УДК 33

ТЕНДЕНЦИИ МИРОВОГО РЫНКА И ПЕРСПЕКТИВЫ ВЫХОДА КОМПАНИИ ЭЛЕКТРОННОЙ КОММЕРЦИИ НА ЗАРУБЕЖНЫЙ РЫНОК

Защитина Алевтина Игоревна

GLOBAL MARKET TRENDS AND PROSPECTS FOR E-COMMERCE COMPANY TO ENTER THE FOREIGN MARKET

Zaschitina Alevtina Igorevna

Abstract
The article gives the overview on the world e-commerce market and illustrates the current state of e-commerce business. Moreover, this article analyzes the intrinsic situation of the E-Commerce Nation and examined the potentials of the UK e-commerce market combined with the PEST analysis of the targeted market. Besides, the E-Commerce Nation's external competitors in the UK were identified and compared in accordance with their main features. The article reveals the SWOT analysis of the company which is an essential part in terms of the business expansion.

Keywords: competitors, demand, development, e-commerce, expansion, market, media, opportunity, sales, strategy


Рубрика: 08.00.00 ЭКОНОМИЧЕСКИЕ НАУКИ

Библиографическая ссылка на статью:
Защитина А.И. Global market trends and prospects for e-commerce company to enter the foreign market // Современные научные исследования и инновации. 2022. № 6 [Электронный ресурс]. URL: https://web.snauka.ru/issues/2022/06/98509 (дата обращения: 14.09.2022).

Introduction 

In the modern world, one of the most important directions in the development of the economy is e-commerce. E-commerce is a rapidly growing sphere of the economy, facilitating the penetration into all areas of human activity.

Nowadays, e-commerce is in the stage of intensive growth, which will continue for several years. It includes electronic data exchange, money transfer, payment systems, marketing, banking, insurance, and other electronic services [1].

Until 2020, the development of e-commerce was influenced by an increase in the number of active Internet users. In January 2021, 4.66 billion people worldwide use the Internet, which is 316 million (7.3%) more than last year [2].

The pandemic has added to this factor the following:

  • Restrictions on offline purchases;
  • The transition to remote work and the associated outflow of population from large cities;
  • Increased demand for food delivery.

Consumers didn’t have the opportunity to buy goods in stores, so during the isolation, people have become accustomed to online shopping.

Currently, e-commerce still accounts a relatively small part of the world trade turnover (10-20%), but it is one of the most dynamically developing segments of trade and the economy of any country, characterizing the impact of digital changes in modern life [3].

By 2024, the turnover of online sales in the world will amount $ 6.4 trillion (Figure 1) [4].


Figure 1. Global e-commerce sales forecast

Operating in this emerging market, E-commerce Nation has gained the stable position as a leading e-commerce community in Europe.

E-Commerce Nation is a digital media platform working on the B2B market. The company has already started its expansion abroad with a website available in five languages and interviews made with foreign businesses. The core business of the company covers the different areas of e-commerce such as logistics, marketing, payments, M-commerce. Among the services, E-Commerce Nation specializes on articles, webinars, interviews, E-books, podcasts and much more [5].

Literature review

Due to the growing popularity, statistical data about e-commerce and future trends are widely introduced on the analytical portals and websites.

Besides, the article written by Yadova N.E. examines the current state of the global e-commerce market and its development prospects. This research paper revealed the essence of e-commerce, analyzed the dynamics of the global e-commerce market, and identified key trends in the further development of e-commerce.

In the pandemic conditions, the development of the e-commerce market is illustrated in the article written by Goncharuk I.V. 

The overview on the management technologies in e-commerce was presented in the article called “E-commerce and the prospective trends” written by Bystrova N.V.

The most important features and characteristics of e-commerce, its components, and the relationship between the development of e-commerce and the Internet are provided by the professor L.P. Gavrilov in the book “Electronic commerce”.

However, there is a lack of systematic and aggregate correlation between global trends and conditions of the UK e-commerce market. 

Methodology

The object of the research – E-Commerce Nation company.

The subject of the research – The market penetration strategy for entering the foreign UK market. 

The hypothesis – The largest UK e-commerce market is the potential for enlarging the leading French media company. 

During the research, the secondary data from the external sources was collected. The methodological basis of the research paper includes analysis of relevant scientific publications, books, web-articles, and Internet resources. The gained data was synthesized. In the process of the UK market analysis the information was generalized. The method of comparison was conducted during the analysis of competitors.

Findings

The UK is the third largest e-commerce market in the world, just behind China and the USA [6].

The e-commerce market in the UK is the most advanced in Europe and one of the biggest in the world. It accounts for 36% of the total retail market (in 2020), with a boost of 20% compared to 2019 due to the covid-19 crisis. This number is expected to steadily increase in the years ahead and would reach nearly one-third of all retail sales by 2024, because online shopping has become a daily norm for millions of UK consumers [7].

In total, 2019 revenues from e-commerce have reached 693 billion GBP (about 812 billion EUR). Revenues for e-commerce continue to increase. New markets are emerging, and existing markets also have the potential for further development. Global growth will continue over the next few years.

Market expansion in the United Kingdom is expected to continue over the next few years. The 27% increase of the UK e-commerce market has contributed to the world growth rate of 29% in 2020. Besides, the revenues in the field of e-commerce will soar and new markets will emerge [8].

However, the more comprehensive view on the local market can be achieved through the PESTEL analysis.

As for the political aspect, Brexit changed the relations between EU countries in 2020. EU countries won’t be able to carry out free trade with the UK. The trade between the UK and the EU has been significantly negatively affected. For French companies, they will have extra tax costs of about 3.5% to 17% and other custom fees if they intend to trade with the UK [9].

Besides, The UK will independently deal with international affairs, no longer constrained by the EU regulatory system. So, the invisibility and uncertainty of business trade between EU countries and the UK will increase. 

After Brexit, the UK attaches more importance to the international political relations with the commonwealth countries. The UK has been seeking new global trade partnerships and regards the CPTPP as an important pillar of its new independent trade policy. 

Under the influence of covid-19 and the uncertainty of Brexit, the UK economy is clearly in recession. The UK’s gross national product contracted by 9.9% in 2020. Especially after Brexit, the ability to attract foreign investment has been greatly reduced [10].

But in general, The UK is still a highly developed state with a relatively high level of national economy. In addition, the UK is the largest e-commerce market in Europe and prospects cannot be neglected. Due to the epidemic, e-commerce in the UK has flourished. Now that the restrictions are being relaxed across the UK and many physical stores are reopening, local ecommerce sales are still growing. It shows a great market opportunity in the e-commerce industry in the UK. 

Needless to say, social factors have a great influence on the market penetration strategy. The UK has a population over 66 million with a substantial social consuming demand [11].

The UK has a multicultural society and is inclusive to foreign countries. The population in the UK is generally highly educated, employment is high, the labor market is stable, despite the impact of Brexit, overall society is stable. Furthermore, the UK people consuming concept and consuming behaviors are changing with the development of e-commerce platforms, more and more UK consumers prefer shop online and frequently search and browse the online market information [12].

Referring to the technological component, the UK has always been one of the world’s important research and development bases for high-tech and high value-added industries and its scientific research involves many scientific fields. In the global Innovation Index 2020, the UK is ranked fourth in the world for innovation [13].

Besides, a large number of talents and investments are attracted to the UK because of the advanced technological infrastructures which has also offered a great opportunity for companies and entrepreneurs to create and develop business in the UK. 

Thus, the external environment can be characterized as a complex, due to the barriers in the political and economic situations, but the UK is the major player on the e-commerce market with full potential, which can bring benefits for the companies entering this market. 

The analysis of the competitive environment is an integral part for the market penetration strategy (Table 2).

Table 2. The competitive analysis of the UK market

Company


Country 

England and Wales

England

Founded 

1999

1990

Employees 

100-140

50-60

Services 
  • Management consulting services about ecommerce, technology and digital marketing trends
  • Offers articles, guides, webinars, training, skills assessments, lives
  • Resources for different sectors among automotive, B2B, charities and non-profit organization, financial services, healthcare, retail, travel, and others
  • Most article are free, but the reports are locked for non-subscribers
  • IMRG offers webinars, conferences, a blog with articles and press releases, data sets and guides
  • The company also acts as a solution provider through their technology partner network
  • See more services below
Price 
  • Subscription method to have full access to their resources
  • 3 types of subscription
  • Solo: 23€/week, billed annually, auto-renew every 12 months
  • 5 user access: 21€/week per user, billed annually, auto-renew every 12 months
  • Enterprise: above 5 users, need to contact consultancy for pricing
  • Two types of memberships
  • Data associate: free, give access to performance benchmarking, analysis and insight, conference program, webinars,

    Linkedin live

  • Retail master: same access as data associate and also access to digital dashboard, data and insight vault, personalized market insight and events
Other 
  • Well established company (over 20 years)
  • Digital community for marketers
  • Has international offices in Europe, Asia and the US 
  • Imrg stands for Interactive Media in Retail Group
  • UK’s largest ecommerce membership community
Company 


Country 

US

Netherlands

Founded  Not communicated, but over 20 years of ecommerce experience

2013

Employees 

< 25

2-10

Services 
  • Offers guides, platform reviews and ecommerce news
  • Platform reviews includes ratings, price, advantages, description of each platform
  • Have a consultancy service for ecommerce, web design, SEO and Shopify Plus
  • Offers advertising on their website and Twitter account 
  • Offers news article about e-commerce in all Europe
  • Have a company database regrouping companies from different sectors
  • Offers introduction to e-commerce for starting businesses
  • Regroups e-commerce events happening in Europe
  • Offers advertisement for companies on their website or in their partner’s magazine (Cross-border Magazine) 
Price 
  • Every content is free, no communication if fees are applicable for the consultancy
  • Every content is free From 250 to 1500€/month for a company advertisement on their website
  • 300€/month for an Event advertisement
  • 1500€ per sponsored news article  
Other 
  • Professional review website
  • Big Twitter community (almost 50k followers) 
  • Have one specific tab for UK ecommerce news 

According to the competitive analysis, there are several strong UK competitors operating in the mature e-commerce media market for a long period of time.

The development of market entry strategy requires analysis and identification of strengths and weaknesses, threats, and opportunities for further business expansion (Table 3).

Table 3. E-Commerce Nation SWOT Analysis

Strengths 
  1. Free Content, free membership
  2. Website available in 5 languages
  3. Strong reputation: leading digital and community e-commerce media in France and Europe
  4. Important foreign community (51% foreign) and website traffic (almost 3M visitors)
  5. Diversity of services offered
  6. Ability to build good and long-term relationships with other companies during past projects
  7. Young dynamic and innovative team with strong e-commerce expertise
Weaknesses 
  1. French social media account only
  2. “Explorer” concept, website design, and writings may not look professional or trustworthy enough for some people
  3. French website feels more complete (ex: ”About us” page is missing, even though it is important for potential clients to know about ECN)
Opportunities 
  1. Increasing amount of e-commerce businesses so increasing demand for e-commerce resources
  2. Giving visibility to companies from different sectors through exclusive interviews
  3. Help companies expand their business across Europe
Threats 
  1. Strong foreign competition due to websites who already offer similar services
  2. Some companies might already be part of other websites’ communities so it can be difficult to
  3. attract them
  4. Brexit: some UK companies might be reluctant to make business outside the UK now, especially smaller companies 

ECN does not only focus on giving resources to companies. It also allows them to get in touch with each other through interviews, which can be considered as their main competitive advantage. This gives more credibility about who the company wants to showcase and is easier for readers or potential clients to trust the advertised company. Overall, the key opportunity for ECN is to take advantage of the growing e-commerce market thus increasing resources demand, especially in the UK where the e-commerce market is flourishing. The biggest challenge for the company will be to differentiate itself from the other well-established competitors. As they offer similar services, most website visitors will be reluctant to check-out another website without a valid reason.

Based on the information above, the market positioning of ECN in terms of price and service was analyzed (Figure 4).


Figure 4. The matrix of ECN positioning

The matrix illustrates that most of the competitors have a big variety of services just like ECN. However, two of ECN’s competitive advantages are their free resources and their international dimension. By keeping competitive advantages, ECN can stand out from other competitors thanks to its international dimension (Figure 5).


Figure 5. The matrix of new potential ECN positioning

The main competitor that ECN would now have to face is Ecommerce News, at their resources are also free and provides information about Europe’s e-commerce.

Recommendations

Market development is the strategy that is currently employed by ECN where UK is the new market and is being approached with the existing service offerings. This is a risk-mitigation approach which requires minimal investments and less management difficulties as the services have already been tried and tested in the current markets. For this, ECN could either expand organically by catering to new customers in UK or they can employ the following approaches:

1. Partnership with subsidiaries of current partners in UK and customer referencing.

This is an approach to leverage on the current clientele’s presence in the UK market. For instance, ECN’s current customers like Amazon, DHL and so on all have presence in UK. So, ECN could try and use the contacts from the current partnership to extend it to UK territory. In this way, the communication can be channeled to the right personnel and would also transmit a lot of credibility given the experience of the customer with ECN in the current territory. This would also mean that the customer would stand to gain linearity and coherence in communication across markets. This approach not only suits the UK market but to all the global markets where the customers have presence and need ECN services. Other benefits include better understanding of the customer requirements, better relationship with management.

2. Joint Ventures with local or complimentary players.

This option helps ECN to gain a foothold in the UK market initially as the company might lack the visibility and the know-hows of the market. Complimentary players include companies like The Guardian which has a strong readership in UK and has recently included a section for e-commerce, so ECN could partner with such players to utilize those sections and gain prominent awareness among the target segment. This can be extended to players in other media platforms like television, print magazines and newspapers.

3. Diversification.

In this approach, ECN could pursue new markets with new service offerings – this involves extensive market research to understand the requirements of each industry which could be targeted including logistics, CRM, e-commerce platforms, payment solution firms. Also, ECN could bundle their services with other growing fields such as virtual conferencing, event management, to offer a wholesome package.

4. Visibility through sponsorships and the critic model.

Sponsoring events relevant to the industries of the target will contribute to not only improve the visibility but also strengthen the networks. Posting review articles and critically analyzing various businesses and the classifying firms based on their performance as per criteria developed internally. Giving the users/readers the opportunity to raise queries that they have related to various fields of e-commerce businesses and creating an expert status would lead to an improved brand image. User experience repository is also another method to prove the relevance in the field.

5. Two-sided network effect.

When there are more users of the service, then more customers would want to use the online media services and vice versa. This is an organic way to increase the demand for the services.

Conclusion

One of the world’s most dynamic countries for e-commerce, the UK is a rather large and very solvable market for the penetration. Despite the existing external limitations, existing competitors, and negative influence of pandemic, the e-commerce share in the country’s economy will grow significantly. Besides, E-Commerce Nation has very solid positions on the local French market, strong reputation, brand image and experience of collaboration with leading international companies, what can facilitate the successful expansion to the UK market.

Considering the conducted analysis, recommendations for the future development, E-Commerce Nation has an opportunity to enlarge its activities in the UK.


References
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  10. Dharshini D., What effect has Brexit had on the UK economy? [Electronic resource]. Access mode: https://www.bbc.com/news/business-47168866 (accessed 10.12.2021);
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  13. Global Innovation Index 2020 [Electronic resource]. Access mode: https://www.wipo.int/global_innovation_index/en/2020/ (accessed 16.12.2021).


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