By Huang Yue
Commerce is inherently global. But now, with changing demographics and advances in technologies as well as regulations, cross-border shopping is really picking up steam.
For evidence that global shoppers are getting savvier online, one need only look to last year’s Black Friday shopping day in which U.S. retailers successfully exported to shoppers in the U.K., France and China. Likewise, U.S. merchants adopted China’s popular Single’s Day and attracted Chinese shoppers.
Globalization is driving brands to transact more frequently across borders, and consumers are increasingly using e-commerce and m-commerce services for their overseas purchases as well. The U.S. is the most popular place for non-nationals to purchase from — an astonishing 84% of Chinese cross-border shoppers have purchased from U.S. vendors. But the U.K. is the next most popular place global shoppers buy from, followed by China and Hong Kong. Canada, Germany and Australia are also popular choices.
Demographic shifts and the growing number of people working abroad are other drivers that feed the volume of global e-commerce. These foreign workers are generating a demand for fast, efficient, secure and transparent cross-border supply chain solutions, which presents a double-edged sword for retailers.
On the one hand, easier and more secure cross-border e-commerce means it is much easier to increase your customer base by serving more markets. But it also becomes easier for foreign competitors to take a slice out of a vendor’s domestic market share, putting pressure on local retailers to differentiate with their foreign competition to stay in business.
No longer is global breadth just another bullet point in a business strategy concocted in a corporate boardroom. Hungry consumers who expect a familiar user experience and local pricing, are actually pulling brands into new territories. As a result, 2015 will see consumers exert greater influence over how global e-commerce companies operate.
Enabling a consumer in one country to buy from an online retailer in another country is incredibly complex. In addition to language and currency considerations, other factors that come into play include: cost factors such as duties, taxes, brokerage fees; customs compliance requirements including product classification, restricted party screening, import/export documentation; and, complying with address formats of destination countries to prevent delays and other issues with last-mile delivery.
Aside from these cross-border language and logistical issues, huge volumes of data need to be analyzed in order to identify issues and opportunities. By applying analytics and generating insights to consumer data, merchants can track and compare performance per country, per payment method and, over time, create steps to optimize processes. Simply put, many online retailers, especially small and midsize ones, lack the internal expertise and technology to make cross-border e-commerce work.
Without flexibility, globally integrated supply chains can punish in the same way they reward. A problem in one part of the world can impact other areas. Narrow focus on one part of the world could mean missing buyer demand in another part of the world.
Having multiple options to enter a market such as in-country fulfillment, international shipping and landed cost visibility help a global supply chain stay limber. To achieve this, companies are keeping warehouses closer than ever to buying hubs.
Brand awareness is the key to online retailers looking to increase their global footprint. Most businesses are using social channels to reach a new generation of customers and drive conversions.
Facebook is said to be the social platform that creates the most conversions for retailers. Social media in general is playing an increasingly decisive role in the buying process, influencing both new product discovery and buying decisions. This year, retailers will place greater emphasis on selling products via these social channels.
So what are consumers buying?
For starters, specialty products that are not available in the consumer’s home country are driving cross-border shopping. Consumers who buy online from overseas sellers are keen to seek out anything new and are actively hunting for new overseas sites. Up to a third of their purchases are from overseas websites of novel products not available locally.
Emerging economies offer new opportunities for all global e-commerce merchants and vice versa. The growing global middle classes now have access to the Internet and are eager to buy discretionary goods that may not be readily obtainable in their home markets.
For the rest of 2015, everything will be on the customer’s terms.