It's barely surprising that the big reasons why people buy cross-border are to get goods they can’t find locally and to make savings. Slightly more surprising is it to note that two-thirds of cross-border online shopping is done through the various marketplaces. The boost in cross-border trade has several reasons: the localization quality of marketplace and e-commerce sites has improved. They are way better in serving international customers. More choices and better logistics when it comes to fulfilment are a big help too. One more accelerator of cross-border sales is the bigger choice when it comes to international payment. The popularity of mobile, especially in countries where many (or most) people don’t have a desktop or laptop computer is also crucial.

The biggest cross-border shoppers will be the Chinese. according to the Forrester research, half of the global cross-border shopping trade will be from China in 2017. It is expected that this number will grow. It is said that 200 million Chinese shoppers will buy overseas on 2020. This would mean the total number of imported goods bought online will reach $245 billion. The key position is reserved for Alibaba, which has been continuingly promoting its Tmall proposition.

The deal between Stipe and Alipay and WeChat’s will grease the wheels as well, while it will be easier for Chinese shoppers to make cross-border payments.

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■ Cross-border shoppers in developing markets are increasing significantly. Forrester’s survey data show an increase in online adults shopping online across borders in many European and Asia Pacific countries. Online cross-border buyer growth in Latin America, Asia Pacific, Africa, and the Middle East will see double-digit compound annual growth over the next five years — significantly more than the growth in Europe and North America.

■ Marketplaces are increasing their share of cross-border sales. Cross-border shoppers prefer to use global marketplaces when they shop abroad.  Alibaba, which holds half of the online B2C market in China, increased its share of online sales from outside China to 7% in 2015.  In Japan, online marketplace Rakuten reported 41% growth in cross-border sales in 2015, more than twice the growth of the domestic eCommerce market.  In Germany, France, and the UK, more than half of cross-border buyers buy from Amazon and eBay.  

■ Cross-border shopping is becoming easier and faster. Free-trade zones (FTZs) in China lower taxes on imported goods. Bonded warehouses within FTZs allow retailers to ship goods across borders in anticipation of a sale, reducing the time to deliver to the consumer to just two to three days.  As cross-border shopping develops, cross-border buyers look to reduce shipping costs and delivery times by shopping closer to home. Forrester’s survey data shows for example that 38% of online cross-border buyers in South Korea bought from other Asian countries in 2015 up from 35% in 2014.

Price, Choice, And Authenticity Drive Cross-Border Shoppers
Consumers shop across borders to find cheaper goods, goods that are not available in their domestic market, or to shop at international retailers they can trust.  Although cross-border shopping often implies longer delivery times and higher delivery costs than for domestic purchases, the price (including shipping), choice, and authenticity of products drives consumers to shop across borders:

■ Price. A country's cross-border shopping correlates with the country's average price of goods. The higher a country's price level index, the higher the opportunity for online shoppers to find retail items cheaper outside their domestic market.  For example, domestic goods are expensive in the Nordic region and in Australia, which explains why more than 70% of Nordic shoppers and 80% of Australian online shoppers have purchased from abroad.

■ Choice. Larger competitive domestic online markets, such as Germany, France, the UK, and the US, inhibit the need for shoppers to buy goods across borders.  Online buyers in countries with small eCommerce markets, such as Russia, Mexico, and India, are more likely to shop across borders to find a better choice of goods. Canada is also a small online market; it’s less than a 10th of the size of the US. Given the convenience of having a large online market on its doorstep, it is not surprising that one-third of Canadian online retail sales in come from across the US border.

■ Authenticity. Product quality and authenticity are also important factors for cross-border shoppers, especially in India and China.  Chinese shoppers favour foreign brands over domestic brands notably for luxury goods, baby food, and beauty products.  Alibaba has recently undergone criticism for not managing counterfeit goods on its websites; this has hurt its reputation and further reinforced the need for online shoppers to buy across borders from recognized overseas websites to guarantee the authenticity of their purchases.

Retailers Must Embrace The Opportunities Of Cross-Border Shopping
Shopping across borders not only helps retailers understand new consumer needs, but it also helps logistics companies develop more efficient ways to deliver goods across the globe while improving the customer experience of the online cross-border buyer. Cross-border shopping helps retailers:

■ Develop a more integrated cross-border delivery network. Shipping costs are the most common reason in Europe for not completing an online purchase.  With half of all cross-border retail taking place between regions, online retailers are increasingly investing in global logistics solutions for efficient cross-border delivery. Both Alibaba and Amazon have made major investments in global supply chain infrastructure to facilitate cross-border retail.  Amazon is expanding its logistics operations in China to reduce logistics costs and make it easier for Chinese merchants and manufacturers to transport their goods to major hubs around the world.

■ Use online habits to drive cross-border habits. As in domestic online retail, apparel and accessories is the most popular cross-border category; one-fifth of the EU-5's online cross-border shoppers report that they've recently ordered clothes/accessories from a website outside their own country.  In Australia, which is a mature online cross-border market, the growth in cross-border commerce mirrors eCommerce growth.  Inhibitors to cross-border trade are similar to those associated with online shopping — whether that’s web interfaces that don’t adapt to the shopper’s preferred device, the inability to deliver content in their preferred language with their preferred payment and delivery options, or the lack of credibility and authenticity of the goods bought.

■ Identify gaps and opportunities within domestic online markets. Understanding the categories that cross-border shoppers buy helps identify gaps and opportunities within domestic markets. For example, it can highlight different prices for the same goods in different markets or how domestic markets don’t meet online shopper needs.  In 2015 only 17% of French online cosmetics buyers bought beauty products across borders, compared with 34% of their Italian peers.  Given that France is a key provider of premium cosmetics products to Europe, it is not surprising that French online beauty buyers are less likely to shop across borders than the Italians.  

This report uses data from Forrester’s Global Online Cross-Border Retail Forecast, 2016 To 2021 and from Forrester’s Consumer Technographics® surveys to understand online cross-border shopper behaviour. Michael O’Grady is a Senior Forecast Analyst at Forrester based in London.

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Our partner Intershop has been cited as a Strong Performer in B2C & B2B commerce suites by renowned industry analyst firm Forrester Research, Inc. The report, “The Forrester Wave™: B2C Commerce Suites, Q1 2017” ranks Intershop in its top three B2C vendors based on its current offering score and among the top in the B2C solution architecture category. 

Decision makers looking for a commerce platform with “strong core commerce capabilities” for the challenges their business is faced with today find in the Intershop Commerce Suite an attractive option while its “strong technical roadmap” helps them to easily tap into coming opportunities in the fast spinning world of B2C. Intershop´s “deep ecosystem of partners” assures the globally available expertise to realize and further develop the envisioned digital landscape.

Also in the B2B sector, Intershop is valued highly by the research experts: While the B2B market is currently undergoing dramatic changes, complexities increase for B2B companies due to channel conflicts and a dramatically changing landscape of competitors. The Intershop offering, however, was noted in the report to be a best fit for complex scenarios: “Intershop is a best fit for brand manufacturers that have complex channel support requirements, need especially well-developed commerce feature functionality, and are looking for flexibility on global pricing and licensing.”

However, complexities and dynamics in the field are unlikely to subside in the coming years. The more important it is for organizations to have a commerce landscape in place that is designed to run a successful business today, but is ready to easily tap into upcoming opportunities. The Forrester report noted the following about Intershop: “On top of solid and well-built commerce features, Intershop demonstrates a strong technical road map and a selectively deep ecosystem of partners and developers ...”

Read the full B2C report here

Read the full B2B report here

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