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Consumers Have Embraced Cross-Border E-commerce But Too Many Retailers Haven’t

A globalized economy means more opportunities for profit, and also poses more challenges for retailers of any size. In a new report from global e-commerce growth firm Flow, shoppers in 11 different countries shared their cross-border shopping behaviors, general shopping tendencies, and preferences in checkout and retail web experiences.

In the markets surveyed, 67 percent of shoppers reported purchasing from retailers outside their own home countries. The highest incidences of cross-border shopping came from Brazil, Australia and Canada, where over 80 percent of respondents in each market reported purchasing cross-border. Around two-thirds of shoppers in the U.S., U.K. and China reported purchasing from other countries.

“We know that cross-border selling is important and fast-growing,” said Juliana Pereira, vice president of marketing at Flow. “It has been estimated that cross-border e-commerce will account for 20 percent of total e-commerce sales worldwide by 2022.” However, while many online merchants are attempting to sell cross-border, only a small percentage of those are actually equipped to be successful. Most merchants don’t have the right tools to handle challenges like multi-currency pricing or real-time and easy-to-understand tax and duty information, Pereira said.

When retailers are determining their cross-border capabilities, it’s important to consider demographic differences across markets. Age is one such factor. In six of the 11 markets surveyed (Brazil, China, Germany, Japan, the U.K., and the U.S.), shoppers between the ages of 45 and 54 were much less likely to purchase from other countries. In South Korea, age was still significant, but actually correlated with higher rates of cross-border shopping, with 52 percent of respondents between 45 and 54 reporting cross-border shopping. Higher household incomes also seemed to increase tendencies towards cross-border shopping, particularly in China, Japan and South Korea.

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The report also notes variations in shopping behavior based on proximity. Australian shoppers, for example, were much more likely to purchase from New Zealand, Canadian shoppers from the U.S., and so on. Interestingly, French shoppers were more likely to buy from Germany than vice versa, but both countries’ consumers purchased from the U.K. at similar rates.

Apparel was the most-shopped category, with 58 percent of respondents indicating they had made cross-border apparel purchases. Shoes and fashion accessories had the next-highest percentages of shoppers, 32 and 31 percent respectively, just above consumer electronics. Apparel shopping was most popular among Brazilian and Canadian respondents.

Pereira said apparel and accessories are already one of the most popular categories for domestic e-commerce, so it makes sense for those categories to be popular in cross-border purchasing too. “For one, these items tend to be compact so they are easier to ship in packing envelopes or small boxes that are more cost effective because of smaller packaging dimensions and shipping weights,” Pereira said. “When considering all the factors that go into selling fast fashion and ready-to-wear cross border, including price point and the level of risk, it makes sense that apparel and accessories would be more popular for cross-border shoppers than higher-ticket or larger items like electronics and furniture.”

For respondents who reported no instances of cross-border shopping, barriers to the behavior were no surprise. The two main factors that prevented shoppers from buying were high shipping costs and slow shipping speeds—both of which lead to abandoned carts in domestic shopping, too. Pereira named other challenges that cross-border retailers face, like product localization and catalog targeting, offering various local payment options, rapid shipping and making returns simple. “All of these factors contribute to creating a holistic localized experience for customers so that they have the same experience as if they are shopping from a domestic retailer,” said Pereira. “The greatest challenge is being able to effectively address all of these factors together.”

Different countries’ respondents reported a wide range of values, preferences and needs when cross-border shopping. Notably, currency exchange rates was a significant factor for Canadian and Australian shoppers making purchasing decisions. Site security was a top issue for shoppers in France, Japan and the U.S.