Cross-border online trade is predicted to grow twice as fast as domestic e-commerce by 2020 while retailers can grow by up to 60% if they offer premium services, according to a new DHL Express report.
The report “The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity” highlights significant growth opportunities for retailers and manufacturers with an international online product offering. It examines the markets and products with the highest growth potential as well customer motivation and preferences when making international online purchases and the success factors for online retailers who wish to expand overseas.
The study focuses in particular on the opportunities for premium products and service offerings as their higher basket values account for a significantly higher proportion of orders in cross-border transactions.
The report reveals that cross-border e-commerce shows strongly increasing growth rates that cannot be generated by most other retail markets: cross-border retail volumes are predicted to increase at an annual average rate of 25% between 2015 and 2020, up from $300 billion to $900 billion. This is twice the pace of domestic e-commerce growth.
Online retailers can also boost sales by 10-15% on average simply by expanding their service offering to international customers. An additional boost comes from a premium service offering: retailers and manufacturers offering a faster shipping option at their online stores grew 1.6 times faster on average than other players, the research showed.
“Shipping cross-border is much, much easier than many retailers believe, and we see every day the positive impact that selling to international markets can have on our customers’ business growth,” Ken Allen, CEO, DHL Express, said.
“We also see that virtually every product category has the potential to upgrade to premium, both by developing higher quality luxury editions and by offering superior levels of service quality to meet the demands of less price-sensitive customers. The opportunity to ‘go global’ and ‘go premium’ is there for many retailers in all markets.
“Our global door-to-door time definite network is perfectly positioned to support any retailer that is developing a premium service offering or simply looking for a way of reaching new overseas markets directly without investing resources in warehousing or distribution.”
According to the report, manufacturers are increasingly taking advantage of e-commerce to move to direct retail models bypassing the ‘middleman’ and offering their products online to the end-customer. These retailers expect to grow 30% faster in cross-border e-commerce than other retailer groups. Customers in many markets are also becoming more discerning, citing product availability and trust, as well as attractive offers, as the motivating factors for shopping with online retailers overseas, the report further revealed.
The main challenges to cross-border purchases highlighted by consumers concern logistics, trust, price and customer experience. At the same time, online retailers can take a number of relatively easy steps to identify, cultivate and meet the demand from abroad. The report noted that the e-commerce trend has given birth to a new “eco-system of facilitators and off-the-shelf solutions”. These include payment providers and programmes that summarise the individual purchase experiences for the visitor, helping retailers to adapt their offering to the digital world and to do business with customers in foreign markets.
“Global logistics partners can provide support in identifying the right trade-off between centralised and local warehousing and fulfillment, while fast, reliable and flexible delivery options can be an important tool in turning speculative interest into long-term customer loyalty,” DHL Express concluded.
The report is based primarily on research and in-depth interviews conducted by a leading global management consultancy, as well as more than 1,800 responses to a proprietary exporter survey of retailers and manufacturers in six countries which looks in detail into the evolving face of e-commerce, with both supply and demand becoming more sophisticated.
