Overcoming cross-border challenges: trust as one solution

December 6, 2018 by
Nico Hoeijmans

The rise of e-commerce is continuing to grow at a rapid pace. The total transaction value of e-commerce worldwide is estimated to be $2,875,507 million in 2018[1], with a global user base of 2,818,000,000[2] estimated online shoppers. The US and China represent the biggest markets globally (when it comes to their online spending) whilst countries such as Argentina, India and Japan have an impressively high growth rate[3].

These figures are remarkable, yet there are still barriers to the wider adoption of e-commerce. Cross-border e-commerce is on the rise, yet there is still the tendency for consumers to stick to their domestic online stores or within the local region.

The following example demonstrates the dramatic effect distance can have on the willingness to buy online[4]. It illustrates the level of consumer confidence within the EU when shoppers buy online from a domestic store, and cross-border within the EU.

art. safeshops1

This short article aims to put forward some keys issues for consumers purchasing online and trust can be a key part of the solution.

Increasing adoption of cross-border trade: 5 key barriers

Consumer protection

Most consumers find it difficult to understand (and use) the consumer protection regulations/legislation in their own country/region, let alone in other countries across the globe. A simple example of this would be the End-user license agreement (EULA) or privacy statements that we often skip to install a program or app. However, when deciding to shop online at a foreign store this can become a big issue for a consumer. Price and convenience may reign supreme, yet this is predicated on a secure foundation on which to make that purchase. Why buy a cheap deal online if you’re worried it may never arrive?[5]

The quality of the goods

When in-store you can clearly see, touch and evaluate the quality of a potential purchase. However, online obviously doesn’t allow this, and making a purchase from an unknown online shop cross-border can flag up certain questions in a consumers’ mind.  Issues such as receiving counterfeit goods or items that are substandard quality are common concerns in this instance. Is it worth it to save a little on the bottom line if the product isn’t up to scratch? Often this doubt is enough to discourage a consumer from choosing a cross-border choice.[6]

Concerns about delivery

Convenience is a key driver of e-commerce as mentioned previously. This is also extending to delivery, where consumers want efficient and cheap (preferably free!) options. So what happens when the delivery firm can’t be contacted easily or only in a different language? This extra hassle can be enough to dissuade a potential cross-border consumer[7].

Dispute resolution

No one likes having a problem with their purchase, whether that be online or in-store. When it does happen, consumers expect a clear way to resolve it. Legislation is catching up in this area with examples such as the EU’s Online Dispute Resolution system. Without certainty with having a potential problem resolved and a lack of easy to understand information about this, consumers will shy away from global e-commerce where procedures are not clear or in place at all[8].

Consumer payment problems

Online transactions live and die on the ability for their consumers to pay easily and quickly once they have made the decision to buy. Simple right? Well not always, and often it requires coordination with retailers to make the experience smooth, quick and easy. iDeal and Klarna are just two examples of payments options that epitomise this[9]. H&M’s recent investment in Klara, and their integration of the payment option from next year (in 14 European countries) is an example of this point[10]. If a consumer is not confident in the payment options available cross-border or is not offered enough choice, the result will be a missed sale and a negative experience moving forward.

Solidifying trust for the consumer: the trustmark

One way to increase the trust that consumers have when purchasing online are trustmarks, such as Safe.Shop. In the graph below consumers were asked[11]:

art. safeshops2

As you can see 70% of consumers felt that this would have a positive impact on their trust for an online store.

Trustmarks provide a visual indication that not only has a third-party verified the online store, but that the store itself has gone to the effort to prioritise gaining the confidence of potential consumers.

A  Verbrauchezentrale report stated that:

“76% are more likely to choose a website with a trustmark.”

This is further illustrated from the perspective of SMEs when asked[12]:

art. safeshops3

In terms of a direct and easy-to-implement strategy, displaying a trustmark is one of the top choices for e-commerce businesses.

Trustmarks are great for small/medium sized online shops as well as those expecting new shoppers. This is because trustmarks can act as a substitute for certain consumer trust points, such as previous experience with the online shop[13]. This is backed by previous academic studies stating that shoppers will be more receptive to trustmarks on an unfamiliar online store[14].

Cross-border e-commerce can grow faster with more trust

A consumer’s confidence and trust when shopping online plays a crucial role in their decision to buy. To drive growth (and therefore revenue) boosting this confidence is key. By implementing this at all stages of the consumer journey, the rapid growth of e-commerce will only increase.

One avenue to closing the trust gap for consumers when buying cross-border is with a trustmark. By putting forward a trusted third-party to verify an online shop, the trust barriers consumers encounter when shopping cross-border can be overcome.

“Trust is at the core of online trade. To push cross-border e-commerce to new heights, a global trustmark is needed.”

Manolo de la Fuente, Director Safe.Shops

 

[1] Statista Worldwide Digital Commerce, 2018
[2] Ibid.
[3] PayPal Cross-border Consumer Research, 2018
[4] Ibid.
[5] The challenge of protecting EU consumers in global online markets, Verbrauchezentrale, 2017
[6] Ibid.
[7] Ibid.
[8] Ibid.
[9] https://www.globaldata.com/barriers-e-commerce-must-addressed-boost-consumer-engagement/
[10] https://www.retaildive.com/news/hm-invests-20m-in-payments-firm-klarna/539205/
[11] https://www.statista.com/statistics/705482/faith-in-seal-of-approval-in-the-us/
[12] https://www.statista.com/statistics/340019/holiday-season-smbs-preffered-trust-building-strategies/
[13] Guohua, W., Xiaorui, H. & Yuhong, W. (2010). Effects of Perceived Interactivity, Perceived Web Assurance and Disposition to Trust on Initial Online Trust.
[14] Özpolat, K., & Jank, W. (2015). Getting the most out of third-party trust seals: An empirical analysis. Decision Support Systems, 73, 47-56.
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