Increasing globalization of world trade and a growing digitalization of society results in online consumers who are increasingly looking beyond borders. In 2012, global cross-border e-commerce generated a turnover of 259 billion euros (1) and the crossborder e-commerce turnover is forecasted to increase by 200 % by 2018.(2) If we take the United Kingdom – one of the leading online markets in 2015 – as a case in point, then we see that today 43% of retailers earn 21 to 30 % of their income from international orders. (3)

Key markets
The United States, the United Kingdom, Germany, Australia, Brazil and China are the big six of online shopping markets. American consumers mainly purchase from the United Kingdom (49%), followed by China (39%) and Canada (34%), while British consumers return the favor with a clear preference for American e-tailers (70%). The Chinese also prefer American retailers (84%), as do the Australians (69%) and Brazilians (79%). German cross-border shoppers have a preference for the U.S. (48%) and the U.K. (46%). But geographical proximity also plays a major role. The Germans look to Austria (33%) and the Netherlands (16%) for many of their purchases, while the Chinese are more likely to turn to Hong Kong (58%) and Japan (52%) for online shopping. (4)

The United States, the United Kingdom, Germany, Scandinavia, the Netherlands and France are the global leaders in the export of products sold online (5). The U.S. leads the way in both the import and export of cross-border purchases but is being challenged by the APAC region. Cross-border e-commerce is a major factor in the economic growth of China and the Chinese government actively promotes online shopping over traditional commerce. This favoritism includes special tax programs. (6) Cross-border e-commerce increased from 10.7 billion in 2013 to more than 14 billion in 2014 and will reach an unprecedented 35 billion euros in 2015. (7)

Obstacles to overcome
One of the biggest pitfalls for e-tailers is to believe that a one-size fits all approach can be applied. For an online retailer to be successful, it needs to define the optimal strategy for each individual market. This means going further than merely translating the website. For example, when it comes to parcel delivery, a local carrier is the key to success in cross-border B2C e-commerce. (8)

A fear of fraud is one of the main reasons for potential cross-border shoppers to fail to complete an order. A lack of transparency surrounding taxes and import duties is another concern that slows the traffic of online cross-border shopping. (9)

Attractive market opportunities
For the time being, the U.S.-U.K. route is one of the largest online trading routes but others, such as U.S.-China, China-Brazil and U.K.-Australia are also popular. Cross-border trade plays an important role in the fast growing Latin American B2C e-commerce market too. In countries where domestic B2C online sales are still underdeveloped, such as Colombia, Venezuela and Paraguay, the majority of online purchases are cross-border (10).

Forming partnerships increases chances of success
There is a huge market potential for cross-border e-commerce, but to gain a foothold in new markets it is essential to be familiar with these markets. To gain access to new markets quickly, the right choice may be to work with local web platforms, such as Tmall in China. This tactic can help retailers to build trust. Cross-border consumers often drift away because they don’t know how goods will be delivered or returned if they are unsatisfactory. Partnering with a logistics provider that knows the market can therefore be an added value and significantly increase the chance of success. (11)

 

FOOTNOTES

1https://www.crossborder-ecommerce.com/international-expansion, cbec

2 Modern Spice Routes, The Cultural Impact and Economic Opportunity of Cross-Border Shopping, PayPal, 2013

3 https://econsultancy.com/blog/65580-what-s-happening-in-cross-border-ecommerce

4 Modern Spice Routes, The Cultural Impact and Economic Opportunity of Cross-Border Shopping, PayPal, 2013

5 Global Cross-border B2C E-commerce 2014, ystats, april 2014

6 https://www.reuters.com/article/2015/02/25/us-china-retail-internet-idUSK…

7https://www.crossborder-ecommerce.com/international-expansion, cbec

8 Global Cross-border B2C E-commerce 2014, ystats, april 2014

9 Modern Spice Routes, The Cultural Impact and Economic Opportunity of Cross-Border Shopping, PayPal, 2013

10 Global Cross-border B2C E-commerce 2014, ystats, april 2014

11 Preparing your organization for cross-border e-commerce, Payvision

 

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