Cross-border eCommerce is thriving and recent research suggests it’s some of the world’s wealthier and smaller economies that are participating most keenly. A study by PayPal has identified that it is small but relatively well-off countries where consumers are most likely to have recently bought something online from a foreign vendor.
These countries include Belgium, Israel, Austria and Ireland. The citizens of Singapore and Hong Kong are also highly likely to have purchased something from abroad within the last 12 months.
The reasons for this are fairly obvious. Consumers in these markets have relatively high household incomes and there’s already a well-established consumer market. They are sophisticated consumers and know what’s available – they just might not be able to source it locally in a comparatively small domestic market.
In fact, around half of cross-border shoppers cited having access to a wider range of products than they had domestically as their main motivation for buying from overseas. But this wasn’t the main driver of buying from abroad. It seems cost is the main motivating factor. This suggests that products the consumers want may be available domestically, just not at the right price for them.
China and the US are the dominant destinations for cross-border shoppers. This could reflect the high profile of marketplaces from these two locations, including AliExpress and Amazon. The UK and Germany are also popular destinations.
For European countries bound by various trade agreements, including Ireland and Belgium, cross-border trade is relatively straightforward. EU citizens buying from other EU countries, or buying from countries with the same language as them, may feel more secure buying from overseas compared to people in countries not bound by political treaties and language ties.
And in smaller countries, the border is rarely far away. If residents of smaller countries are used to popping across the border, buying from the next country probably doesn’t seem a big concern.
Language and cosmopolitan nature
It’s no coincidence the markets that are particularly active at cross-border commerce also tend to be relatively cosmopolitan. English skills tend to be fairly high across these markets, and there’s a high level of internet penetration.
This means people have what they need to shop online from major English language marketplaces, or they are catered to with a dedicated marketplace site from a major platform such as Amazon which offers easy cross-border buying options.
Perhaps unsurprisingly, the reverse can also be true. Consumers in the large, wealthy North American markets prefer to shop domestically.
With a well-developed consumer sector, shoppers there have plenty to choose from and there’s enough choice that it’s seldom necessary to buy overseas. North Americans tend to be more sceptical about buying from overseas, and they’re some of the world’s most reluctant shoppers when it comes to buying in a foreign language.
The only real stand-out result is Japan, where people are extremely reluctant to buy online from overseas. A startling 94% of those surveyed by PayPal had not done any cross-border shopping in the last year. Japan is strikingly introverted when it comes to online shopping and this is only changing very slowly.
Admittedly, this is a highly developed consumer market which may offer consumers everything they want from domestic vendors.
It’s likely that language is also a contributing factor, with Japanese customers often not finding their language needs being catered to by foreign vendors. By contrast, buyers in Ireland, Belgium and Austria will find the languages they share with other markets expands their scope of opportunity for shopping online.
A reliance on desktop
Paypal’s research also shows that much of this cross-border eCommerce is happening on a desktop of some kind – a slightly surprising outcome given how much attention is on mobile eCommerce these days.
In key markets such as Canada, France, Germany, and Japan, a solid 70% of cross-border purchases are made on desktop or laptop. It’s possible that these patterns reflect people doing online shopping at work or browse on mobile and convert on desktop or laptop devices.
In the US and some Asia Pacific countries, desktop is less relied on. In India and China, desktop and laptop account for less than half of cross-border shopping. In Singapore, cross-border eCommerce is often enabled by mobile apps. Despite the high reliance on desktop at present, it’s likely that mobile will become increasingly important in future as this reflects prevailing trends.
Unsurprisingly, PayPal’s survey found great enthusiasm for free shipping among the 13,000+ consumers they surveyed. Concern about shipping costs was the main deterrent for those considering purchases from overseas, with delivery time a close second.
Trust was also an important factor to consider and a barrier for many. But the importance of this tended to vary according to the region.
Shoppers in the African continent tended to worry more about not receiving their goods than ones in Europe, which may reflect both general social trust and also very concrete concerns about local postal services and transport infrastructure.
If you’re trying to ride this wave of enthusiasm for cross-border purchasing, it’s important to think about how you’re responding to these consumer concerns. There’s clearly a huge opportunity from customers in markets both large and small but these customers all have concerns that you need to address before they’ll consider buying from you.
Whether it’s overcoming the language barrier, expediting shipping, or just providing reassurance of your legitimacy, you need to work harder to meet the needs of cross-border buyers.