Brace Yourself For Explosive Net Growth

by Aaron Baar, Mar 21, 2012, 8:00 AM

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As much as it has grown in the past two decades, the Internet is set to become an even more disruptive economic force in the next five years as more developing countries begin to expand their access, according to a new study from the Boston Consulting Group. 

According to the BCG, which surveyed approximately 1,000 consumers in each of the world’s 20 largest countries, roughly half of the world’s population (3 billion people) will use the Internet, and the so-called “Internet economy” in those G-20 countries will be $4.2 trillion by 2016 -- up from about $2.3 trillion in 2010.

“The speed and scale of change that the Internet is responsible for driving in all sorts of businesses is really remarkable,” David Dean, senior partner at BCG and coauthor of the report, tells Marketing Daily. “It’s very fair to say that the change that will happen in the next three to five years is far, far larger than any other change that has happened in the past 10 to 20 years.”

Much of the coming explosion in growth will come from developing countries, where Internet connections are still being made, smartphone adoption is nascent and consumers have yet to gain comfort with online retail channels. But once those hurdles are cleared, Dean says, the explosion of the Internet economy will be huge -- particularly in places where offline retail shopping is less pleasurable. 

“[In many developing countries], the experience of buying online is much more exciting and pleasurable than going to some dreary store,” Dean says -- noting that the percentage of online shopping could be much higher in those countries than in the U.S., where the online shopping rate stands at 5% of total commerce. “Everywhere you go in the U.S. you’ve got stores and shopping malls and there’s a retail experience close to hand. Consequently, there’s somewhat of a lower need to go to online.”

At the same time, the report attempts to put a dollar value of the Internet’s value for consumers in these various markets. In the U.S., for instance, consumers said they would have to be paid, on average, $2,528 a year (or 5.4 times what they pay for access and services) to live without Internet access. Twenty-one percent said they would be willing to give up sex for a year in order to keep their Internet access; 77% said they’d forgo chocolate; 43% said they’d give up exercise and 7% said they’d give up showering. 

The study also found that younger consumers would have to be paid more to give up their Internet access and services, but Americans over 55 would also require more than the average, Dean says. “That’s partly because it’s a new experience that they’re beginning to get their arms around and they see the value in it.” 

The full report can be found here.

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