March 17, 2017
With the increasing significance of the online channel in retail, we need variables other than macroeconomic data or consumer market size to assess the readiness of a market for eCommerce. While there is no universal tool for selecting expansion opportunities, the Forrester Readiness Index (FRI) provides a holistic assessment of the eCommerce setting for each country.
Our recently published Forrester Readiness Index For eCommerce, 2016 is a holistic assessment of the eCommerce setting to provide insights for global expansion needs. The eCommerce index signifies the level of opportunity in each of these countries over the next three to five years and measures the impact of technological and behavioral influences in conjunction with the revenue opportunity.
The FRI evaluates 25 quantitative variables in four areas — consumer, vendor, infrastructure, and online retail opportunities — in 55 countries across the globe. We selected each quantitative and qualitative indicator to measure the relative “readiness” of the platform in each country; these indicators reflect each country’s eCommerce environment and overall retail opportunity.
Some of the key findings of the Index:
- The US and China lead. The US and China remain the leaders in eCommerce environment and retail opportunity scores, respectively. Due to their sheer size, these two retail markets are expected to remain the key focus of online retailers as more and more people buy products in an increasing number of categories online. However, these markets are different when it comes to mobile commerce: China is far ahead of the US, as most eCommerce in China is conducted on smartphones.
- India remains attractive despite hiccups in 2016. India is still the fastest-growing online retail market globally. Three factors led to a slight decrease in the growth rate of Indian online retail markets: venture funding slowdown, a curb on discounting by marketplaces, and the demonetization of 500-rupee and 1,000-rupee notes on November 8, 2016. In spite of all this, India remains a large opportunity for online retail and continues to attract more online retailers and venture funding.
- Countries in the Middle East and Southeast Asia are emerging. Countries in these regions — including the United Arab Emirates (UAE), Saudi Arabia, Indonesia, Thailand, and Malaysia — are emerging as new markets and will attract investment in the coming years.
The FRI helps both offline and online retailers prioritize countries for global expansion. The framework enables retailers to benchmark each country’s eCommerce readiness and clearly outline the strengths and opportunities to help them set country-specific strategies.