‘…WINNING THE GLOBAL E-COMMERCE BOOM’ part three
by Porter Erisman
Published by St. Martin’s Press
eBook ISBN: 9781250088680
Copyright (c) 2017 by Porter Erisman
“In Chapter Six we focus on Southeast Asia, which, after India and China, offers the greatest potential for e-commerce to flourish. But not all the new e-commerce companies in emerging markets are working in their own backyard. Rocket Internet, the company pioneering e-commerce in Southeast Asia, and the one most aggressive in its efforts to do e-commerce business there, is based in, of all places, Berlin. Although Rocket is not nearly as well known as Amazon, eBay, or Alibaba, it has been rolling out an e-commerce empire that spreads well beyond Southeast Asia to Nigeria, Pakistan, and Mexico City. It’s known as a clone factory for starting small companies modeled on Amazon and Alibaba in more than one hundred countries and relentlessly building, through much trial and error, some of the leading e-commerce companies in their markets. But Rocket has also burned through cash and stirred controversy among investors, who are wondering when the payoff will come. Has Rocket pioneered a new model for the Internet as a “venture builder” that quickly and profitably adapts successful US business models for the developing world? Or has it simply led investors astray with salesmanship and a cynical business model based on copying the hard work of others? My interview with a senior Rocket executive provides some insights.
Indeed, e-commerce is booming in Southeast Asia. Indonesia has been the magnet for investors’ money: Tokopedia alone has reportedly raised nearly $250 million to take on Lazada, a company started by Berlin’s Rocket Internet. When I interviewed Tokopedia’s founder, he described how he expects his company to battle Lazada, whose new controlling shareholder is Alibaba. Can Tokopedia, the self-proclaimed “komodo in the jungle,” beat Alibaba’s crocodile in the Yangtze at its own game? And what will the lessons be for other Southeast Asian markets?
In Chapter Seven we travel to Latin America, where e-commerce is beginning to take off after a somewhat slow start. Some of the early pioneers of Mercado Libre, the e-commerce leader in the region, have interesting ideas about why e-commerce expansion in Latin America has trailed growth in China—and why that may be about to change. In Mexico City, executives at Linio, Mercado Libre’s Rocket-backed challenger, think they are poised to win the market in Latin America.
In Chapter Eight we travel to e-commerce’s final frontier, Africa. There we meet Africa’s largest homegrown e-commerce company, Konga.com, based in Lagos, Nigeria. One of the most formidable business assets of Nigeria, Africa’s most populous nation, is its optimistic entrepreneurial spirit, quite a powerful force when attempting to overcome political instability and widespread corruption in order to do business.
Much of this book is written like a travelogue, and I want to explain why. In my eight years at Alibaba, I saw a common reaction from investors and Western companies that were entering the China market. They’d spend a lot of time discussing numbers, market potential, and the “what?” of the market. But they spent remarkably little time asking “why?” the market is how it is. I am hoping that by providing some additional texture—of places, the people who live there, and their culture—readers will get a better understanding of the context in which e-commerce is unfolding. It’s not enough to know that China has 1.3 billion people and nearly 500 million of them shop online. I want to help explain how they shop online and why they shop the way they do. That may help you avoid some of the pitfalls that have literally cost businesses billions of dollars as they attempted to crack e-commerce in emerging markets.
You’ll see that I cover some markets, like China, in extensive detail, whereas my discussion of others, such as Southeast Asia, is broader. My goal is not to discuss every detail of every emerging market. Plenty of detailed analyses do that quite well. Rather, my goal is to focus on certain markets or companies to find the broad themes that tell the story of how e-commerce is developing.
You’ll also notice that I’m focusing on e-retail of physical products, not other areas that are often included in e-commerce, such as travel and other services. That’s because e-retail represents the biggest segment of consumer commerce. Once the market for physical products is transformed into e-commerce, other markets, such as online media and digital products, tend to follow.
A quick word about conflicts of interest. Although I have previously been employed by, or served as a consultant for, some of the companies I discuss in this book, I am no longer affiliated with any of them. With the exception of privately held Flipkart, in which I hold a small number of shares, I do not have a financial interest in any of the companies mentioned in this book.
For some of the entrepreneurs in the book who share a last name, such as Jack Ma and Pony Ma, or Binny Bansal and Sachin Bansal, I often use their first name, rather than last, so that readers can keep clear which Ma or Bansal I’m referring to.
Although I began this book with the idea of sharing what I had learned about breaking into e-commerce in emerging markets, I realized after my unfortunate encounter in that alley in Bogotá that those teenagers were precisely the people who could most benefit from e-commerce. In China I’d seen how e-commerce empowered struggling villagers by allowing them to sell their products online. And it offered those villagers who ventured to the city entry-level jobs as couriers. E-commerce has provided young students and recent graduates, who might otherwise have been destined to work in creaky state-owned enterprises, an outlet to pursue their dreams, create their own brands, and earn enough money to think about life and ideas beyond the need to put food on the table. It has also absorbed unemployed or displaced workers, giving them a foothold from which to rebuild their careers.
E-commerce has proved to be more creative than disruptive in emerging markets, creating opportunities that otherwise would not have existed, not simply killing old retail incumbents, as it did in the West. I hope that explaining how e-commerce is growing in emerging markets will help accelerate its adoption.”
An insightful, practical guide to e-commerce in emerging markets–and how to profit from their explosive boom.
From China to India to Nigeria, e-commerce is entering a golden era in countries that were long left out of the e-commerce gold rush experienced in the West. If the story of the first twenty years of e-commerce’s growth was set in developed markets, the story of the next twenty years will be set in emerging ones. The rise of e-commerce in emerging markets is being driven by three major trends: widespread internet adoption, a rising middle class, and, most importantly, innovative new business models that serve the needs of local customers better than the models used by western e-commerce giants.
Six Billion Shoppers takes readers on an exciting and colorful journey around the world to visit the next e-commerce mega markets and explore how a new e-commerce boom is opening opportunities for entrepreneurs and global brands alike. Traveling through Nigeria, China, India, Southeast Asia, and Latin America, Porter Erisman addresses e-commerce across these new markets and what it means for western brands. He argues that e-commerce in developing countries is revolutionary and will play a much larger role in emerging markets than in the West. With e-commerce in emerging markets entering a rapid period of expansion, Six Billion Shoppers explains how to seize the massive opportunity created by emerging market consumers and provides practical advice on how to ride this new business trend.
From 2000-2008, Porter Erisman worked as a Vice-President at Alibaba Group, joining the company just as it moved out of founder Jack Ma’s apartment. He is the writer/director of Crocodile in the Yangtze: The Alibaba Story, an award-winning documentary about the rise of Alibaba and its famous founder, Jack Ma. Erisman is also the bestselling author of Alibaba’s World: How a Remarkable Chinese Company is Changing the Face of Global Business. An expert on e-commerce in emerging markets, he has consulted to e-commerce companies in Africa, Asia, and Latin America and has spoken at high-profile industry events in over 30 countries.