02 Sep 2014

Cheap Smartphones Set to Boost Global Ecommerce

Smartphones have dramatically changed the ecommerce landscape since they first appeared on the scene at the turn of the century. It is now easier than ever before to buy stuff online, even if you’re out and about.

Smartphones have reached huge levels of penetration in many western countries in recent years. According to Google, the UAE, South Korea, Saudi Arabia and Singapore have some of the highest levels of smartphone penetration in the world at over 70%. The UK has a smartphone penetration rate of 62% and the 56% of US citizens own a smartphone.

But the situation is very different in some emerging economies. India, for instance, only has a smartphone penetration rate of around 13%.

Mostly, the lack of penetration is to do with the relatively high cost of these devices. But, things appear to be changing.

The race is on to produce the world’s cheapest smartphone. Brands like Google, Xiaomi and Mozilla have all announced the release of cost-effective smartphones in recent months, and many more are expected to follow suit moving forward.

Scramble for India

Mozilla, the company behind web browser Firefox, has unveiled Asia’s first-ever budget Firefox-OS smartphone in India.

The Intex Cloud FX, which will retail at just 1,999 rupees (£19.91), boasts a 3.5-inch HVGA touchscreen, 4GB of memory, Bluetooth and Wi-Fi capabilities, not to mention 2G/3G dual SIM support.

Initially only available on Snapdeal.com, it will be the best bet for a lot of people in terms of access to the internet.

Intex Technologies, enlisted by Mozilla to develop the device, is hopeful of selling half a million units this year alone.

A number of emerging markets across Asia are seen by mobile device manufacturers as the key remaining areas for massive growth. India, in particular, is considered to be the fastest growing market in the world for low-cost smartphones, not just Asia, hence Mozilla’s decision to set up shop in the country.

Karbonn Mobiles, a telecommunication company in India, has also launched its own budget smartphone.

The Karbonn A50S, priced at 2,600 rupees (£26), uses the Android operating system and has access to the Google ecosystem including Gmail and Maps. It features a touchscreen display, front and rear cameras and dual SIM capability, as well as a 1.2 GHz dual-core processor, 256MB of RAM and 512MB internal storage.

Both the Intex Cloud FX and the Karbonn A50S will make smartphone ownership a possibility for the masses in India. Up until now, it is predominantly the upper classes that have been able to afford such devices.

China enters fresh chapter

Just like India, China is witnessing the arrival of high-end smartphones at low prices.

Xiaomi, a new kid on the block in the telecommunication arena, recently revealed the Mi4 – a metal-backed smartphone with striking similarities to the Apple iPhone 5S, yet it is priced at 1,960 (£191) yuan rather than 4,300 yuan (£420).

This means it is much more accessible to China’s middle class, who account for a large chunk of the population.

The Mi4 has 2.5GHz quad-core processor, 3GB of RAM, a 5-inch screen, plus a 13MP main camera and 8MP front camera. It follows the Mi3, introduced in September 2013, which proved to be very popular.

China is one of the largest consumer markets on the planet. Technology companies in the country are therefore willing to offer top of the range technology at a fraction of the usual price in a bid to attract customers.

Manufacturers started teaming up with chip makers about seven years ago, taking the standard workings of a smartphone and making large numbers of them at low cost. Now the trend is really taking off.

Ecommerce braced for boom

Ecommerce already benefits from the growing popularity of smartphones around the world.

But the introduction of cheaper smartphones will mean an even bigger ecommerce market as more people will be able to afford the devices – including millions from India and China.

Retailers may see an increase in purchases as citizens of the world’s two largest countries connect to the internet for the first time.

Business-to-consumer ecommerce sales are expected to hit $1.5 trillion this year, according to figures from eMarketer, thanks to the rapidly expanding online and mobile user bases in emerging markets.

In fact, for the first time ever, consumers in Asia-Pacific will spend more on ecommerce purchases than those in North America, making it the largest regional ecommerce market anywhere in the world.

Ecommerce sales are forecast to reach $525.2 billion in the region, compared with $482.6 billion in North America.

China will take in more than six of every 10 dollars spent on ecommerce in Asia-Pacific this year and nearly three-quarters of regional spending by 2017 – fuelled by a jump in mcommerce, thanks in part to more affordable smartphones.

It is anticipated that the country will soon leapfrog the United States as the biggest ecommerce market in the world, at the beginning of 2016 to be precise, while massive gains in India will push Asia-Pacific’s growth ahead of the chasing pack.


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