In her presentation at Google today, Stephanie Rieger shared how commerce is evolving (and in many cases innovating) in emerging Internet markets. Here's my notes from her talk: Exploring the Just-in-Time Social Web.
- The Web was first conceived about 25 years ago from mostly European origins. For the following 15 years, most of the internet's users and companies came from developed countries. The people who founded the Web were the ones who built it and consumed it.
- Today the situation is quite different. Internet penetration is nearing saturation in developed economies but fast growing companies are emerging from places like China, India, and Russia.
- There's close to 3 billion people that have yet to come online and thanks to cheap mobile devices, their barriers to entry are quickly falling.
A New Kind of Web
- So the Internet that the next billion people "discover" isn't quite like "ours". For example, people in Kuwait are sleeping sheep on Instagram. This creates a lot of ad-hoc businesses. These businesses provide a glimpse of a new, digital, and mobile-fueled informal economy.
- "Informal" businesses are relatively ad-hoc. They use chat for negotiations and Facebook pages as store fronts.
- These services don't offer a great experience but they are "good enough". They balance reach, effort, functionality, and adaptability to local circumstances.
- Most of these businesses get their largest growth from the countryside, where brick and mortar shops are under-developed.
- But these businesses reach cities (very big, high density, lots of middle class) as well. Opening enough stores to serve 700 million urban residents is very expensive. Mobile fills this gap.
- In China shopping on mobile is the primary way of buying things.
- Chinese commerce is 90% through online marketplaces vs. in the US 76% is through online merchants. So in China, sellers and buyers find themselves online in large e-commerce platforms like TMall.
- Even large brands have big digital storefronts on TMall.
- Taobao is like eBay in China but very social as vendors aren't limited to selling things, they also sell services like travel planning.
- Running a shop on Taobao is a national pastime, like a second job or hobby for tens of thousands of Chinese.
- Digital commerce services in China are a mix of Amazon, eBay, and PayPal, with a dash of Google. They've evolved differently.
- Alibaba is bringing digital services to rural communities by identifying people who can order for villages. "We give them a computer and the start taking orders for the whole village."
- The Chinese model is moving to other countries like Jumia in Africa. They are trying to leapfrog brick and mortar commerce with online selling.
Starting with Social
- With millions of vendors, how do you find stuff? Online shopping neighborhoods are created through social media where people can curate lists. These sites get a cut for each transaction.
- Part of the reason these services work because they feed of a cycle of mobile and social media adoption. Developing markets are going straight to social. When they come online, they just jump into social networks as their onramp into the Internet.
- The most poplar social media services are platforms. WeChat is a great example of integrating wallet, blogging, rss, messaging, etc. There's thousands of apps inside WeChat, you can book doctors, talk to stores, etc.
- WeChat adresses daily and hourly needs not monthly active users.
- There is no Web in WeChat its all inside the platform. Ironically, though many people reach WeChat mini-apps through Web pages and QR codes.
Payments
- In sub-Saharan Africa, 1/4 of adults have accounts at formal financial institutions. Less than 15% of Indonesians have a credit card. As a result, they use mobile banking services.
- In many developing countries, you can pay for online services with cash-on-delivery. With such giant marketplaces, counterfeiting treats trust concerns between buyers and sellers.
- Alipay has about 800 million registered users and is used to pay fro not only goods but services as well. These types of services help mitigate purchasing risk.
- WeChat creates QR codes for every entity, just scan it to enter the right mini-app.
- Merchants are starting to tie offline and online commerce together using these kinds of technologies.
- Due to the massive size of audiences, you can rapidly prototype new experiences for people for whom the words offline, online, and mobile have become irrelevant. They're just woven into day-to-day life.
The Impact of Culture
- People in these new markets aren't tied to previous models, so they often try different ideas that we might reject.
- For example, in Russia sales agents deliver clothes, allow people to try them on, and process payments for what people want. This works because of the poor delivery infrastructure.
- New technologies can create new behaviors but often times they can amplify existing behaviors as well. For example, street vendors used to ring bells to announce their menu, then moved to SMS, and now use WhatsApp groups.
- Users with similar personal and socio-economic circumstances may seem similar but cultural differences can make the difference between success and failure. For example, WeChat got started with Chinese New Year red envelopes, a traditional gift for the holidays.
- Look for desire paths: ways people want to go through tasks. Look for unconventional ways people use your products. The Internet is full of these kinds of desire paths. These are opportunities.