“Online Retail” is the “Front & Center in Quest for Growth”| Consumer Products & Retail | A.T. Kearney

E-commerce websites are no longer just off-shoots of Retailers’ physical-stores, but valid alternatives for Global Expansion” — The 2013 Global Retail E-Commerce Index™

Today’s most successful Retailers see Global expansion as a crucial platform for growth. 

Wary of “Real-estate wars” and long ROI horizons, many have seized the online retail opportunity to overcome these challenges. Retailers everywhere are diving into online retail as consumers across the globe in both developed and developing markets go online to buy products. They are using a variety of growth strategies, from grassroots websites to acquisitions of smaller online retailers or expansion of international shipping capabilities.

A.T. Kearney unveiled the first E-Commerce Index in 2012, highlighting the top 10 developing countries for online retail investment. This year we have taken the Index one step further, ranking the top 30 countries in both developing and developed markets. The rankings are based on NINE variables, including select macroeconomic factors as well as those that examine consumer adoption of technology, shopping behaviours, infrastructure, and retail-specific activities. The Index balances current online retail market indicators with those that reveal the potential for future growth.

This study is designed to help retailers devise successful global online-retail strategies and identify market investment opportunities while understanding the trade-offs and barriers to success.

About the 2013 Global Retail E-Commerce Index :

A.T. Kearney’s Global Retail E-Commerce Index ranks the most attractive countries for online-retail on a 0-to-100-point scale. The higher the score, the more potential a country has in online-retail.

Online-retail is defined as the sale of consumer goods to the general public through websites operated by pure-play online retailers or those owned by store-based retailers. This term also includes mobile commerce sales through smart-phones OR tablets. Sales are attributed to the country where the purchase is made, not where retailers are located.

Online retail encompasses the following consumer – goods categories :

  • Apparel
  • Beauty and personal care
  • Consumer appliances
  • Consumer electronics and video games hardware
  • Do-it-yourself and gardening
  • Food and beverages
  • Home care products
  • Housewares and home furnishings
  • Media products
  • Toys and games
  • Other products 

Online market attractiveness is based on the following metrics :

  1. Online market size (40 percent) – Current online retail sales. The higher the rating the greater current online retail market size.
  2. Technology adoption and consumer behaviour (20 percent) – Indicators of online consumer behaviour, such as Internet penetration, purchasing trends, and technology adoption. The higher the rating, the more favourable a country’s consumer base is for transacting online.
  3. Infrastructure (20 percent) – Indicators of financial and logistical infrastructure development, including credit cards per household and the availability and quality of logistics providers. The higher the rating, the more conducive a country’s infrastructure is for purchasing online.
  4. Growth potential (20 percent) – Projected online retail sales growth. The higher the rating, the greater the projected rate of growth.

( Data and analyses are based on Euro-monitor, International Telecommunications Union, World Bank, and World Economic Forum databases).

The Index Findings :

The Index rankings show a combination of developed and developing markets (see figure 1). China occupies the top-spot, and the G8 countries (Japan, United States, United Kingdom, Germany, France, Canada, Russia, and Italy) all fall within the Top 15. In the middle of the rankings is a compression of scores, with only five points separating the 15th- and 30 th-ranked countries. 

Developing countries feature prominently in the Index, holding 10 of the 30 spots, including first-place China. These markets have been able to shortcut the traditional online-retail maturity curve as online-retail grows at the same time that physical-retail becomes more organized.

Consumers in these markets are fast adopting behaviours similar to those in more developed countries. For example, mobile phones per capita in Russia (1.8) and the United Arab Emirates (1.7) are much higher than many developed markets. Consumers in these countries use their phones to research products, compare prices, and seek input from their friends on social media.

The rankings include 10 “small gems”—countries with populations of less than 10 million, including Singapore, Hong Kong, Slovakia, New Zealand, Finland, United Arab Emirates, Norway, Ireland, Denmark, and Switzerland—that have active online consumers and sufficient infrastructure to support online retail.

On the other hand, India, the world’s second most populous country at 1.2 billion, does not make the Top 30, because of low Internet penetration (10 percent) and poor financial and logistical infrastructure compared to other countries.

India’s Unharnessed Online Retail Potential :

India is on many online-retailers’ radars – after all, it is the second most populous country in the world (1.2 billion people), with an online-retail market worth $1.5 billion. Yet it falls short of the Index’s rankings because of its low Internet-penetration and significant infrastructure constraints.

Increasing Internet-penetration remains the “key to unlocking India’s online-retail potential”. Only one in 10 Indians use the Internet, as many lack access to a computer and fixed broad-­band.

Mobile phone usage may bolster this rate, as more than 900 million Indians have mobile phone subscriptions, but only 10 percent of mobile subscriptions are for smart-phones. Internet-penetration may dramatically improve in the coming years as smart-phone usage increases, mobile broadband improves, and India’s government rolls out its National Optical Fibre Network plan.

India’s poor logistics and trans­portation infrastructure, particu­larly outside of tier-1 cities, makes timely delivery difficult. Planned infrastructure improvements on roads and highways in tier-2 and 3 cities, would improve the base of online consumers.

Low credit card penetration and complex tax laws also impede Indian consumers’ ability to conduct online-retail transac­tions efficiently. Cash on delivery (COD) is common in India, as only 10 percent of Indian households have a credit card.

However, many online-retailers recently halted COD payment options in Uttar Pradesh, India’s most populous state, because of operational challenges. In addition, India’s complex state and local tax laws hinder online retailers’ ability to apply accurate taxes to online orders. The planned introduction of a Goods and Services Tax (GST) is expected to mitigate tax complexity across states and improve online-retail efficiency in the future.

Despite the hurdles, India’s large population presents online retailers with a tremendous long-term opportunity,  especially as investments are made to shore up infrastructure gaps. Today, 58 % of online users make purchases, a figure that will increase as retailers are able to improve consumer conditions.

More Similar than Different ? – 

Globally over the past 5 years, online-retail has grown at a 17 % CAGR, with growth particularly strong in Latin America (27 percent) and Asia Pacific (25 percent) (see figure 2).

At first glance, online-retail in developed and developing markets appears vastly different. In developed markets, retailers with an established presence in physical stores are struggling to integrate their in-store and online channels to offer consumers a seamless shopping experience.

Retailers in developing markets, however, worry less about multi-channel integration and more about addressing the barriers to online purchasing, such as financial and logistical infrastructure and cultural norms.

However, both types of markets share many similarities, which retailers should account for as they expand their global presence online.

The “Key” Market Types :

As in any globalization strategy, there are FOUR main questions to contemplate while considering online-retail expansion and investments :

  • How big is the market ? 
  • How fast is the market growing ? 
  • How do consumers behave within the market ?
  • Is there sufficient infrastructure in place to deliver on the online customer promise ?

These answer questions by comparing online growth potential to online consumer behavior in the Global Retail E-Commerce Index’s top 30 countries. This comparison offers an insight into the primary types of online retail markets.

Plant the Seeds for Growth :

Retailers are racing to expand online, and through-out the world they are building capabilities across the Retail e-commerce value chain to meet consumer needs and customers’ desires.

The winners will recognize commonalities across markets and develop scalable online expansion strategies for local markets. As always, regardless of location, successful retailers will manage the customer experience from browsing and community interaction to purchase to delivery and return in order to maintain and gain market share.

In this fast-moving space, one thing is clear : Online-retail is front and center in the quest for growth..

“Consumer Neuroscience-Based Advertising”| Making :15 sec spot, the New :30 sec | by:Randall Beard | Nielsen

Often treated as an after-thought by Marketers & Agencies alike, the 15-second TV spot is usually just a cut down version of the 30-second spot, rarely copy-tested, but assumed to be at least 50 percent as good as the : 30 from which it’s derived.

But the truth is that most marketers have no idea how good, or bad, their :15s really are. It’s as if everyone just blindly assumes the best, without thinking about the worst. Fifteen-second ads adhere to the same basic principles of success as :30s, but just get much less attention.


Things have improved somewhat over the past few years. With the advent of real-time TV ad effectiveness measurement, marketers can now monitor the performance of their : 30s and : 15s on a weekly or bi-weekly basis, enabling them to understand relative differences in performance.

This allows you to see when your 15s perform well enough to warrant moving out of your : 30s and into 100 percent focus on your :15s. But all of this is after the fact. What’s really needed is better : 15 design beforehand. But how ?


Consumer neuroscience has had any number of fits and starts over the past few years when applied to marketing. But one area where there has been substantial and undeniable progress is in the area of copy testing. The most advanced technique uses EEG measures of brain activity to understand how viewers are responding to advertising. This approach uses EEG to identify and capture responses to brain stimuli in fractions of a second.

In particular, EEG based copy testing can measure THREE things extremely well :

  1. Attention – When and how much viewer attention is paid to an ad. This is key to knowing if someone even notices or pays attention to your ad in the first place.
  2. Memory – Whether a viewer’s memory is activated in response to viewing an ad. Without memory, it’s unlikely that an ad will influence much future behavior.
  3. Emotion – To what degree a viewer is drawn to or pulls away from the ad stimulus. Attention and memory are important, but so is positive emotional attraction.

Taken together, these three measures are key to effective ads. They relate directly to whether someone pays attention to the ad, whether the ad is stored in long term memory, and whether the ad elicits a positive emotional response.

Importantly, EEG based copy testing measures viewer’s brain waves in milliseconds throughout the commercial. Typically, a viewer’s brain waves looks like a series of peaks and valleys as the viewer responds to different parts of the commercial. These peaks and valleys correspond to the parts of the commercial that are most and least effective as measured by attention, memory and emotion.


Back to the :30 vs. :15 conundrum: how do you design a better :15 TV spot? Well, it’s not as difficult as rocket science, but it’s essentially an exercise in brain wave assessment. Simply put, you cut out the ad’s “valleys” and keep the “peaks.”


Consumer neuroscience-based copy testing has advanced to the point where it can algorithmically eliminate the weakest portions of the :30 TV commercial while keeping the strongest ones for the new :15. This re-cut commercial is then edited by the agency creatives for story flow, continuity and visual seamlessness into a final spot.


At this point, you might be asking: “but how good, really, are these cut down neuroscience based ads? It all sounds like a big black box.”

Based on Nielsen NeuroFocus testing of both original :30 TV spots and the EEG-optimized :15s, here’s what we see :

  • ~ 90 % of Neuro-science optimized : 15sec ads test just as well as their : 30sec counterparts 
  • A significant number of optimized : 15sec ads actually test better than their : 30sec counterparts 

So, the next time you see your Ad-agency, tell them that you have a “present”  for them — Consumer Neuroscience-based : 15sec.