January 28, 2017    3 minute read

Is Facebook’s Marketplace Ignoring Emerging Markets?

Missed Opportunities?    January 28, 2017    3 minute read

Is Facebook’s Marketplace Ignoring Emerging Markets?

Last November, Facebook launched its much-awaited Marketplace – a feature inside the Facebook mobile app. It comes as a response to marketplace-type sites like Craigslist and eBay, and works on the same principle whereby anyone can buy and sell goods, filtered by location.

The new feature has been rolled out in the USA, UK, Australia and New Zealand. The choice of these four countries does not come as a surprise: they are mature markets with high mobile internet penetration.

Emerging Markets: The Next Step?

Facebook has yet to announce which countries will launch the Marketplace feature next. However, emerging economies could be an attractive option for Facebook’s next step. The top 5 countries by number of Facebook users worldwide are India, US, Brazil, Indonesia and China – 4 out of 5 are emerging markets.mobile+data+traffic+

Although the numbers of those who shop online in emerging economies are small compared to mature economies, mobile internet usage is high. It’s high because people there tend to browse the internet more through smartphones. Laptops and wi-fi connections are still too expensive, but smartphones are becoming more accessible.

More Smartphones: More Mobile Data

The percentage of smartphone ownership among mobile phone users in emerging markets is growing exponentially. According to eMarketer, in Brazil smartphone users as a proportion of mobile users stand at 38%, in Indonesia 37%, and India 26%. eMarketer also forecasts smartphone penetration among mobile users to double by 2018.

38% of Brazilian phone users have smartphones

Recently in India, a smartphone that costs only $4 made headlines. Mobile operator newcomer Reliance Jio entered the Indian telecoms market in late 2016, offering rock-bottom pricing for its data services to all users. Jio gained more than 50 million subscribers across India in a little less than 3 months, a feat unprecedented anywhere else in the world.

In Brazil, Motorola Moto G was the best-selling handset in 2015. According to IDC, mid-range models like the Moto G (priced between $100 and $300) will account for the majority of growth in the industry over the next four years. Also, Brazilians love Facebook so much that Facebook is not only the country’s favourite social network, but it’s the absolute favourite app (94%) among smartphone owners.

In Indonesia, 43% of the population owns a smartphone, and active mobile social users make up 25% of the population. To make mobile data signal more accessible, the country’s mobile operators have rolled out 4G networks in more than 100 cities over the past year, and sales of LTE models have increased.

As a consequence of more smartphone ownership, people will also be using more mobile data. According to Ericsson’s Mobility Report 2016, mobile data traffic in Latin America, Central Europe, the Middle East and Africa will surpass North America by 2021.

The ‘Unbanked’ Want To Shop

A big challenge for the eCommerce market in emerging economies is their large number of ‘unbanked’ people – those without bank accounts. In emerging economies, banks charge high admin fees and are highly bureaucratic.

Latin America, is still pretty much a ‘cashonomy‘, as cash is the primary form of payment. In South East Asia, in 2016, only 27 per cent of the region’s adult population had a bank account.

That leaves room for financial tech innovation, also known as fintech. In Africa, for instance, financial inclusion is happening through mobile money accounts. Kenya became world famous for its P2P mobile payment app M-Pesa. In 2013, one-third of the country’s GDP was made through M-Pesa transactions.

1/3 of Kenyan GDP was spent through M-Pesa

This all comes to show that the unbanked want to shop – and do. Despite all the challenges that emerging markets have, like poor internet infrastructure and financial exclusion, the opportunity is there.

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