Cross-border ecommerce saw tremendous growth in 2020 and is poised to continue on that trajectory. In fact, online retail sales across the globe increased 24.1% in 2020, reaching $4.29 billion.
In the 2021 guide “Turning Browsers Into Buyers: A retailer’s guide to overcoming cross-border ecommerce hurdles,” Digital Commerce 360 and business tax solutions provider, Avalara provide insight into the current and future state of cross-border ecommerce.
Specifically, they reference data from ClearSale’s 2021 Global Ecommerce Consumer Behavior Analysis which surveyed respondents about their ecommerce opinions and behaviors related to fraud, cross-border shopping and purchasing habits in general.
It’s clear from the data in both guides that cross-border ecommerce is an area of opportunity for online merchants.
The key is to be aware of the trends that will continue to shape this burgeoning market.
The ClearSale analysis offered some promising data about the emergence and opportunity in cross-border ecommerce based on how consumers behave now.
In particular, consumers who spend more tend to be more confident about their cross-border online purchases. Over half of consumers who spend an average of $69 or more per transaction through cross-border ecommerce say they are confident about their purchases, as are nearly 70% of those who spend more than $521.
Age also plays a role, with 63% of consumers ages 18 to 24 and 62% in the 25 to 34 range reporting they buy from sites overseas. This is the primary target market for cross-border ecommerce, since the percentage of cross-border shoppers declines at a steady pace as their age increases – only 31% of shoppers 65 and older purchase from cross-border sites. It follows that younger consumers are more confident purchasing from cross-border ecommerce retailers than those in the 65 and older range.
The takeaway: Cross-border ecommerce merchants need to win
over Gen Z and Millennial shoppers to establish a loyal base
of returning customers.
The Digital Commerce 360 guide also highlighted the impact that price has on cross-border ecommerce.
According to a 2019 International Post Corporation (IPC) survey, consumers said that getting a lower price was one of the main reasons they purchased from foreign online retailers. It also revealed that
Chinese consumers accounted for 39% of those consumers’ most recent international purchases. The U.S. came in second at 14%, followed by the U.K. at 10%, and Germany at 9%.
At the same time, the survey reported that U.S. online retailers had the lion’s share of sales to major markets, such as Mexico (50% of cross-border sales), Japan (30%), and the U.K. (21%).
This phenomenon might be attributed to two other key differentiators – safety and quality. The IPC survey found that middle-class consumers valued both of those factors above price.
The takeaway: Ecommerce merchants in the U.S. have a real opportunity
for cross-border ecommerce when price isn’t the only focus.
There is no doubt that international consumers are looking for safety and quality from North American brands.
Digital Commerce 360 uncovered that 12.6% of traffic to the Top 1000 online retailer sites in 2019 came from outside of the U.S. – excluding Amazon, Microsoft, and Apple, which experience a high percentage of overseas traffic.
When analysts broke the data into product types, there were a few clear winners:
Despite this trend, cross-border ecommerce has not been adopted by the majority of U.S. online retailers. Just over half (51.5%) of North America’s top retailers ship to the U.K., less than 49% will take orders from shoppers in Germany and Australia, 43% will ship to the Middle East, and only 41% of those retailers will sell to consumers in China. Keep in mind, China is the world leader in online shopping.
The ClearSale study shows that U.S. consumers are equally reserved when it comes to cross-border ecommerce – only 52% of them shop cross-border compared to 72% of Mexican consumers, 60% of Australians, and 53% of Canadians.
This points to two factors:
The takeaway: There is a huge cross-border ecommerce opportunity
for North American online retailers in general, and an opportunity
for global online retailers to sell into smaller markets.
Cross-border ecommerce does present more of an opportunity for fraud to take place, but merchants with a comprehensive fraud prevention and protection strategy can guard their businesses from fraud and seize the opportunity that this expanding market presents.
The key is making sure you have a solution in place.
- Sarah Elizabeth, Senior Director of Marketing at ClearSale
Want to learn more? In our webinar entitled, “Cross-Border E-Commerce Expansion: Prepping product pages and combatting fraud,” ClearSale Vice President of Partnerships, Denise Purtzer hosts a discussion with industry experts about fraud prevention and global ecommerce to help merchants understand:
For more information about cross-border ecommerce and for help evaluating your fraud prevention strategy, contact one of our representatives. At ClearSale, we are here to assist you stop fraud, sell more, and create better consumer experiences.