The next billion consumers

A fast-growing opportunity

One billion digitally native consumers will enter the market over the next decade in eight rapidly growing countries: Bangladesh, Egypt, Ethiopia, India, Indonesia, Kenya, Nigeria and the Philippines.

We found that these fast-growing markets can open the path to growth for companies that deliver relevant and engaging digital experiences. There is work to do, however.

These findings are relevant for brands in these markets and for digital commerce globally. Younger consumers who have grown up with digital will expect superior digital commerce experiences as they enter the market. Many companies are not prepared for this influx.

While it’s not going to happen tomorrow, it’s time to start building capability today. Companies need agile business models and data-powered commerce operations, so they have the scale to flex fast with market change.

Markets primed for growth

These markets are unique in three key ways

1. High digital commerce growth potential. Digital commerce revenues have quadrupled since 2017—equating to $211 billion in 2022.
2. Emerging young, digitally astute population. 36% of the population is made up people between the ages of 26 and 6 years old.
3. Little to no competition among most consumer-facing companies. 40% of the world’s largest consumer brands have no presence in these markets.

These 1 billion people are truly digital consumers ... many are already taking advantage of digital services when making a purchase.

Truly digital consumers

Research

80% use online channels such as search engines, social networks and videos to research products and services before purchasing.

Reviews

76% are influenced by lots of “likes” or “good comments” on social media when deciding whether to buy something online.

Returns

75% say that easy return policies are an important factor that influences their online purchasing decisions.

A new generation of digital consumers

Consumers in these markets are not alike

Our survey of age generations in these countries, combined with modeling analysis, identified four consumer segments based on shopping preferences and age groups.

Digital Native Purchasers

• 15 to 34 years old in 10 years
• 83% already shop online today
• They are focused on customer experience

Digital Native Content Creators

• 15 to 34 years old in 10 years
• They don’t make online purchases
• They are focused on savings

Digital Savvy Millennials

• 35 to 44 years old in 10 years
• Are not digital natives
• They have gained digital intelligence over time

Digital Alpha Influencers

• Younger than 15 years old in 10 years
• Hold sway over their parents’ purchases
• 83% of parents say their kids influence what they buy

Barriers to entry

Despite the opportunities that exist, making traction in these markets will mean moving past several challenges to attracting and keeping these customers:

• Operational complexity and risk is significant. Operational risks are already high, and digital commerce introduces new issues such as last-mile delivery challenges related to poor roads and infrastructure. There are also often limitations around limited access to finance and payments.
• Consumer sentiment and experience. Consumers’ expectations in these markets are rising faster than companies can manage. More than half of digitally astute consumers in these countries prefer shopping on social media apps to other purchasing apps. Yet, 52% of social media comments related to consumer experience are negative.

How to win in digital commerce

To keep pace, companies will need data insights, technology and partnerships to create winning new offerings. It is a continuous and dynamic Total Enterprise Reinvention.

Here are four ways to ground and speed up their efforts.

1. Digital brand. Articulate the role for digital commerce in brand and growth strategies.
   
   To create a consistent experience across their digital commerce ecosystem, companies should prioritize channels by category, brand and geography. Digital commerce plays an integral part in brand and category planning, and the brand experience must be consistent across every relevant channel.
   
   
2. Digital brain. Create a secure data foundation and analytics enabled by cloud.
   
   To better understand a customer’s unique needs and wants in the context of their life, a company might collect a variety of different data across first- to third-party sources like CRM systems, email, social media activities, transactional systems and websites. Cloud technologies create a highly automated data foundation that can secure all critical data assets and data management.
   
   
3. Digital build. Build a digital commerce ecosystem that scales everywhere you sell.
   
   To scale everywhere they sell, businesses need a digital commerce ecosystem with a modular and flexible architecture. It should integrate business functions (sales, service, marketing, supply chain) and support seamless omnichannel buying experiences.
   
   
4. Digital brawn. Develop talent and assets for efficient operations at scale and speed.
   
   To achieve scale, businesses must establish well-defined resourcing and technology ecosystems. They need to articulate their expected business outcomes and ensure governance and accurate reporting. These insights can reveal necessary operational improvements.