E-commerce is well established in developed markets, where the majority of people make at least occasional purchases online. However, levels of activity on the whole remain relatively low in emerging countries, as these markets are restrained by a wide range of challenges, including less-developed financial and logistical infrastructure overall. Nevertheless, online sales are growing rapidly in developing economies, with local governments deploying measures aimed at boosting activity. Notable regional players are emerging in these largely untapped markets, in some cases backed by partnerships with major e-commerce firms, which are constantly on the lookout for new acquisition opportunities in growth markets.

Widening Gap

E-commerce is most developed in advanced economies. For instance, annual sales revenues at leading international online retailer Amazon have grown from $34.2bn at the start of the decade to $232.9bn in 2018. Over the same period, online sales in the US have grown from 6.4% of all retail sales to 13%, or a total of $513.61bn, according to US Department of Commerce data. In addition, online sales growth in the US stood at 16% in 2017, compared to 3.6% for overall retail sales growth. Figures from the World Bank’s “The Global Findex Database 2017” report show that 61.2% of adults living in OECD states made an online purchase in 2017, including 70.4% of residents in the US and 74.7% of residents in the UK.

By contrast, online commerce remains a much more marginal segment in many developing countries. For example, in sub-Saharan Africa just 3.6% of adults made an online purchase in 2017, according to World Bank figures. Data from the Credit Suisse Research Institute and Kantar Worldpanel shows that, while the percentage of fast-moving consumer goods bought online stands at 19.7% in South Korea, 7.5% each in the UK and Japan, and 6.2% in China, it is just 0.1% each for Indonesia and Mexico, the two emerging economies covered by OBG for which data is currently available.


Sub-Saharan Africa has low levels of e-commerce penetration, and only 3.6% of adults made online purchases in 2017. However, this figure is higher for some major continental markets, reaching 4.1% in Nigeria, 7.9% in South Africa and 9.3% in Kenya, for example. Furthermore, industry players anticipate rapid e-commerce growth on the continent. “Africa is a very large untapped e-commerce opportunity,” Rodolphe Mollet, co-head of corporate development and strategy at Jumia, a major regional online retailer with activities in 14 African countries, told OBG. “At 453m, the number of internet users is enormous, the cost of data is falling rapidly and internet infrastructure is developing quickly. E-commerce penetration is still fairly low, at 0.6% of all retail sales, compared to 4.9% for India and 20.4% for China, but its growth is following the same trajectory it did in those countries, and we can expect Africa to reach similar levels within five to 10 years.” Levels of urbanisation also appear to play a major role in the number of consumers who make purchases online, and African cities are expanding rapidly – by the mid-21st century, the urban population of Africa is likely to have tripled, according to the African Development Bank.

Challenges to the development of e-commerce in many emerging markets, and in particular in Africa, include infrastructural problems, such as a lack of formal postal address systems, which make deliveries hard to carry out, and issues with payment systems, such as those arising from low card penetration. “The payment network landscape is highly fragmented between services such as mobile money, bank transfers and cash deposit agencies that offer debit cards, which constitutes something of a barrier to development,” Mollet told OBG. A lack of trust in payment systems is also a factor. “There is still a lot of apprehension regarding electronic payments,” Etop Ikpe, CEO of Cars45, a Nigeria-based online car trading platform that connects buyers and sellers, told OBG. “Trust is growing, but there needs to be a conscious, concerted effort to improve the situation.”

Some countries are taking steps to address such challenges. For example, in October 2017 Ghana launched GhanaPostGPS, a national digital address system set to help drive e-commerce not only directly, by enabling deliveries, but also indirectly by making it easier for people to provide addresses when they come to open bank accounts, thereby facilitating financial inclusion. Limited financing for e-commerce projects can also hinder development. “There is some funding available, but there needs to be more exits to give confidence to investors,” Ikpe said. “At the moment there is a lot more focus on funding ventures that work on issues such as payments, logistics and supply chains than on actual e-commerce sites, though improving relevant infrastructure for those kinds of projects will also help with the development of the market more broadly,” he told OBG.

Unlike in some other emerging regions, major global firms have not yet entered Africa, although they are likely to do so in the coming years. “Africa does not constitute a single market, and companies will have to deal with it one country at a time and adapt their approach to local conditions, rather than try to win the continent in one fell swoop. However, its potential will inevitably attract other players, and Amazon, for example, has already developed a presence in Egypt via its brand Souq.com,” Mollet told OBG.


According to Global Findex data, 10.1% of the population of the Middle East and North Africa (MENA) region made an online purchase in 2017, a figure that is higher than that in sub-Saharan Africa, but well below developed-market levels. The figures vary widely by country, standing at 1.6% in Morocco, for example, and 49.6% in the UAE. Activity is expected to ramp up quickly. A report by Google and Bain & Company released in October 2018 predicted that the value of online sales in the MENA region would grow by 28% in the five years to 2022, tripling revenues from $8.3bn in 2017 to $28.5bn. Saudi Arabia will account for $10bn of the total, with a penetration rate of 8% of total retail sales, and the UAE for $9bn, or 13% of sales.

Such anticipated growth is inevitably attracting major global players. Amazon moved into the region in mid-2017 when it acquired Dubai-headquartered regional online retailer Souq.com for $580m. Other notable companies include Noon.com, founded in mid-2017, which is backed by Saudi Arabia’s Public Investment Fund and leading Emirati businessman Mohamed Alabbar, who chairs Emaar Properties. Emaar also put in a bid for ownership of Souq.com and has been buying up other regional online vendors, as well as acquiring a 16.45% share in Aramex, one of the region’s main logistics providers, in July 2017.

As in other regions, trust regarding online payment remains a significant barrier to development. Despite relatively high card penetration in parts of the region (particularly Gulf Cooperation Council countries), 62% of online buyers prefer cash-on-delivery payment methods – an option which is much more difficult for online retailers – while this figure is in the low single digits in most developed economies. Other cultural preferences also pose obstacles. “E-commerce is the future, but at the moment people in Oman still prefer to walk into stores and physically hold the item rather than buying online,” Ajay Ganti, CEO of Oman’s Al Seeb Technical Establishment, told OBG, adding that online purchases of products that require after-sales service, in particular, will take more time to take off.

East Asia

Some 35.7% of people in low- and middle-income East Asian and Pacific countries made online purchases in 2017. However, the figure is lower for the economies in the region covered by OBG, at 9.9% in Indonesia and 16.8% in Thailand, for example.

Nonetheless, the sector is expected to expand significantly here as well. A 2016 report by Google and Singaporean investment company Temasek predicted a compound annual growth rate in South-east Asian e-commerce sales of 32% in the years to 2025, driven by factors such as the region’s youthful population and growing middle class. This would bring the size of the market to $88bn, which is not far behind the projected offline retail sales total of $120bn.

Major players in the region include Lazada, which was founded in Singapore by Germany-based venture capital firm Rocket Internet in 2012 and currently has operations in six South-east Asian countries. In 2016 Chinese e-commerce giant Alibaba acquired a controlling 51% stake in Lazada, raising this to 83% the following year. Alibaba also led a $1.1bn joint investment by a consortium of backers in Indonesian e-commerce firm Tokopedia in August 2017, which overtook Lazada as Indonesia’s leading e-commerce company by customer numbers that year. The third-most-popular online marketplace was Singapore-based Shopee.com.

As in other regions, limited access to payment methods is one of the major challenges to market development. “Mobile payment channels exist but are not yet widely accepted, and the market is very fragmented,” Izak Jenie, CEO of Indonesia’s JAS Kapital, told OBG.

Latin America

Levels of e-commerce penetration in Latin America and the Caribbean are overall broadly similar to those found in other non-African emerging market regions, with 10.2% of adults having made online purchases in 2017. Figures are slightly lower in several other Latin American countries, at 8.4% in Colombia and 7% in Mexico, but higher in Trinidad and Tobago, at 16.5%. In terms of total sales, Mexico continues to be the largest e-commerce market in the region, reaching $21bn.

The largest regional player is MercadoLibre. Established in Argentina in 1999 and active in 18 countries, the firm operates its own online payment network that allows customers to buy credit, giving it a substantial competitive advantage in a region in which cash often remains the preferred form of payment.

However, important international actors are beginning to move into the region. Among these new arrivals is Amazon, which started to ramp up its operations in Brazil in 2017 after entering Mexico and quickly emerging as a leading player around two years earlier.