52 TheEconomistAugust 3rd 2019
1D
elight ogualu’shair is straight, black
and gloriously glossy. She made it her-
self. Mrs Ogualu and her husband run a
business selling wigs, which are fashion-
able in Nigeria. At first buyers came to their
small Lagos shop in person. Then they
started selling their goods on Jumia, an e-
commerce site, to customers across the
country. Today about 60% of the Ogualus’
sales are made online.
Around the emerging world, businesses
like the Ogualus’ are finding a route to mar-
ket through the internet. Global e-com-
merce has been growing for more than a
decade. But companies like Jumia are hav-
ing a moment. Investors are piling in
again, spying opportunities to lock in new-
ly connected consumers.
Jumia floated on the New York Stock Ex-
change in April. MercadoLibre, Latin Amer-
ica’s dominant marketplace from Argenti-
na, which listed in New York 12 years ago,
has seen its share price more than double
since the start of 2019; PayPal has just in-
vested $750m in the company. Shares in
Sea, an online conglomerate which listedin New York in 2017, have tripled in value
this year. In March it raised $1.5bn to fund
the growth of its e-commerce arm, Shopee.
Last year Walmart paid $16bn for control of
Flipkart, an Indian firm. Money is pouring
into Russian e-commerce, where a “sprint”
is on for control of the $18bn market, says
Fedor Virin of Data Insight, a research firm.
Last year Alibaba, China’s online titan,
teamed up with Mail.ru, a Russian internet
firm. Sberbank, a big Russian state-con-
trolled lender, launched an e-commerce
joint-venture with Yandex, another local
company. Both are chasing Ozon, Russia’s
biggest generalist online retailer.Such companies—call them baby Ama-
zons—are following the path charted by
America’s e-commerce colossus. They
have a way to go. After stripping out Ama-
zon’s mature north American business,
some $277bn of goods changed hands on
its platform last year, compared with per-
haps $30bn for the biggest emerging-world
firms (see table on next page). At around
$65bn, their combined value is dwarfed by
Amazon’s $949bn (though its cloud-com-
puting arm, aws, may account for half of
that). And their revenues, some $6bn all
told, are a tenth of the American firm’s.
But whereas Amazon’s international
e-commerce sales grew by a comparatively
measly 12% year on year in the second quar-
ter, the upstarts’ sales are rising by high
double digits or more, as the emerging
world embraces the virtual one. Mercado-
Libre’s swelled by 94% in its most recent
quarter. Shopee’s ballooned by 342%. Small
wonder investors are giddy.
Although all these firms no doubt want
to be like the American paragon when they
grow up, they are going about it differently
than it did. Where Amazon’s growth piggy-
backed on the us Postal Service and credit-
card networks, they had to build their own,
or do without. This limited their early
growth. With better infrastructure now in
place, and potential customers flocking
online, they eye a new era. “The opportuni-
ty in the next 20 years is much bigger than
the last 20 years,” enthuses Sean Summers,
MercadoLibre’s chief marketing officer.Digital marketplacesHow to beat Bezos
LAGOS, MOSCOW, RIO DE JANEIRO AND SINGAPORE
A new generation of online retailers takes on the giants of e-commerceBusiness
53 Investingintechnology
54 Bartleby:Nicework
55 A genericmerger
55 TragedyinIndiaInc
56 Schumpeter: Foodoo economicsAlso in this section