Cross-border eCommerce is thriving, and recent research suggests it’s some of the world’s smaller, wealthier economies that are participating at the highest rates.
A 2018 study by PayPal has revealed that consumers from small but relatively well-off countries–such as Belgium, Israel, Austria, and Ireland–are more likely than larger countries like the U.S. to have made an online purchase from a foreign vendor. Citizens of cities like Singapore and Hong Kong are also very likely to have purchased something from abroad within the last 12 months.
Why? These are well-established consumer markets where consumers have relatively high household incomes.
People are sophisticated consumers and they know what’s available. They just might not be able to find what they want locally in a smaller domestic market.
In fact, about half of cross-border shoppers said having access to a wider range of products than is available domestically was one of their main motivations for buying overseas. However, the largest driver of cross-border shopping is cost, suggesting that the items consumers want may be available at home, just not at the right price point.
For European countries bound by various trade treaties, such Ireland and Belgium, cross-border trade is relatively straightforward. EU citizens may feel more secure purchasing from other EU countries, or from countries that share the same language, as opposed to countries that aren’t bound by political or linguistic ties. The UK and Germany emerge as two popular cross-border destinations.
If the country is small enough, borders are also never far away, and residents are used to making frequent, quick trips across the border to purchase from a foreign country.
Language and the cosmopolitan factor
It’s no coincidence that markets particularly active in cross-border commerce also tend to be relatively cosmopolitan. English skills also dominate these markets, and there’s a high level of Internet penetration. This means people have the means required to shop online from major English-language marketplaces, or they are directly 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 is also true.
Consumers in large, wealthy North American markets prefer to shop domestically. Thanks to well-developed consumer sectors, shoppers in these places have plenty to choose from, so there’s seldom a need to purchase overseas.
The only exception to these findings is Japan, where people are extremely reluctant to buy online from overseas companies. Some 94% of those surveyed in the PayPal study had done no cross-border shopping in the last year.
Japan is strikingly introverted when it comes to online shopping, and this is changing very slowly. Admittedly, this is a highly developed consumer market, which offers consumers almost everything they want from domestic vendors. It’s likely that language is also a contributing factor, with Japanese customers not finding their language needs being catered to by foreign vendors.
In contrast, buyers in Ireland, Belgium, and Austria share language with other markets, which expands their opportunities for shopping online.
A reliance on desktop
PayPal’s research also shows that much cross-border eCommerce is happening via desktop, which is slightly surprising given how much attention has been recently given to mobile eCommerce.
In key markets such as Canada, France, Germany, and Japan, some 70% of cross-border purchases are made via desktop or laptop. This may also be a reflection of people online shopping at work.
In the U.S. and some Asia Pacific countries, desktops are less used for cross-border shopping. Desktop and laptop purchases account for less than half of cross-border shopping in India and China. Similarly, in Singapore cross-border eCommerce is often done via mobile app.
Despite the current reliance on desktop, it’s likely that mobile will become increasingly important in future, reflecting prevailing trends.
Unsurprisingly, PayPal’s survey found great enthusiasm for free shipping among the 13,000+ consumers surveyed. Concern about shipping costs was the main deterrent for those considering purchases from overseas, with delivery time coming in a close second.
Trust is also an important barrier for many, although this varied by region. Shoppers in Africa tend to worry more about not receiving their goods, as opposed to those 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 consumer concerns. There are clearly great opportunities for customers in markets large and small, but their concerns need to be addressed before they’ll purchase from you.
Whether it’s overcoming a language barrier, expediting shipping, or just providing reassurance of your legitimacy, you need to work hard to meet the needs and expectations of cross-border buyers.