Five Key Insights from Euromonitor International’s 2016 Digital Consumer Index
Consumers are more connected today than ever before, and will be even more interconnected in the future. These digital connections, which have ushered in speed and convenience, are underpinning generational shifts in how consumers live, work, shop and play. As billions of people become interconnected by these devices, it means an endless number of opportunities for companies wishing to vie for this emerging connected consumer’s attention and ultimately their spend.
But, the questions remain: How do companies reach this new connected consumer? Which markets offer the best prospects for future digital initiatives? Which categories should companies invest their digital dollars? Using Euromonitor’s Digital Consumer Index, we’ve identified five key insights within the connectivity and digital commerce space to provide an outlook into what the digital future holds:
Degree and type of connection varies greatly across market types
The degree and type of digital connectivity varies greatly between developed and emerging markets. Broadly speaking, developed market consumers tend to have greater access to digital hardware and services than emerging market consumers. Of the top 10 markets with the highest current scores on the Digital Connectivity Index, all are developed markets. Of the 26 emerging markets contained in this index, the emerging markets score higher on mobile connectivity than home connectivity with the exception of Hungary, Poland, Slovakia and the UAE. These Eastern European countries benefited from their proximity to Western Europe and began rolling out fixed-broadband connectivity in the 1990s unlike other emerging countries in Africa, Asia and Latin America that had to wait for the more affordable mobile connection.
South Korea leads the current digital connectivity rankings
South Korea is a leader in technological development and implementation with some of the fastest and most extensive networks in the world. The strength of these digital connections propelled it to the top spot in the index’s current rankings, placing it just ahead of tech-savvy neighbors like Singapore and Japan. Although strong in fixed and mobile broadband connectivity, the nation’s connectivity score was buoyed by its near-ubiquitous household broadband. With an extensive infrastructure and top connection speeds, it has a highly developed broadband environment, which will mute expansion rates going forward. South Korea will fall four spots in forecasted ranks as Hong Kong, Singapore, Switzerland and the US make greater gains. These markets will see an increase in their expansion of wireless broadband penetration rates and share of mobile internet subscriptions to total subscriptions.
UK leads the Digital Consumer Index thanks to digital-first mindset
The UK is a digital frontrunner, making it one of the most digitally advanced commerce markets worldwide. As of 2015, 17% of all consumer payments were executed through a device, equating to US$260.3 billion in digital purchases of goods and services. That ratio is expected to reach 22% by 2020. Digital commerce has taken off in the UK more so than other markets thanks to a strong digital infrastructure backbone and a propensity toward paying with a card. Furthermore, the proliferation of smartphones led urbanites to embrace the convenience of on-the-go purchases. UK consumers can conduct commerce via websites, mobile apps, carrier billing or text message. In fact, most products and services can be bought digitally. Even traditional cash-driven businesses, such as cabs, hairdressers and cleaning services, accept online bookings and payments.
Digital Purchases as a Share of Consumer Payments in Select Markets, 2015
China and the UAE currently outpacing emerging market counterparts
China and the UAE are outpacing their emerging market counterparts based on current scores on both the Connected Commerce and Digital Connectivity Indexes, which together equally feed the topline Digital Consumer Index. Owing to the economic downturn and the increasingly rapid pace of life, digitally savvy Chinese consumers have been seeking more efficient, convenient and cheaper ways of purchasing. Thanks to the enhanced user experience and quicker internet access, mobile overtook computers in 2015 for most digital commerce spend, which was buoyed by higher-priced items like consumer electronics and appliances. Like other emerging markets, the UAE has a strong cash culture, which has hindered digital commerce growth with the exception of travel-related purchases. Although offline travel sales still account for a higher proportion of overall travel sales, the popularity of booking travel services, flights and/or accommodations online propels the digital commerce story in the UAE.
US will take top position in the forecast Digital Consumer Index
The US is forecasted to move ahead of the UK in the forecasted index on the back of an expanding digital connectivity environment and a well-developed digital commerce ecosystem. The willingness to make digital purchases continues to grow as US consumers become more familiar with browsing and buying online across a range of devices. By 2020, Euromonitor predicts consumers will make more purchases for both goods and services via mobile phones than computers. An estimated 46% of digital commerce is expected to be executed via mobile in 2020, up from 20% in 2015. The large range of products available online means consumers have a wider choice in terms of prices, brands and delivery options. More internet retailers are also offering free delivery, free in-store delivery and rewards for purchases. While some consumers visit stores to test products, many turn to websites to buy such products in order to take advantage of online offers. These online platforms also appeal to consumers due to the 24/7 nature of these commerce environments and the convenience they provide for time-starved consumers.
CHART: Digital Purchases by Device Type 2020