Consumers are going global like never before. Here’s what you need to know about cross-border e-commerce.
For those of us in the transportation and logistics industries, the rise of cross-border e-commerce is nothing new. Many of us have been following the trend closely, adapting our models to meet the needs of consumers and reaping the fruits of our labor. Though we are acutely aware of the challenges that lie ahead, we see enormous potential in rethinking e-commerce fulfillment, delivery and returns.
Cross-border online trade is growing annually at about 25% – a rate most traditional retail markets can only dream of. And there are currently no signs that demand for products from abroad is going to recede. Forecasters expect cross-border transactions to be worth some US$1 trillion by 2020 and make up roughly 22% of the global e-commerce market.
Rushing the border
And more consumers are shopping across borders than ever before, according to the 2017 IPC Cross-Border E-Commerce Shopper Survey. Not surprisingly, the vast majority are turning to China – the top overseas shopping destination in Australia, Brazil, Mexico, Russia, the United States, and much of western Europe. In Brazil, Mexico and the United States, for example, China accounts for over 50% of cross-border shopper purchases.
Free trade zones and geographic proximity, such as in Europe, also make international trade especially economical and attractive, creating a dense web of cross-border traffic. Over 70% of online shoppers in Austria and Luxemburg turn to their German neighbors, as do nearly 50% in Switzerland. Over 60% of Irish consumers prefer shops in the UK, and the Belgians look across their northern border for deals in the Netherlands.
Why are consumers rushing over the border? First, they have become quite the savvy online shoppers, tapping into online tools to compare goods and services and learn where best to buy what. They do not shop cross-border by chance, but rather consciously – and for fundamental reasons. According to Google’s Consumer Barometer, better product availability, a more attractive offering, and trust in brands and shops are the main reasons. Simply put, more and more online shoppers are comfortable purchasing from abroad if they can’t get what they want at home, that’s where the best deals are, or they trust the brand.
Unless you’re selling commodities, competing on price alone is nearly impossible to maintain over time. For e-tailers the message is clear: if you want to stand out, you need to offer product availability and trust.
The potential is enormous, so why are so many companies slow to respond to this demand? A recent report by EFT lists navigating customs compliance, tracking cross-border deliveries, and managing delivery expectations as the biggest challenges. Interestingly enough, the latter two are exactly the same challenges faced by domestic shippers – and the IPC survey shows that tracking and transparency top the list of cross-border consumer expectations.
For example, when asked to indicate the importance of specific delivery services on a five-point scale ranging from “very important” to “not at all important,” some 70% of consumers said it was “very important” to know the full delivery costs up front. Nearly 60% rated both free returns and a simple and reliable returns process as “very important.” And about 50% indicated it was “very important” to be able to easily track & trace their purchases along every stage in the delivery process. The option to choose the delivery location and to receive delivery at a preferred time also topped the list.
After years of shopping domestically online, consumers have also grown used to their local shopping habits, and they expect to find the same conveniences abroad. For example, most European consumers still prefer to shop on their desktop or laptop computers. And PayPal is by far the most popular payment option, with some 61% of German consumers favoring it over credit or debit cards.
While the demand for parcel tracking is high across the board and most consumers like to receive their parcels at home, delivery preferences vary by country, making it essential for e-tailers and logistics companies to understand their customers in each domestic market. In Scandinavia, the most popular place to pick up parcels is a postal service point. Many Russians, on the other hand, would rather collect their orders at the post office.
Leveraging local to deliver global
Now that e-commerce no longer stops at the border, we leverage our local expertise and global network to meet the rising demand for service, simple handling, and competitive prices. In Europe, DHL Parcel Connect offers harmonized parcel shipping across the entire DHL Parcel Europe network – 27 countries and growing. Fast transit times, high quality standards, end-to-end track & trace, and a wide range of services for recipients are meeting the very needs outlined in the IPC survey.
Just this month, DHL Parcel Europe launched domestic operations in Switzerland, which will allow us to cater even more to the needs of our customers in the mountainous Central European country and deliver state-of-the-art domestic and cross-border logistics services.
Naturally we are also developing business models and adapting to consumer needs with an eye toward EU efforts to increase price transparency in cross-border e-commerce. In fact, we, like many postal operators, already publish our prices online, data that price comparison portals can tap into and make it easier for consumers to make informed choices. The question will be how and if regulators want to assess the “affordability” of parcel delivery. The delivery fees consumers pay are set by e-tailers and often include a margin above what parcel delivery companies charge. Nevertheless, this is an issue the cross-border e-commerce industry in Europe must follow.
Some say cross-border e-commerce is the future of e-commerce. I tend to agree. Those of us who are able to facilitate consumer border crossings – to meet their expectations as they search the globe in pursuit of products – are poised to play a role in that future.