Identifying the Next Digital Frontiers

1. 2016 DIGITAL CONSUMER INDEX: IDENTIFYING
THE NEXT DIGITAL FRONTIERS
October 2016

2. © Euromonitor International PASSPORT 22016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
INTRODUCTION
Key findings
The world is more
connected than ever
before
The number of internet users has doubled over the last seven years to reach 3.2
billion globally in 2016. An estimated 43% of the population uses the internet as of
2016. This rapid uptake of digital services has underpinned generational shifts in
how consumers live, work, shop and play.
Increased connectivity
transforms the
commerce experience
This connectivity has driven a fundamental shift across all corners of commerce.
Today’s connected consumer browses and buys goods and services differently
from the previous generation. Digital is how consumers of tomorrow expect brands
will interact with them before, during and after a purchase.
Unprecedented digital
shifts creates need for
market prioritisation
It is no longer a question as to whether a digital strategy is needed. In order to
assist companies with identifying which geographic markets are the most digitally
attractive and offer the best prospects for future deployment of digital initiatives,
Euromonitor International developed the Digital Consumer Index.
Degree and type of
digital connectivity
varies greatly between
market types
In general, developed nations lead in internet access, with many establishing this
connectivity years ago through a fixed broadband connection in the home. Digital
connectivity in emerging markets has been far more often driven by mobile, due in
large part to cheaper network investment and falling prices of mobile devices.
Digital commerce
opportunities remain
driven by more
established developed
market economies
The Digital Consumer Index examines the interplay of digital connectivity and
digital commerce to identify promising markets for digital commerce opportunities.
Of the top 20 markets on the Digital Consumer Index, all but two are developed
markets. China and the UAE outperform other emerging markets on both
components that feed into the overall Digital Consumer Index score.

3. Consumers are more connected than ever before, and this rapid increase in
digital connections has ushered in speed and convenience across all aspects of
life. Whether or not a company needs a digital strategy is no longer up for
debate. The question is how and where to deploy limited resources for these
digital initiatives. Leveraging more than 2,500 data points, Euromonitor
International created the Digital Consumer Index to assist clients with this market
prioritisation for all digital initiatives, including digital commerce.
Introducing the 2016 Digital Consumer Index

4. © Euromonitor International PASSPORT 42016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
Consumers are more connected today than ever before
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX
49%
Population using
internet as of 2020
 Consumers are more connected
today than ever before, and will be
even more connected in the future.
 The number of internet users has
doubled over the last seven years to
reach 3.2 billion globally in 2016. To
put that figure into perspective, an
estimated 43% of the population
uses the internet. By 2020, almost
half of the population is expected to
use the internet.
 There is a stark digital divide
between developed and emerging
market consumers. As of 2016, 79%
of developed market consumers
used the internet, compared with
36% of emerging market consumers.
That gap will narrow by 2020, as the
number of internet users in emerging
markets is projected to expand four
times faster than in developed
markets.
43%
Population using
internet as of 2016

5. © Euromonitor International PASSPORT 52016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
 Increasingly, consumers are connecting to the internet via devices which may include anything from a
computer to a smartphone to a smartwatch to a refrigerator to an automobile. These digital connections,
which have ushered in speed and convenience, are underpinning generational shifts in how consumers
live, work, shop and play. As billions of people become connected by these devices, it means a number of
possibilities, including unprecedented processing power, storage capacity, access to knowledge and other
things that one can not imagine today.
 Broadly speaking, society is on the brink of another technological revolution, which has been dubbed the
Fourth Industrial Revolution. The first Industrial Revolution leveraged water and steam to mechanise
manufacturing facilities. The second used electrically-powered machines and division of labour to introduce
the world to mass production. The third used electronics and information technology to automate
production. The fourth is characterised by a fusion of technologies that is blurring the lines between the
physical, digital and biological spheres. Additional breakthroughs in areas such as artificial intelligence,
robotics, the “internet of things”, 3D printing and autonomous vehicles will further accelerate this
technological revolution.
 Consumers have benefited from this digital connectivity revolution thanks to the increased access to the
digital world and the simplicities it brings. Today’s connected consumers can now summon a taxi, book a
flight, browse products, order food, listen to music, play a game, watch a film or chat with others anytime
and anywhere, all from the small handheld computing device known as the smartphone.
Digital connections underpin generational shifts across society
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX
Automation
1970s
Mass Production
1990s
Mechanisation
1700s
Connectivity
Present

6. © Euromonitor International PASSPORT 62016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
 Growing connectivity has driven a fundamental shift across all corners
of commerce. Today’s connected consumer browses and buys goods
and services differently from previous generations. Brands are using
digital devices to connect and give today’s consumers the ability to
browse their commerce offering anytime and anywhere they would
like. Brands have also introduced new and engaging ways of
conducting commerce that have changed consumer behaviour and
disrupted long-standing business models.
 Two examples of this disruption are the sharing economy, which was
made famous by the likes of Uber and Airbnb, and subscription-based
services for both digital and physical goods and services, such as
those provided by Birchbox, the Dollar Shave Club and Netflix. In this
digital-first world, consumers can execute payments using any number
of things, including mobile phones, watches, rings, refrigerators and
cars.
 Digital has allowed commerce to spring up in a number of places, both
online and offline. As the number of connected things increases, the
number of digital commerce touchpoints will rise. Digital is already
impacting various industries, and this digital disruption is far from over.
Euromonitor International projects that by 2020, 58% of all travel
bookings will unfold in the digital channel, due to the wide popularity of
making all types of travel bookings online. In comparison, those figures
will stand at 11% for retailing, specifically goods sold, and 7% for
consumer foodservice, meaning a vast addressable market.
0 50 100 150
Fast Food
Consumer
Appliances
Other Travel
Intermediaries
Direct Lodging
Bookings
Food and Drink
Full-Service
Restaurants
Consumer
Electronics
Media Products
Direct Airline
Bookings
Apparel and
Footwear
Online Travel
Agencies
Absolute value sales growth (US$
billion) 2015-2020
Online Value Sales
Growth by Category
2015-2020
Increased connectivity is transforming the commerce experience
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX

7. Digital connectivity expected to impact the travel industry most
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX
11%Share of total retailing sales
expected to occur digitally in
2020. US$760 billion in
absolute value is predicted to
be added over 2015-2020.
58%Share of total travel-related
purchases expected to occur
digitally in 2020. US$360
billion in absolute value is
predicted to be added over
2015-2020
7%Share of total consumer
foodservice sales expected to
occur digitally in 2020.
US$113 billion in absolute
value predicted to be added
over 2015-2020.

8. © Euromonitor International PASSPORT 82016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
 Given that technological advances are driving unprecedented changes
across all aspects of society, the decision as to whether or not a company
needs a digital strategy is no longer up for debate.
 The question is now how and where to deploy limited resources either as
its relates more broadly to digital connectivity initiatives or specifically
digital commerce strategies. What is the best way to make sense of the
multitude of factors impacting digital connectivity to prioritise markets in a
way that is simple, intuitive and makes the most of the wide range of
available information? How can digital strategists weigh the health of the
macroeconomic context, micro indicators of digital maturity and potential
digital commerce uptake?
 In order to assist companies with identifying which geographic markets
are the most digitally attractive and offer the best prospects for future
deployment of digital initiatives, Euromonitor International developed the
Digital Consumer Index. This tool pinpoints a country’s relative digital
standing in the present, as well as offers forecasts for where it is expected
to be five years from now.
 Leveraging more than 2,500 data points from Passport, Euromonitor
International’s syndicated research platform, the Digital Consumer Index
will assist clients with market prioritisation exercises for all digital
initiatives, including digital commerce. In total, the Digital Consumer Index
utilises 18 different metrics, all weighted according to Euromonitor
International’s industry expertise, to provide an overall market
attractiveness score for each component of the index.
Digital shift creates need for market prioritisation
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX

9. © Euromonitor International PASSPORT 92016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
 The 2016 Digital Consumer
Index consists of two central
components: the Digital
Connectivity Index and
Connected Commerce Index.
Each component, which is
broken down into further
subcomponents, is given equal
weight in the overall Digital
Consumer Index.
 Each index contains a current
and forecasted score. The
Digital Consumer Index score
(out of 100 points) reflects the
current or forecasted readiness
in a particular country.
Coverage spans 50 countries
across all regions.
 A full explanation of the
methodology and full rankings
can be found in the appendix
at the end of this document.
Introducing Euromonitor International’s Digital Consumer Index
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX
Digital Connectivity
Index
Connected Commerce
Index
Measures
economic and
demographics
factors
Measures the
market’s overall
internet
connectivity
Measures the
infrastructure’s
digital commerce
readiness
Measures
consumer spend
across digital
channels
Measures the
market’s mobile
connectivity
specifically
Mobile
Connectivity
Index
Home
Connectivity
Index
Commerce
Infrastructure
Index
Market
Environment
Index
Digital
Commerce
Index
Digital Consumer
Index

10. © Euromonitor International PASSPORT 102016 DIGITAL CONSUMER INDEX: IDENTIFYING THE NEXT DIGITAL FRONTIERS
2016 Digital Consumer Index
INTRODUCING THE 2016 DIGITAL CONSUMER INDEX
Based on the rank of the Digital Consumer Index Current Score
1 UK
2 South Korea
3 US
4 Denmark
5 Norway
6 Switzerland
7 Australia
8 Sweden
9 Netherlands
10 Singapore
11 Japan
12
Hong Kong, China
13 China
14 Belgium
15 France
16 Canada
17 UAE
18 Germany
19 Israel
20 Taiwan

11. FOR FURTHER INSIGHT, PLEASE CONTACT
Michelle Evans
Digital Consumer Manager
Euromonitor International
michelle.evans@euromonitor.com
RELATED ANALYSIS
 Introducing the 2016 Digital Consumer Index (Opinion, October 2016)
 Five Key Insights from Euromonitor International’s 2016 Digital Consumer Index (Opinion, October
2016)
 How to Meet the Connected Consumer’s Need for a Seamless Mobile Commerce Experience
(Strategy Briefing, August 2016)
 The New Connected Consumer Code: Unlocking Digital Commerce Opportunities (Strategy Briefing,
July 2016)
 Top Three Trends for the Digital Consumer in 2016 (Opinion, December 2015)
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