What We Know
If you look deeper at the data, what you see is that while sales in North America (US and Canada markets) are growing, it’s not at the rate that online sales are growing in emerging regions such as Asia-Pacific.
In fact, ecommerce is growing significantly in the BRIC countries – Brazil, Russia, India and China, with China alone expected to surpass the US ecommerce market. So let me rephrase my initial opening…
There has never been a better time to start thinking about your international ecommerce strategy.
Cross-border shopping is not something you typically see in the US because there’s such supply. But consumers in many markets can’t get the things they want domestically and this presents a significant opportunity for US retailers.
Already we see significant ecommerce occurring between the United States and Canada and there’s no question that the US-Canada corridor will continue to be the biggest cross-border opportunity for US retailers (depending on what’s sold). But getting access to even greater global demand should be on every retailer’s to do list – particularly when you look at the growth in demand in developing markets
In our own global online shopping study we found that 66% of consumers now shop online, and 40% had purchased goods from another country. There are still many misconceptions around online shopping, particularly in South Korea, India, China and Japan, where many consumers don’t realize they can buy goods outside their own country. For those that did shop cross-border, the most desirable e-destinations were the US, UK, and Germany. This is a trend that US retailers can tap into by demonstrating the ease and accessibility of shopping online.
Currently, the biggest US cross-border growth engines are Canada, the UK and Australia. But our research shows there is significant opportunity in markets like Brazil, Germany and China. And those markets – particularly Brazil and China – are growing at a much faster rate.
When is it right to go international?
One of the big questions you might be asking is, “Am I selling products that global markets want?” And at what price point does international Ecommerce makes sense? The answer might actually surprise you. We’ve found that the average order value across all types of goods is around US$120. There is a lot of demand for lower value goods. This is especially true for Canada because shipping is relatively cheap relative to overseas markets.
Despite its distance, Australia is another strong market for US retailers. This is largely due to the duty threshold of $1000 Aussie dollars and lack of local supply which makes it cheaper and more practical to get goods cross-border, even if you factor in shipping from the US.
Historically, the highest volume of cross-border purchases are luxury goods/brands such as apparel, jewelry, shoes, etc. And while apparel has been the leader in Ecommerce sales, as the price point for shipping comes down we are starting to see the product categories expand- for example, selling auto parts to Australia.
The key to determining if you have something that is saleable in another market is to look at the market from a local perspective. What kind of supply is there for a product like yours and at what price point? What kind of selection is there? This information will help you decide if it’s a market you can do well in.
In our global Ecommerce study we asked the primary reasons why consumers shop outside their country. The top three reasons included price (68%), availability (46%), and selection (38%).
Cross border shopping doesn’t come without its challenges.
If you are going to have a successful international Ecommerce strategy, these are the things you’ll want to pay particular attention to:
-Shipping costs and tracking visibility
-Clarity in cross-border fees at the time of purchase (i.e., duty/taxes)
-Reasonable product delivery times.
Data security is another top concern within a number of markets. The good news is all these barriers to cross-border shopping can be dealt with by leveraging partners that have this expertise.
Your international ecommerce strategy.
If you have decided that it’s time to get your international Ecommerce strategy in order, there are a few things to think about.
-The most important thing you need to do is provide clarity and accuracy into the online buying process, transparency and certainty in delivery, and competitive pricing. These are table stakes. To do these things you will need to think about and plan for customs and brokerage management, import and export management, international address validation, optimized global shipping, denied parties screening, parcel protection and more. Sound overwhelming? It can be – but you don’t have to do this all yourself – there are companies out there (including ours) that specialize in providing these services.
-But let’s take it a step further – let’s start with your website. This channel is your face to the world. When an international shopper visits your website, welcome them and speak in their language – make sure they understand that you understand their culture and their shopping preferences. If you don’t tell them otherwise, they will assume that you think they are just another domestic shopper, which creates uncertainty. And language doesn’t mean the language they speak. It’s important to clearly show the costs and implications of buying from you, which means presenting costs in their currency including taxes/duty, shipping, etc. Even more than showing it, you need to follow through on the promise of cross-border retail by delivering goods in a reasonable time and with clear tracking visibility. You’re intent should be to create an experience that mirrors that of your domestic shoppers, which makes the customer feel comfortable enough to buy from you in the first place, and to come back again and buy more. And be sure to stay consistent throughout the process. If you want to use local language or currency, make sure you’ve thought through the implications for post-order emails, packing slips, customer service, etc.
Two-thirds of the world’s purchasing power is outside the United States. That’s 790 million international customers who are potential new customers for US retailers. Today, only 50% of US online retailers engage in cross-border ecommerce. It’s clear that the opportunity is significant and growing quickly, so take advantage of what could potentially be an extremely profitable channel for new revenue.