2020 Ecommerce Customer Base and the Strategic Technologies to Support Them

Currently, the world has 1.8 billion internet users. By 2020, Zdnet forecasts that there will be 5 billion worldwide internet users. The first thing we should take from this is that there will be 3 billion more internet users who are not from the United States. The international opportunity is seemingly tremendous.

This is by no means supposed to discount the U.S. market. In fact, the U.S. market is the steady core that provide retailers with unyielding growth through 2020 (and most likely beyond). It is a necessity for retailers. But as an e-commerce strategist, one must always think "beyond the core" (to quote Chris Zook). Indeed, it would be unwise to miss out on the significant international opportunity - especially the 2020 international opportunity.

Briefly, let's review some more data. In 2009, 6% of the $135 billion in U.S. e-commerce came from international buyers. With such explosive growth in overseas internet usage and e-commerce growth, this "international sales ratio" will double to 12-14% of U.S. e-commerce sales. This means that 1 in 7 buyers at your e-commerce site isn't from the U.S. And this is just an average! Some retailers already have 30-50% of total web sales from international buyers. These cases will only multiply over time.

A lot has been written about U.S. domestic customers (and who knows U.S. consumers better than the retailers that sell to them?). Therefore, I won't re-invent the wheel with domestic consumers. I'll focus on the international audience.

In order to win the international market in 2015 and 2020, retailers have to begin thinking strategically about technology spending about now. Research has shown that the ramp up time for international customers to crowd into your web retail store is a 2-3 years. So if you begin in 2014, you won't be ready to capitalize by 2015.

In-house IT groups always have dozens of "high-priority" projects to attend to - but this needs to be at the top of their list. So now the question becomes: what aspects of the international experience should in-house IT groups focus on?

Should retailers or their e-commerce platforms be preparing for technologies that support multi-currency transactions? Back-end financial reconciliation? Language translation? International shipping? International marketing?

What technology aspects should be outsourced to 3rd parties? And what should be in-house?

Read next week's post for the answer.