The most explosive growth will be in global cross-border ecommerce, together with the Asia Pacific region leading the way. Research firm Forrester foresees cross-border ecommerce outpacing national expansion, with a compound annual growth rate of 17 percent between 2017 and 2022, compared with 12 percent for total B2C ecommerce.
Key reasons people shop outside their regional areas are to get products which aren’t available locally and to pay less for products. Two-thirds of cross-border online shopping is performed through marketplaces.
Why the Upturn?
Increased localization, better logistics, and much more payment options are making it much easier for consumers all around the world to buy goods from other countries. The simplicity of purchasing from mobile devices opens online sales to another customer group in countries where most individuals don’t own a computer. The increasing penetration of smartphones has opened up both the Middle East and Africa as modest but growing markets for overseas goods.
Forrester forecasts that cross-border purchases will include 20 percent of all worldwide ecommerce in 2022, with earnings of $627 billion. The Asia Pacific region, dominated by China, will become the biggest ecommerce region for both exports and imports. Growing incomes, an expanding middle class, and dissatisfaction with national goods propel China’s ecommerce development. China has 300 million middle-class consumers clamoring for foreign goods.
Forrester forecasts cross-border ecommerce sales, as a proportion of total ecommerce sales, will increase through 2022, to approximately 20 percent. The proportion of online worldwide shoppers that purchase across borders increases, also, to approximately 45 percent. Source: Forrester Research, Inc., 2017. Online Cross-Border Retail Forecast, 2017 To 2022 (International ).
China Leads in Cross-border Purchasing
Half of international worldwide cross-border ecommerce costs will come from Chinese customers in 2017, according to Forrester. Consulting firm Accenture predicts that more than 200 million Chinese will be cross-border shopping by 2020, using a transaction volume of imported goods purchased online reaching $245 billion.
Alibaba, the China-based ecommerce giant, is actively seeking foreign goods because of its Tmall site from both multinational consumer-package-goods companies and smaller businesses. Its logistics platform offers an integrated services package for smaller businesses which may not otherwise have the ability to market in China.
To beef up its Chinese sales, Amazon introduced its own Prime program in that country, offering members free cross-border delivery. Globally, cross-border revenue account for almost one-quarter of third party units sold on Amazon.
Unsurprisingly, a vast majority of cross-border shopping is done via marketplaces that provide one-stop seamless services for payment, delivery, regulatory compliance management, and import duties.
Chinese payment platforms Alipay, managed by Alibaba affiliate Ant Financial, and WeChat Pay, owned by Chinese service provider Tencent, formed a partnership with Stripe, a company that facilitates both merchants and individuals the ability to make payments. Stripe operates in 25 nations. Throughout the venture, anyone who uses Stripe will have the ability to accept payment through both Alipay and WeChat Pay.
From the Middle East and North Africa region, half of ecommerce buying is cross-border, according to KPMG, the accounting and consulting firm. In March 2017, Amazon bought Dubai-based Souq — known as the Amazon of the Middle East — which sells more than 8 million products online annually, mainly to Gulf states and Egypt.
Cross-border returns are very costly for vendors, affecting 8% of total online sales, according to the Federal Express 2016 Annual Report. The high cost is one of the key reasons many merchants do not make international sales.
Through its affiliate program for ecommerce vendors, PayPal provides a complimentary”Refunded Returns Service” that covers the cost of returning unwanted goods to overseas sellers. Buyers who wish to return their thing can receive a refund for the shipping cost, up to a certain price.
PayPal also provides a buyer-protection program, reimbursing customers for items that don’t arrive or do not match the item description. This helps give otherwise reluctant cross-border buyers confidence that they won’t be out-of-pocket for the cost of this merchandise.
American Cross-border Sellers
According to this”CrossBorder Merchant Research 2016″ report from market research company Ipsos, 36 percent of U.S. online merchants are available across border. Fifty-three percentage of Malaysian vendors use online marketplaces — with eBay and Amazon being the most frequent.
Fifty-eight percent of American Malaysian sellers now offer one currency for many markets (the U.S. dollar), but most admit that this isn’t the best option.
How to be successful in Selling Across Borders
- Learn about local tastes and appeal to them by tailoring offerings to customer demands — from luxury products to infant formula, based on the nation.
- Adhere to local customs and tax regulations. Local customs are particularly important in the Middle East and pertain to what to sell and how to deliver the goods. In the Middle East and Africa, cash on delivery is the most frequent payment form.
- Provide premium delivery alternatives for people who are able to afford it. Standard shipping can be slow and unreliable in the Middle East, Africa, and parts of Asia.