Cross-border e-commerce is growing exponentially. Here's what it means, and how it could impact your business.
When it comes to online shopping, formerly unreachable global markets are now as close as a consumer's desktop – or even the smartphone between their thumbs.
Billions of consumers worldwide have ready access to the internet through computers, tablets and mobile devices. According to a recent Accenture and AliResearch report, the number of cross-border online buyers alone will more than triple by 2020, reaching 943 million consumers, compared with 309 million in 2014. In the 2016 UPS Pulse of the Online Shopper™ study, one in four U.S. shoppers say they've made an international purchase in the past year.
Here's further evidence: 67 percent of Canadian web shoppers made purchases across borders in 2015, according to eMarketer research. And the U.S. Department of Commerce reports that 26.2 million online shoppers in China (7 percent of the total 375 million Chinese online shoppers) bought cross-border products. E-commerce is relatively new in China.
"Every day, online shopping is bringing retailers to the doorstep of millions of consumers worldwide," says Randy Strang, UPS vice president of Global B2C Operations. While Strang believes the opportunity is there, many retailers, both large and small, remain reluctant to make the move.
"Selling to consumers globally has challenges that make many web merchants hesitate," Strang says. "It's important to understand the ins and outs, and get comfortable with the process."
The growth of global e-commerce
In a recently released special report, "E-commerce without borders," UPS i-parcel partnered with Internet Retailer to give retailers a detailed look at the scope of international e-commerce along with case studies of successful web merchants. Here are the key takeaways:
Global e-commerce reached $1.7 trillion in 2015 and has grown 1.5 times faster overall than in North America and Europe. As a percentage of the total, Asia's slice of the pie was 46.9 percent, Europe tallied 27.1 percent, and North America, 21.4 percent. The fastest growing region was Middle East/Africa (28 percent).
Shoppers aren't hesitant to shop across borders. In fact, many prefer buying direct from international websites, especially U.S.-based merchants. Nearly 60 percent of the 2015 Internet Retailer Top 1000 web merchants ship orders overseas from North American distribution centers or dedicated facilities in local markets.
The top 10 countries for North American web merchants are Canada, the United Kingdom, Australia, France, Germany, the Netherlands, Spain, Italy, Ireland and Japan.
The top three product categories for the Internet Retailer Top 1000 are apparel/accessories, housewares/home furnishings and computers/electronics. Sporting goods, general merchandise and specialty retail round out the top categories.
A simple, straightforward and positive online experience is essential, according to global retailers profiled in the report. Using "localized" online stores with language translation, currency conversion and clearly displayed duty and tax information at checkout will help increase sales. International payment options and clearly explained delivery and return options are also essential.
E-commerce and mobile sites need to reflect interests and product preferences tailored to each target market. A best-seller in one region or country may not appeal in another. One global retailer profiled in the study recommends having creative teams in each country that can accurately communicate product and style information, while taking into account language, culture, currency and payment preferences.
Selling internationally has its own unique set of complications, says Strang, including marketing, social media and the logistics of delivery, payment and customer service. That may be one reason why 27 percent of the top 500 web merchants in North America use a global e-commerce solution like UPS i-parcel to grow direct-to-consumer, cross-border sales, according to 2015.
UPS i-parcel a key to streamlined international commerce
UPS i-parcel technology is a key enabler for customers profiled in the report. UPS i-parcel is a scalable, cost-effective and virtually turnkey solution for retailers who want to reach global shoppers in more than 100 countries and 70 languages. With a few lines of code, e-commerce merchants can optimize their website with a local look and feel, manage payment collection and customs compliance – and satisfy customers no matter where they are in the world.