In conjunction with the Internet becoming a global means of communication in our everyday lives, user habits and preferences are changing, and e-commerce market is expanding. Some aspects are gaining importance day by day such as creating necessary infrastructure systems for e-commerce, adapting companies to the digitalization process and increasing their investment in this area.
In this article, we will analyze the leading countries in the global e-commerce market. What are the leading countries in e-commerce? What methods do they follow? Having answers to these questions will light the way and give significant cues to the companies who wish to increase their e-commerce value.
The countries that have the largest share in the global e-commerce market are China, America, and England. While China is at the top, it is followed by America at the second and England ranked in third place. The biggest reason for these three countries have the largest share in the global e-commerce market is that they have their own e-commerce platforms.
China has the largest e-commerce market volume in the world. The support of the sector along with the public policies influences the growth of China in e-commerce field. The government has been supportive to establish pilot areas and free zones for e-commerce. It decreased the costs arising from taxes and made studies about enhancing the domestic distribution network.
The deliveries in China are carried out by domestic distribution companies. The widespread usage of e-commerce in the country had reflected on the logistics processes and a fair amount of importance was given to fast delivery. According to the research of Deloitte “China E-Retail Market Report 2016”, the average domestic delivery time was stated as 2.6 days in 2015.
Another important point is the payment infrastructure. In China, online payment methods are highly preferred. According to the report announced by ITC, 31% of Chinese customers prefer online payment systems such as Alipay and PayPal, 24% use credit cards and 22% use bank cards while e-shopping.
China Identified Pilot Areas for Cross-border E-commerce
In China, 7 cities including Shanghai, Hangzhou, and Guangzhou were identified as cross-border e-commerce pilot areas and Hangzhou was approved as the first pilot area in 2014.
Each one of these pilot areas has an e-commerce platform that is operated and managed by the companies that are licensed or supported by the government. Companies can establish warehouses allied with the area and they can temporarily store the bulk shipments coming from abroad.
In the pilot areas, the accelerated clearance process is carried out. After the goods enter the local customs area, transactions are completed within 24 hours. Customs duties are paid after the goods are sold to customers and left the pilot area.
Lower taxation is applied in the transactions made in the region.
According to the information announced by the Turkish Ministry of Commerce General Directorate of Trade Research on January 2nd, 2020; China has approved the establishment of 24 new cross-border e-commerce pilot areas. In the document of approval, the considered points are "the exemption from VAT and the excise duty for cross-border retail exports", "increasing innovation and brand awareness" and "encouraging liberalization and facilities in international trade". Similar to the 35 available cross-border e-commerce free zones; it is expected that some advantages (such as tax refunds, government support for establishing e-commerce platforms and for international logistics services) will be given to the companies in the areas which will be newly established.
The United States of America is one of the leaders dominating the global e-commerce market. Along with the customs structuring, the cooperation contract made between eBay and the Ministry of Commerce which aims "Increasing the trade and investments of America" in 2013, and also the contract made between Amazon and China government to operate in the free zone of Shanghai, have major impacts on the present market growth of America. Particularly SMEs benefited from those contracts and increased their good and service sales.
Increasing demands for fast delivery in America caused the companies to focus on "last-mile delivery" which is the last step of delivery to customers. While the delivery time after the order was 8 days on average in 2014 in America, it went down to 5 days in 2017. (Source: US E-Commerce Trends and the Impact on Logistics, ATKearney, 2017)
There are several payment methods available in the country. The most preferred payment type in e-shopping in America is the payment method with credit or bank cards. It is followed by e-wallet payment methods such as Apple Pay and Google Wallet. (Source: Key Business Drivers and Opportunities in Cross Border E-Commerce 2017, Payvision)
America Takes Notice of the Customs Structuring
Customs and Border Protection of Ministry of Internal Security of the United States of America has established the department of "E-Commerce and Small Businesses" in 2016 to facilitate the e-commerce customs procedures and to increase security. The main purpose of the department which supports small and micro businesses operating in e-commerce field is to improve e-commerce, to detect unsafe shipments in e-commerce and to provide training to SMEs.
In accordance with The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), in 2016 the minimum figure which does not require official customs transactions and exempted from duties and fees has been increased from 200 to 800 dollars.
Within this execution, no duties are applied on the fast shipments up to 800 dollars. Courier companies submit electronic declaration related to the shipment thus the transaction process is over, and the goods are delivered to buyers faster.
England is the main center of European e-commerce. The major reasons for the growing value of E-Commerce in England are; the fact that companies have the advantage of growing with the government support and diminished obstacles, and the fact that wholesaler and retailer companies make most of their sales through online platforms.
In England, most of the e-commerce shipments (42%) can be delivered the following day after the order. 2-5 days delivery time is 28% and the same-day delivery percentage is by 4%. Besides, the "Pickup from Store” delivery method is also preferred by English consumers. (Source: Statista)
Along with the bank and credit card preference in e-commerce shopping, PayPal and such payment systems are often preferred in England. Although it is preferred lesser than other methods, Cash on Delivery is another payment method used in e-commerce shopping. (Source: Statista)
England Has Improved an E-Export Program
In 2014, UK Trade & Investment (UKTI) which was a UK Government department, improved an E-export program for the companies who would like to do e-exports. Within the scope of this program which is the first in the world, a service package is offered to companies in all sizes to expand their activities, create their brands and increase their international e-commerce value.
This program gives international trade consultancy by professionals, offers programs that enable the companies to reach new global e-markets, provides the chance of meeting the digital consultants on the UKTI network, and have applications such as online contact analysis that will increase the sales volume on international markets.
Besides, it also establishes relationships with the leading online global markets to make the companies in England export their products to new international markets.
Source: UTIKAD The Report of e-Commerce and E-Export Development Potential in Turkey and Logistic Processes