a Chinese multinational e commerce company that was founded in 1999
Jack Ma, the founder ofAlibaba, is now one of China’s richest people Ma had the classic rags to riches story He had been rejected from more than 30 jobs and started a successful website making business with his wife and a friend that grew into theAlibaba Group Ma’s innovative approach at the helm ofAlibaba ensured the company’s success As of September 2022,Alibaba has a market capitalization of more than $200 billion
Alibaba is the largest e commerce retailer in the world in terms of gross merchandise value (GMV) Its 2021 GMV was a staggering $1,239 billion Together,Alibaba andAmazon were responsible for more than half of the total amount of global sales from online shopping in 2021
Alibaba Group Holding Limited operates a range of subsidiaries that offer different services such as logistics networks, self operated retails chains, e commerce platforms and cloud services
Here is a list of the majorAlibaba operated businesses:
Taobao
Taobao is an e commerce marketplace which facilitates consumer to consumer (C2C) business In 2021, it was the eighth most visited website globally according to Alexa Rank It mainly caters to the consumers in the Chinese speaking regions of Mainland China, Hong Kong, Macau and Taiwan
Taobao alone is the biggest online marketplace in the world in terms of global merchandise value (GMV), reaching a total value of $711 billion worth of goods sold in 2021.
Tmall
Tmall, formerlyTaobao Mall, is a spin-off fromTaobao. LikeTaobao, it’s a Chinese-language website. UnlikeTaobao, it facilitates business-to-consumer (B2C) e-commerce.Tmall is the second biggest online shopping marketplace in the world in terms of global merchandise value (GMV), reaching a total value of $672 billion worth of goods sold in 2021.
It has over 500 million monthly active users It was the third most visited website globally in 2021 according toAlexa Rank Taobao,Tmall andAmazon were responsible for more than half (55%) of the total amount of global sales from online shopping in 2021
Alibaba Cloud
Alibaba Cloud provides cloud services
AliExpress
AliExpress is an e commerce platform that facilitates online shopping for international consumers who can buy goods and services from small businesses in China.
Lazada
Bought byAlibaba in 2016, Lazada was founded in 2012 by Maximilian Bittner with the backing of German incubator Rocket Internet. Headquartered in Singapore, Lazada is focused on the South EastAsian e-commerce marketplace. It’s the largest online shopping platform in South EastAsia based on average monthly web visits In 2021, Lazada achieved $21 billion in gross merchandise value
Youku
Youku is a Beijing based video hosting service
DingTalk
DingTalk is a China based communication and collaboration platform with over 100 million users
Cainiao Network
Cainiao is a Chinese logistics e commerce company.
JD com, Inc
Founded in 1998, JD com, also known as Jingdong, had nearly 570 million annual active customers at the end of 2021 JD com is one ofAlibaba’s main competitors in the Chinese e commerce marketplace JD com’s market cap stands at more than $109 billion, making it smaller thanAlibaba However, JD com’s 2021 revenue from online shopping, reaching more than $149 billion, was $40 billion more thanAlibaba’s
JD com sold $244 billion worth of merchandise in 2021, making it the fourth largest e commerce marketplace in terms of gross merchandise value (GMV)
JD com is heavily invested in new e commerce logistics technology like drones,AI and robotics Astatement on its website says, “We are at the forefront of robotics and automation ”
Other E Commerce Companies
Other big e commerce companies around the world include Rakuten, Meituan, Pinduoduo, eBay and Mercado Libre More examples of big e commerce companies are Reliance Digital, Prosus, the Otto Group, Walmart and Home Depot
Founded in 1997, Rakuten Ichiba is Japan’s largest e commerce marketplace Rakuten has had a partnership with Walmart since 2018. Beijing based Meituan is notable for its nearly 400,000 partnerships with Chinese local businesses. Pinduoduo is a “mobile only marketplace that connects millions of agricultural producers with consumers across China.”
Ebay was founded in California in 1995 and is the ninth-largest e-commerce company in the world in terms of revenue. It also had e-commerce’s fifth-largest gross merchandise value (GMV) in 2021, reaching $87 billion worth of online sales.
Mercado Libre is the largest e-commerce ecosystem in LatinAmerica. Reliance Digital, an online shopping platform, was launched in 2016 backed by Reliance Retail Limited, India’s biggest retailer with more than 12,000 stores
Effects of E-Commerce on Shopping Malls
The term ‘retail apocalypse’ refers to the phenomenon where consumers flee traditional brick and mortar stores in favor of online shopping The retail categories that have been affected most in the past decade include toys, home/bed/bath, office supplies, books, apparel and consumer electronics The so called retail apocalypse affected the kinds of stores that tend to be the primary occupants of shopping malls, leading to the closure of many
A 2017 report by asset management company Cohen & Steers confirmed the decline of the US retail industry Many national retailers including Sears, Macy’s and JC Penney also announced mass closures in 2017
The desire to limit in person interaction during the 2020 COVID 19 pandemic added to the pressure that many shopping malls were already facing Globally, many mall owners filed for bankruptcy protection due to decreased rent as many stores shut down The pandemic accelerated the ‘retail apocalypse’trend where consumers chose online shopping over shopping malls
Since then, many retailers have embraced a “click and mortar” model which refers to having both a physical and online shopping store
Online Buyers
Most online buyers tend to be younger, as young people are usually the earliest adopters of new technology Most online buyers are either millennials or Gen Z Generally, around 76% of U S adults shop online, 62% of whom do so regularly. Globally, most online buyers come from key e commerce markets such as the United States, China, the U.K, Japan, Germany, South Korea et cetera.
Many people prefer online shopping because of the convenience, large selection of products, cheaper prices, lack of sales pressure and clear information about goods and services.
Items that people tend to buy the most online include clothing items, shoes, electronics and technology products, toys, pet products and stationery.
Emerging e commerce markets in mobile first economies are pioneering global m commerce upward trends In 2021, 72 9% of all retail commerce was generated via m commerce, which stands for mobile commerce Online buyers in these emerging markets, many of them Asia Pacific countries, prefer the ease of their mobile devices