Global ecommerce continues to accelerate and is expected to reach $4.5 trillion by 2021. Worldwide spending online increased 18% in 2018, according to Internet Retailer. The vibrant growth provides a significant opportunity for retailers who are ready to move beyond their home country’s borders and sell internationally. In fact, a recent Nielsen report found that 57% of shoppers bought something from an overseas retailer within the past six months.
Overall, the global outlook is promising. According to a 2018 briefing by the United Nations, the global economy is finally growing again after a sustained stagnant period. Regardless of doubts incurred by some political instability — notably Brexit and trade wars dominated by the United States and China — the worldwide economy is experiencing increased investment and trade, improved spending attitudes by both businesses and consumers and better labour market conditions. Moreover, cross-border ecommerce is increasing, as consumers look beyond their country’s boundaries to get the goods they want.
Even though international ecommerce expansion is a key growth opportunity for retailers based in the United States and Europe, it can be a daunting enterprise to embark upon. Here, we explore what to consider and your international retail opportunities to take advantage of.
Things to ponder when going international
The world is a diverse place, with international consumers all bringing their different expectations to the table. If your business is expanding beyond borders, there are a few things that you may want to consider:
Customers in different countries prefer paying in different ways. Whereas United States buyers prefer credit, debit, PayPal, PayPal Credit and Google Checkout, debit is a popular payment form in the United Kingdom. In Russia, cash is still king. You need to set up a payment infrastructure that best meets local preferences.
Product and content localisation
You have to customize your product and content for each market. That means you have to understand local product preferences, descriptions, images and safety regulations.
Although English is widely spoken in other markets, retailers need to evaluate whether to translate the content on their websites. Some retailers elect to translate only portions of their website, whereas others translate entire sites. Wherever content is translated, it needs to be localised and then tested for accuracy.
Tariffs and taxes can significantly raise the final price of products. It is critical to understand how these charges will affect sales and pricing. Some online markets are extremely price-sensitive; others are not. International shipping is another aspect of pricing that can prove a deal-breaker for buyers in some markets (see below).
Shipping costs can also significantly affect the price of the transaction – especially for international shipments. The cost to the retailer to fulfil orders will vary significantly based on where the inventory is located and what partners they’ve signed up with.
Expanding into new markets means serving customers with whom you have no transaction history. You might also be facing different restrictions on using data that can help identify whether an order is legitimate or fraudulent.
The countries of opportunity
There are ecommerce opportunities all over the world, but understanding the market size, their struggles and how to succeed is essential. Of course, different countries present different market opportunities that should be explored.
China: The land of burgeoning opportunity
China is still the supersized version of ecommerce when compared to the rest of the world. Chinese ecommerce revenue in 2018 was almost as much as the United States and the United Kingdom combined. Retail web sales totalled 7.18 trillion yuan ($1.149 trillion).
Clothes are the most popular goods to purchase online, followed by food and drink and footwear and toiletries. Chinese consumers don’t trust credit cards. Most use cash on delivery or Alipay, a digital payments system spun off from Alibaba. Consumers also expect free, fast delivery and will base purchasing decisions on your ability to supply that, as well as the promise of free and painless returns.
Japan: Convenience reigns
Japan is the third largest (after China and the United States) online retail market in the world. It’s been growing at roughly 9% a year for the past few years, with 74% of consumers regularly shopping online.
Electronics and media is currently the leading product category in Japan for online sales, accounting for $23.7 billion. Interestingly, the top two reasons that Japanese consumers buy online are based on convenience. A full 71% mentioned being able to buy anytime and 62% like that they “don’t have to go outside”.
75.5% of Japanese shoppers prefer to use credit or debit cards online, compared to 4.5% who like to pay with cash on delivery.
Germany: Online lovers
A full 92% of German internet users have made an online purchase in the past 12 months. Even 89% of over-65-year-old internet users have shopped online in the past year. Germany lags behind only the United States and the United Kingdom in cross-border ecommerce, so online buyers are constantly looking beyond Germany to purchase attractive goods.
Germans’ favourite payment methods are credit or debit cards (29%), invoices (26%) and digital payments (22%). It’s clear that payments are diverse in Germany, so offering a range of payment options at checkout is essential.
Because consumers prefer to shop with recognised local retailers, international sellers should put up a local website with the .de domain.
France: A maturing market
Although not dominant, online retailing in France continues to grow. Like many countries, online spending typically rises at the end of the year, with about 20% of sales coming during the holiday season. A full 80% of French consumers compare prices before buying and flash sales have grown in popularity.
French consumers expect a truly “impeccable” buying experience that combines convenience, speed, reliability and regular reassurance about where their packages are in the delivery process. Due to customer expectations, you’ll probably need to offer multiple delivery options.
South Korea: Mobile shoppers
Ecommerce is critical to consumers in Korea, where 99.2% of households possess internet access. Consumers tend to window shop at traditional stores, then go online to find the best deals.
Mobile ecommerce is driving South Korea’s explosive ecommerce expansion. Whereas online shopping grew by 19.2% last year, mobile ecommerce increased by 34.6%. Mobile transactions represented 61.1% of the total market value of online purchases. Korean consumers are mostly concerned about price when shopping online.
Canada: Open for business
Ecommerce has been slower to take hold in Canada due to low population density, high shipping costs and relatively high sales taxes. But that looks like it’s changing.
Fashion is the leading sales category, followed by electronics and media. Cross-border shopping is extremely strong in Canada, particularly at U.S. online sites. Half of what online shoppers in Canada purchase comes from foreign sites. 75% of Canadian shoppers think free shipping is critical when deciding what site to buy from.
Russia: Comparison gurus
According to the Russian Association of Internet Trade Companies, cross-border sales accounted for a 37% share of online transactions in 2017. Russians tend to compare online extensively before they buy – 58% of consumers compared products, prices and features online before purchasing.
Russian consumers distrust the safety of online ecommerce transactions. Cash on delivery is the main payment method (80%). Price-sensitive online shoppers also gravitate to stores that offer lower prices and purchase 50% of their online goods using discounts and special offers.
Brazil: Mobile potential
Brazil is the largest economy in Latin America. It has 140 million internet users, out of a total population of more than 207 million, which represents 42% of all online retailing in Latin America.
Brazil is the fifth-largest smartphone market in the world. Mobile transactions, which make up 27% of all online purchases, are growing. Brazilians also like to pay in instalments. In 2017, only half (49.8%) of online sales were made in one payment.
International commerce with Brazil can be difficult, however. Not only is taxation very high on foreign goods, but customs can also be very slow. It can take as long as five weeks before customs releases products to the customer. Trademarks and websites should ideally be registered within the country.
There are opportunities all over the world to enjoy ecommerce success. Understanding the international market and the challenges you’ll face is essential for overcoming them. Signifyd enables merchants to grow with confidence by providing its end-to-end Commerce Protection Platform. Powered by the Signifyd Commerce Network of thousands of merchants selling to more than 250 million consumers worldwide, its advanced machine learning engine can protect merchants from fraud, consumer abuse and revenue loss caused by barriers and friction in the buying experience.