Diversifying supply chains and taking advantage of the lower cost potential of emerging markets can also help accelerate growth.

With economies in western markets struggling to achieve substantial growth, and consumers feeling the impact of rising costs, many businesses are looking further afield to find profitable areas to expand into. Emerging markets – many of which have seen a rapid expansion in consumer classes – could represent an important opportunity to explore.

4%

Consumer class has been growing throughout the world – by more than 4% per year since 2000 ⁵

Until the beginning of this century, the middle classes – large swathes of the population with disposable income – existed almost entirely in the west. But while that consumer class has been growing throughout the world – by more than 4% per year since 2000⁵ – it’s in Asia where the growth has been most pronounced. 

It’s been home to half of the world’s global consumer class since 2016,⁶ and spending there now exceeds that of North America and Europe combined.⁷

The IMF predicts that emerging markets will grow at more than twice the speed of developed markets in 2023.⁸ So, now could be a great time to take advantage – particularly as many consumers are willing to spend money on foreign brands. In India, for example, almost three-quarters of e-commerce spending is on cross-border purchases.^9.

Expanding your e-commerce offering into emerging markets not only enables you to reach more customers and harness their growing spending power. It also gives you the protection that diversification provides, and at a relatively low level of financial risk compared to establishing a physical presence in the market.

Emerging markets don’t just represent an opportunity to sell into. Depending on your business, exploring supply options in emerging markets could offer you a stronger platform for growth.

Research shows that in 2023, many businesses are prioritizing resilience over short-term profitability.¹⁰ Exploring supply options in emerging markets could help to achieve this. 

That’s partly because diversification itself adds resilience – the more locations you source from, the more you spread the risk. And if you currently have production in a country or region that feels politically unstable, there are a number of emerging market countries that could offer strong alternatives.¹¹

There can also be cost advantages in emerging markets. This could give you more financial flexibility – especially if you’re expanding sales to these markets too, as putting production closer to the consumer could enable you to save on transportation costs as well as ease tariff burdens and increase the efficiency of your supply chain.¹²