Results from a new study commissioned by FedEx (FDX) and conducted by Forrester Consulting on the priorities and preferences of global online shoppers indicate how truly global online shopping has become, according to a recent press release. In an effort to better understand global purchasing behavior in cross-border e-commerce, researchers questioned over 9000 respondents in 17 countries and territories, as well as conducted interviews with small-and-medium businesses with cross-border operations.
With online buying behavior currently representing over $1 trillion in sales per year and forecasted to nearly double in the next four years according to Forrester Research data, the findings of the paper, Seizing The Cross-Border Opportunity, are revealing. Clothing and apparel are the most popular online purchase, along with books, electronics and cosmetics. The study also found a significant part of e-commerce shopping globally involves cross-border shipments.
“This research provides deep insight into the priorities and preferences of global online customers and highlights how small and mid-sized retailers can better take advantage of the cross-border opportunity,” said Raj Subramaniam, executive vice president, global marketing, FedEx. “Knowledge about both the cultural similarities and differences in geographic markets can help businesses gain real online retail advantage.”
Global results:
- Eighty-two percent of global respondents report making an online purchase from a merchant outside their home country. These rates vary minimally across regions from a high of 90 percent of Canadians reporting purchasing cross-border compared to a low of 59 percent of Japanese. On average, these customers reported spending about $300 on cross-border items a year.
- Primary online shopping destinations are the U.S., China and the U.K. While shoppers indicated purchasing cross-border from all 17 international markets included in the study, the U.S., China and the U.K. were the top three exporters of online purchases. Ninety-one percent of Canadians who responded reported making their cross-border purchases from the U.S., with Latin American shoppers sourcing from the U.S. as well, including 68 percent of Brazilians who responded. Europeans have a tendency to order within the EU, although U.K. businesses ship primarily to the U.S. and Australia. Shoppers in Japan and Korea stated they purchase more frequently from the U.S. than they do from their APAC neighbors.
- Cross-border shoppers prefer to purchase from well-known major multi-brand retailers and global online marketplaces. In fact, the majority of respondents in every country surveyed ranked major multi-brand online retailers or marketplaces as their first choice out of five business types for cross-border purchases. The findings indicate an effective way for SME retailers to enter the global arena is through online marketplaces.
- Duties and taxes curb cross-border activity. While shipping cost and delivery time are top of mind with shoppers, over a third of global respondents cited high duties/taxes as a concern for cross-border shopping. The impact of duties and taxes was even more pronounced when researchers explored creating a standard duty-free threshold. If all online purchases under $200 U.S. dollars (localized) were duty free, 56 percent of global respondents would increase their cross-border shopping. Regionally, the hypothetical limit had the greatest impact on Latin American shoppers, with 80 percent of those respondents predicting an increase in their cross-border shopping. At the country level, 71 percent of respondents in India and 80 percent respondents in China indicated the same.
“The results of this study on global trends suggests that streamlining regulations by harmonizing duty free limits across the globe could result in a significant uptick in cross-border trade, benefiting consumers and businesses around the world,” said David Cunningham, chief operating officer and president, international, FedEx Express.
The online survey offers a glimpse into American’s cross-border shopping habits as well. Results show that 67 percent of U.S. respondents indicated they buy items online at least once a month and a little over 30 percent say they make online purchases of goods from merchants outside their country at least every few months.
What all this means for the small and mid-size businesses is they also have an opportunity to take advantage of regional differences. Most Americans in the survey look to international SME retailers for specialty and unique items. In fact 51 percent of Americans vs. 34 percent of global respondents cited it was the availability of specialty/hard to find items as a reason for shopping cross-border.
Americans also indicated a greater interest in international cross-border shopping where the experience provided simple exchanges, guaranteed costs at check-out including duties and taxes, and free returns.
In a world of globalized shopping, cross-border e-commerce appears destined to grow exponentially, benefiting small and mid-size businesses and consumers with exciting and expanding opportunities.
Findings are based on Seizing The Cross-Border Opportunity, a commissioned study conducted by Forrester Consulting on behalf of FedEx, December 2014 and a commissioned survey conducted by Forrester Consulting on behalf of FedEx, August 2014. More details about the study are available here.