Calling all cross-border e-commerce entrepreneurs! Last week we released the China Cross-Border E-commerce Export B2B Report which was developed by DHgate and Tsinghua University, downloaded for free.
The report contains key information about the largest e-commerce markets, fastest growing markets, best markets for e-commerce by continent, top growing product categories, the most promising future product categories, and a special analysis of the ASEAN e-commerce market which is projected to be the world’s second largest e-commerce market.
This data will give you a great idea of what countries are adopting e-commerce and what product categories are in demand around the world. When undertaking a cross-border e-commerce venture, it is essential to understand the market size, potential, and product demand in your target country. My goal in this article is to give you useful insights on what markets to target and what products to sell, so I have included the most important parts of the report here:
The Top Cross-Border Markets for Turnover
The table below shows the top markets for Gross-Merchandise Volume (GMV) or total sales volume. The column on the left shows markets by size, and the column on the right shows markets in accordance with the fastest growth rates in terms of GMV.
Important takeaways from this data:
- Russia’s turnover proportion grew from 16% in 2015 to 21% in 2016, and is now roughly the same size as the US.
- Paraguay has the fastest growing growth rate in terms of turnover, increasing by over a tenfold in 2016.
| Top Markets for Turnover | Fastest Growing Markets in Terms of Turnover |
| 1. The USA | 1. Paraguay |
| 2. Russia | 2. Dominican Republic |
| 3. Spain | 3. Morocco |
| 4. France | 4. Netherlands |
| 5. The UK | 5. Argentina |
| 6. Brazil | 6. The Philippines |
| 7. Israel | 7. Pakistan |
| 8. Canada | 8. Sri Lanka |
| 9. Netherlands | 9. South Africa |
| 10. Ukraine |
10. Ghana |
The countries on the left have very developed e-commerce markets, however are already very saturated. If you launched a venture into one of these countries you would face severe competition, but there would definitely be a market for your product.
We can also infer from this chart that people in Paraguay and the Dominican Republic are rapidly adopting e-commerce.
We are currently in a period of time where countries with medium to lower levels of development are experiencing rapid penetration in internet, which they generally access through mobile devices. These countries generally do not have highly developed retail infrastructure, therefore making e-commerce the easiest way for buyers to acquire goods as soon as e-commerce is available and they understand how to use it. If you are quick at setting up an operation, these countries could be your best bet for a quick buck.
Best Cross-Border Markets by Continent
Success in cross-border e-commerce is not just about selecting the largest or fastest growing market to sell your goods to. Product demand and the suitability of the market for cross-border e-commerce are also important considerations. Our composite index accounts for all of these factors plus many others when being calculated, however the largest factor is the overall demand for Chinese goods through cross-border e-commerce.
The chart below shows the best markets for e-commerce by continent according to our composite index. It is important to note that there may be a relatively large difference in the demand between the top market in a content and the third-fifth since some continents have more countries with higher rates of e-commerce adoption than others.
Please note:
- Canada and Brazil’s growth showed significant decreases.
- Russia is on track to pass the US.
| North America | Africa |
| 1. The US | 1. South Africa |
| 2. Canada | 2. Morocco |
| 3. Mexico | 3. Ghana |
| 4. Costa Rica | 4. Nigeria |
| 5. Honduras | 5. Guinea |
| South America | Europe |
| 1. Brazil | 1. Russia |
| 2. Paraguay | 2. France |
| 3. Chile | 3. Netherlands |
| 4. Argentina | 4. Spain |
| 5. Columbia | 5. Ukraine |
| Oceania | Asia |
| 1. Australia | 1. Israel |
| 2. New Zealand | 2. Turkey |
| 3. American Samoa | 3. Indonesia |
| 4. Fiji | 4. Saudi Arabia |
| 5. French Polynesia | 5. Lebanon |
What we are seeing over and over again, is the fantastic growth, size, and demand in the Russian market, which will probably pass the United States in the next year. This is a key country to consider when selecting a country for your cross-border e-commerce venture.
The Top Product Categories
In 2016, 20 major categories saw the majority of the growth in terms of Chinese cross-border e-commerce exports.
The table below lists the top categories in terms of sales volume:
|
Category |
| 1. Cell Phones & Accessories. |
| 2. Clothing |
| 3. Health & Beauty |
| 4. Mother and Baby |
| 5. Home & Garden |
| 6. Consumer Electronics |
| 7. Sports & Outdoors |
| 8. Hair & Style |
| 9. Computer & Network |
| 10. Jewellery |
| 11. Automobile & Motorcycle |
| 12. Watches |
| 13. Business & Industrial |
| 14. Shoes & Accessories |
| 15. Toys & Gifts |
| 16. Bags & Luggage and Accessories |
| 17. Video Games |
| 18. Lights & Lightening |
| 19. Cameras |
| 20. Security & Surveillance |
| 21. Weddings & Formal Events |
| 22. Fashion Accessories |
|
23. Musical Instruments |
The product category with the most growth is Cell Phones and Accessories. This can be attributed to a number of factors. Nowadays, practically everyone has a cell phone, in developed countries it is much less expensive to purchase these from a developing country (like China) than to buy domestically made ones. In addition, in developing countries, mobile penetration is growing like crazy.
There is also a huge increase in health, beauty and fashion related items, which is primarily in the developing world. Social media and E-commerce are opening up new channels to increase awareness and availability of good habits and style that people may not have had much access to before.
The Most Promising Future Categories
These product categories grew like crazy in 2016, and we anticipate to see some of them at the top of the previous chart next year. Please note, these are product categories you need to invest in NOW if you want to catch the wave.
| Product | Growth Rate |
| 1. VR Glasses | 1979% |
| 2. Sports Camera | 1255% |
| 3. Kitchen, Cafeteria and Bar tools | 705% |
| 4. Makeup bag | 508% |
| 5. Slippers | 444% |
| 6. Nail art and Salon | 440% |
| 7. Wearable devices | 357% |
| 8. Sports shoes | 330% |
| 9. Hair care & Salon | 276% |
| 10. Outdoors Equipment |
223% |
Remember, in order to stay on top of hot product categories and to be able to identify which categories will be hot in the near future, it’s very important to stay up to date on trends. Anyone who did their homework two years ago probably would have been able to tell early on that VR was going to be extremely popular in the near future, then it grew 1979% in popularity in 2016. In addition, by observing the list some more, one can tell that a product doesn’t necessarily have to be new or high tech to experience huge growth, aka slippers and hair care products.
Special Focus: ASEAN
Let’s talk about ASEAN for a second. If you are a cross-border e-commerce entrepreneur then ASEAN definitely needs to be on your radar. This region is full of developing countries that are relatively new to internet and smart phones. As a result, this group of nations are poised to be the second biggest e-commerce market in the world. Take a look at this chart from Business Insider:
From the graph you can tell that ASEAN has insane growth potential. What’s more, no firm has yet to establish themselves as the clear e-commerce market leader in this region, which makes ASEAN one of the best places to try your luck.
Philippines and Vietnam are the top two fastest growing countries. Thailand’s development slowed down, and Malaysia’s development declined compared to 2015. Here’s a breakdown of the growth rates by country:
| Country | Growth Rate |
| Philippines | 104% |
| Vietnam | 72% |
| Indonesia | 54% |
| Cambodia | 50% |
| Thailand |
34% |
If I had to select a country to focus on long term in ASEAN, it would be Indonesia. Their population is 263 million with an internet penetration of 50%. This implies an opportunity to get in early on a rapid growing market with huge potential to continue to grow for years.
Here are the top product categories for ASEAN by growth rate in 2016:
| Category | Growth Rate |
| Hats, Scarfs and Gloves | 2448% |
| Makeup | 798% |
| Fashion Bags | 790% |
| Sports Shoes | 318% |
| Instrumentation | 208% |
| Puzzle and Educational Toys | 201% |
| Watches | 191% |
| Computer Software | 172% |
| Cable TV and Related Products | 99% |
| Skin Care Products |
98% |
As you can see, fashion accessories make up the fastest growing product categories in the developing ASEAN countries.
Bonus: Top 3 Categories for Top Cross-Border Markets
Last but not least, something that cannot be found in our White Paper. Since E-commerce Nation is published in English and French, we wanted to give you something that could potentially guide you in your domestic business endeavours.
The top 3 product categories for the US, the UK, Canada, Australia, and France:
| The US |
| Toys and Gifts |
| Consumer Electronics |
| Cell Phone and Accessories |
| The UK |
| Health and Beauty |
| Cell Phones and Accessories |
| Consumer Electronics |
| Canada |
| Consumer Electronics |
| Toys and Gifts |
| Cell Phones and Accessories |
| Australia |
| Cell Phones and Accessories |
| Toys and Gifts |
| Health and Beauty |
| France |
| Cell Phones and Accessories |
| Sports and Outdoors |
|
Shoes and Accessories |
This table is not a reflection of the top categories in demand in these countries, just the most demanded product categories that come from China, which could be for a number of reasons.
Just a reminder, if you are planning a market entry venture and you’re not a local, remember to take time to plan a localization strategy. This is an essential part of reaching the hearts of your customers and connecting with them on a personal level.