Report highlights cross-border e-commerce opportunities
Cross-border e-commerce offers aggregate growth rates not available in most other retail markets, according to a new report.
Retail volumes in cross-border e-commerce are predicted to grow at an annual average rate of 25 per cent between 2015 and 2020 (from US$300 billion to US$900 billion) – twice the pace of domestic e-commerce growth.
Online retailers are also boosting sales by 10 to 15 per cent on average simply by extending their offering to international customers. An extra boost comes from including a premium service offering: retailers and manufacturers incorporating a faster shipping option into their online stores grew 1.6 times faster on average than other players.
DHL Express has published research highlighting the significant growth opportunity for retailers and manufacturers with an international online product offering. The report, The 21st Century Spice Trade: A Guide to the Cross-border E-Commerce Opportunity, looks in detail at the markets and products offering the highest growth potential, the motivations and preferences of customers making international online purchases, and the success factors for online retailers seeking to expand overseas. It focusses in particular on the opportunity for premium products and service offerings, with higher basket values accounting for a significantly higher proportion of orders in cross-border transactions.
Rising consumer education and e-tailer awareness of opportunity is spurring growth in markets outside of China, the UK and the US, the three biggest spice-route supply markets which now account for about 60 per cent of the revenue. These include Hong Kong, India and Singapore in Asia, plus France, Germany, Italy and Spain in Europe, key markets from which spice routes for high-value purchases are being expanded — with growth rates up to two or three times higher than the global average. The report also says the $30 billion market of high-basket-value transactions is evenly divided between Asia, Europe and North America.
“Shipping crossborder is much, much easier than many retailers believe, and we see every day the positive impact that selling to international markets can have on our customers’ business growth,” says DHL Express CEO Ken Allen. “We also see that virtually every product category has the potential to upgrade to premium, both by developing higher-quality luxury editions and by offering superior levels of service to meet the demands of less price-sensitive customers.
“The opportunity to ‘go global’ and ‘go premium’ is there for many retailers in all markets. Our global door-to-door time-definite network is perfectly positioned to support any retailer developing a premium service offering or simply looking for a way of reaching new overseas markets directly without investing resources in warehousing or distribution.”
DHL Express Singapore MD Frank-Uwe Ungerer says small and medium-sized retail and manufacturing players can capitalise on opportunities generated overseas through his company’s “gold standards of service and delivery that consumers have come to expect”.
The DHL report is based primarily on research and in-depth interviews by a global management consultancy, as well as more than 1800 responses to a proprietary exporter survey of retailers and manufacturers in six countries.
It says manufacturers are increasingly taking advantage of e-commerce to move to direct retail models, bypassing middlemen and offering products online to the end customer. They expect to grow 30 per cent faster in cross-border e-commerce than other retail groups.
For consumers, the main challenges highlighted relate to cross-border logistics, trust, price and customer experience.
The report notes the e-commerce trend has given birth to a new eco-system of services and off-the-shelf software, such as payment providers and programs that localise a website’s check-out experience. This helps retailers adapt their offering to the digital world and to transact with customers in foreign markets.