The shift to mcommerce in emerging economies 

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.