How to accelerate your cross-border e-commerce growth

September 2020


What can retailers do to unlock their international sales potential?

Every ambitious online retailer wants to increase sales volumes and revenue. For most, the greatest opportunities are in overseas territories. Cross-border e-commerce is increasingly a key revenue driver, allowing businesses to flatten seasonal fluctuations by increasing their reach of target audiences within key international markets to create a cross-border profit centre.

What is the UK’s current situation with regards to trading internationally?

The UK formally left the EU on 31st January 2020, and as we are now in a transition period, both the UK and EU need to decide what their long term relationship will look like throughout the remainder of 2020 and beyond. The UK will leave the single market and customs union at the end of the transition, and in an ideal world, a free trade agreement will allow goods to move between the UK and EU without checks or extra charges. If by 31st December 2020 an agreement is not made, the UK faces the prospect of having to trade with no deal in place, which means tariffs on UK goods and necessitates the need for customs clearance support.

Throw in the recent pandemic and it’s easy to see why it is becoming difficult for the UK’s 208,760 retailers to make critical plans for trading outside of the UK. Despite these unfortunate events, e-commerce merchants should not stop selling internationally, because to do so would be a great mistake.

 

How are current events impacting online retailers across the globe?

Covid-19 impacted online sales globally initially, but has since rebounded. The pandemic has in fact driven further digital adoption in many countries and age groups, creating more opportunities for sales and reach than before. 

Selling to overseas consumers can reap huge rewards and there are many advantages of foreign trade. According to a recent study by Cross-Border Commerce Europe, the total online EU cross-border market represented a turnover of £98.28 billion in 2019, representing 23.55% of all e-commerce trading. Going forward, international sales are predicted to increase in sheer volume and as a proportion of all sales.

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  • Despite the UK’s population making up 13% of the EU28 countries, the UK’s e-commerce market represents a staggering 25.5% of all the EU28 countries, making it the largest e-commerce market in Europe; This huge market share speaks volumes about the UK’s relative disposable income and propensity to shop online. This also means there is so much more business out there for UK retailers, who aren’t shipping internationally, to tap into.

  • Looking outside of the European Union, the UK’s e-commerce market represents 10.5% of global e-commerce trade.

  • When taking into account international sales, the global cross-border B2C e-commerce market was £452.8 billion in 2018 and is expected to reach around £3,912 billion by 2027, growing at a Compound Annual Growth Rate of 27.4% between 2019 and 2027.

Retailers, brands and wholesalers should look to explore selling to international markets, to create greater opportunities for growth. This can be achieved by offering a broad range of international parcel delivery options, flexible payment methods and a clear and concise returns process. Furthermore, offering streamlined e-commerce customer service that’s tailored towards helping international online shoppers, and selling on overseas marketplaces such as MercadoLibre will help you tap into new markets and mirror the performance of your global competitors.

What do overseas consumers actually want?

Whistl conducted a research study to understand more about consumers’ international buying habits from a selection of six countries (Australia, France, Germany, ROI, UK and USA), to give more of an insight into these activities and thoughts on purchasing from abroad.

The survey was conducted between 25th-29th March 2020. We surveyed 1,200 adults, split equally between the UK, the Republic of Ireland, Germany, France, Australia, and the United States, to gain a nationally representative sample of adults.

In this study, Whistl found that each country differs greatly in their buying behaviour and shopping preferences. The study found that 30% of purchases were made from international countries, in the past month.

Own country purchasing.png

 

While Germany had the highest proportion of online shoppers buying domestically (over 90% in the past three months), Ireland had the highest proportion of online consumers shopping from overseas retailers.

International Purchasing.png

Therefore, it is of great importance that you analyse your customer base by country of origin to gauge whether your marketing strategy is geared towards maximising sales from your most opportunistic markets.

 

 

Which international markets hold the greatest opportunities for cross-border ecommerce growth?

Trying to figure out which are the best countries to export to? A sensible place to start is to understand what drives consumers to buy from abroad. In our study, Whistl found that cost saving is the most popular reason, followed by product availability.

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The same study also found that these variables differ depending on the respondents’ ages and demographics. For example, we found 18-39 year-olds rated access to better technology +65%, higher product quality +50%; earlier product access +45% more than the 60-79 age group.

The next step we recommend is that you review your product range against the cross-border markets, and biggest e-commerce industries, with the most potential.

In the Whistl study, we found some consistencies across all foreign markets. Men were more likely to buy electronics and sporting goods, whereas women prefer purchasing clothing, household and beauty products. This bar chart will give you an idea of overall category popularity:

Popular International Purchases.png

While it’s useful to understand global trends, deeper analyses on a country-by-country basis reveals greater insights into consumer preferences:

  • Shoppers in the Republic of Ireland bought more clothing, shoes, and accessories than the other countries surveyed, as well as beauty/healthcare and entertainment products.

  • France purchased a higher percentage of telecommunication and electric items but significantly fewer healthcare products than the other 5 countries surveyed.

  • Shoppers in the UK and Germany were less likely to purchase beauty and personal care products from abroad.

  • American shoppers bought fewer household and entertainment products from international markets.

Why do international shoppers buy from the UK?

While the UK’s biggest export markets are the USA (15.7% share of all exports), followed by Germany (9.9%), China (6.9%) and France (6.6%), globally different countries show different preferences; Whistl analysed the UK and overseas online shoppers’ preferences, to determine which markets are most popular for cross-border purchases. For 5 of the 6 countries surveyed, China was the most popular international market that consumers bought from, followed by the UK and the USA.

But why do international consumers choose to buy from the UK? The UK is widely regarded as ‘leading the world’ in online retail. However, the Whistl study also found the UK is consistently the second most popular market for international consumers. This applies to key markets including clothing, electronics, household goods, entertainment, food and wine. 

China edges ahead of the UK in popularity for international sales, but only just. Thanks to the UK’s strategically advantageous geographical location and consumers’ love for British goods that are synonymous with quality, the UK can compete on level terms. This is despite China’s population being nearly 21 times its size

This is great news for e-commerce retailers looking to target and gain customers in the UK market. With the right digital strategy, product sourcing and cross-border logistics partner, your goods can easily be imported into the UK, and delivered directly to your customers' doors.

What is preventing international consumers from buying from you?

In the Whistl study, we asked 1200 respondents (200 per country) and found that high delivery cost was the most common reason why consumers don't buy from abroad. This was followed by the complexity of returns, low quality of goods and delivery time taking too long. The more you can minimise consumers’ anxieties when shopping online, the higher your conversion rate will be

Despite all the fears surrounding Coronavirus, only 4% of respondents cited the pandemic as being a reason why they wouldn’t buy from abroad. It is more important to xenophile online shoppers that you get the fundamental mechanics of the customer experience right, tailored to their locale, in a way that eases their anxieties.

To maximise sales from international consumers this study has highlighted the importance of getting every component right in the consumer buying journey. As detailed in the graph below it is clear that you need to mirror the customer experience of overseas competitors. It is also important that you ensure your customer service, delivery and payment options are tailored to the international customer, along with your website content.

Delivery Costs.png

How you can unlock sales potential, in some key markets

  • Australia - With 39% shopping online in the last four weeks, Australian consumers are very comfortable with buying overseas, and prefer eBay to other marketplaces. Australian consumers are comfortable with a lengthy delivery window but are frustrated by customs clearance processes and poor returns procedures.

  • France - 77% of French consumers shop on Amazon, followed by AliExpress (29%) and eBay (27%) so it makes sense to utilise these marketplaces. With around 150k Brits currently living in France, it is unsurprising that in a recent consumer research study the UK was voted the second (China was first) most popular destination for online purchases from French residents. While e-commerce penetration is a low 52% (by European terms), it is a highly valuable market. 66% of French consumers shop with overseas retailers to take advantage of better prices. However, as with Australia the French strongly dislike excessive customs procedures.

  • Germany - With 140k Germans living in the UK and 140k UK citizens living in Germany, there is already lots of cross border trade between the two nations. While Germans are the most likely to shop domestically, we found German consumers want better prices, the latest products, and unique items and they are no longer limited to local markets.

  • Republic of Ireland (ROI) - Irish consumers are particularly fond of clothes shopping online from international retailers, purchasing most frequently from their closest neighbour: the UK. 

Irish consumers use Amazon (67%) and eBay (42%). To capitalise on Irish sales potential Whistl recommend prioritising selling on both marketplaces whilst ensuring seamless customs and returns processes.

  • USA - If you’re exporting to the USA from the UK, it’s important to note 66% of US consumers are concerned about longer delivery times with international orders. Moreover, 45% are disappointed with overseas retailers’ complex returns procedures. To maximise your e-commerce growth in the US we recommend selling on eBay, Amazon and partnering with an international delivery management company.

How Whistl has helped some of our customers increase cross-border sales

 

Skinny Coffee Club

Whistl has helped Skinny Coffee Club increase their cross-border sales. 

Skinny Coffee Club was having problems with their previous international delivery management provider, with parcels not arriving and prices rocketing for a seemingly worse service. 

Whistl provided this health drinks retailer an international e-commerce exporting solution tailored to their needs. Comprising of international parcel and mail delivery; they enjoyed a 40% reduction in international complaints.

Sony DADC

Another online business that’s reaped the rewards of working with Whistl is Sony DADC, a leading end-to-end entertainment services provider. 

Whistl has helped this global brand access pooled volume discounted delivery rates on their international parcel delivery for more than five years. We have helped SONY DADC better deal with and capitalise on spikes in demand and given them increased capacity for growth by developing their collection capabilities.

What is the future of cross-border online shopping?

 

When exploring whether you should expand your business internationally, you need to consider where your products are most likely to succeed and consider this alongside the buying habits and trade restrictions in those economies.

There are a broad range of reasons that deter consumers from buying abroad, however these can be easily remedied. Despite some reluctance to shop online internationally, this has not stopped cross-border trade building a greater share of all commerce. 

Furthermore, consumers have increased overall adoption of online commerce, particularly in older age segments. With the decline of brick and mortar retail, this is unlikely to change for the foreseeable future.

As international trade and the shift to e-commerce increase, so too will the size of the opportunity. With the right international delivery partner that specialises in border clearance, parcel delivery and contact centre services you will be able to maximise your cross-border sales. 

Finally, a robust returns process is clearly of paramount importance. Having a delivery partner who can also make this process seamless will ensure your customers are more likely to give positive feedback, make that repeat purchase and recommend your offering to their peers.

At Whistl we help mid-market retailers with direct and indirect e-commerce exporting. All of our services are tailored to your needs and with a wide range of solutions, we are well suited to maximise your delivery performance and enhance your customer experience.

 

Get in touch

Get in touch with Whistl to discuss how we can help you accelerate your cross-border expansion.

 

 

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