This article was previously published in Cross-Border Magazine
Author: Nico Hoeijmans
Over the years, it has become significantly easier to buy products and services from anywhere in the world. Having it on your doorstep within only a few days is realised by an increasing amount of e-commerce entrepreneurs, too. For domestic orders, that might not come as a surprise, especially in mature markets. However, upcoming markets are also increasingly focused on e-commerce and service demands and levels are rising. As the growth of online markets continues, both sales of global e-commerce and cross-border e-commerce are expected to steadily increase.
The cross-border shopping market
Research by eShopWorld predicts that global physical e-commerce sales are valued at $2.02 trillion in 2019. Over the next few years, this number is expected to increase to $2.86 trillion in 2023. That means online shopping will realise global growth of more than 40% in five years. Currently, the Chinese market has the largest share overall in this enormous amount of sales. It accounts for $740.42 billion (40%) currently in 2019 and is expected to maintain its leading position.
When looking at just the cross-border sales figures, it can be concluded that cross-border e-commerce sales are valued at $826 billion in 2019. This figure is expected to increase, just like the global e-commerce sales figure. For 2020, total cross-border sales are expected to rise to $994 billion (+20%).
Consumers in the Middle-East (56%) and Africa (50%), in particular, state that they shop both domestically as well as cross-border. This may be due to the lack of availability of products in the local area. The reversed version of this argument would explain why cross-border shopping is relatively less popular in North America and the Asia Pacific regions. With large marketplaces and resources in these areas, it is easier to obtain products from locals, which makes the need to shop cross-border less urgent.
Both in domestic as well as cross-border sales, the fashion market segment is the largest. In 2018, the global revenue of the fashion e-commerce market reached $600.99 billion. It is predicted to grow to $825.55 billion in 2022. The second largest market segment is consumer electronics.
A market is not just growing by itself. In any case of growth, there are always stimuli that make something grow faster. Of course, there are threats that can slow down developments as well. In the current global e-commerce market, five general trends can be seen to stimulate growth:
- Customer experience
Improvements to the checkout process to make it as seamless as possible for the shopper, such as a one-step checkout, are one focus area for customer experience initiatives. Loyalty and membership programmes are also proving popular methods among online retailers for improving the customer experience.
Consumers like to shop as they please. Sometimes that is online, sometimes it is not. Click and collect and checking store availability online are two key omnichannel capabilities that shoppers are demanding.
- Delivery optimisation, last mile fulfilment & returns
Parcel delivery boxes, premium packaging, and import consolidation are current innovations in this area. More long-term innovations are drones, autonomous vehicles, and delivery robots. The developments in these fields are picking up at rapid pace.
- Innovative product discovery developments
Visual image search and voice search are opening up new methods of product discovery, while social media is enabling more efficient product discovery.
- Customer segmentation and personalisation
Big data allows retailers to segment and analyse consumers based on their habits and shopping behaviour, which is driving a move towards personalisation.
The endless opportunities of technology
Technology can be considered one of the key drivers of e-commerce. Currently, developments in the fields of artificial intelligence, augmented reality and virtual reality are gaining strong momentum. Consumers benefit from these innovations that enrich the online shopping experience. E-commerce entrepreneurs, on the other hand, have the opportunity to offer a better, more suitable assortment to their customers, decreasing the chances of returns and increasing the chances of potential sales.
Another major development takes place in the field of voice commerce. It has the potential to revolutionise the e-commerce shopping journey and change how consumers interact with online retailers through voice search and purchase.
Finally, online payment methods are also developing at high speed. Purely online payments and other alternative payments are rising to meet the needs of consumers online. E-wallets, bank transfer payment solutions and mobile payments are becoming more common in a lot of e-commerce markets. Alternative, blockchain technology and cryptocurrency technology are developing as well, and online shops can begin to consider offering these forms of payments at checkout, which do not require any intermediaries when a payment is made.
A view on promising markets
In general, it can be stated that, due to the popularity of e-commerce and current technological developments, many online markets show a growth trend. Taking a closer look, a few emerging markets may be worth keeping an eye on in the coming years. Brazil, India, Indonesia and Singapore are particularly promising markets. E-commerce currently accounts for a moderate amount of total retail sales (3.3-4.8%) in these countries. However, over the next few years, substantial growth is expected. In Brazil and India, the fashion market is booming, whereas in Indonesia and Singapore we can see a high growth rate in the consumer electronics market.
Deciding to start selling cross-border can be a challenge. Do not forget to carefully research future markets of interest. Statistics can be helpful to identify potentially interesting markets and help you decide which markets you want to research more in-depth.
The full Market and Innovation Report can be downloaded on eShopWorld’s website.