Booming cross-border e-commerce set to outperform domestic online orders

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A new survey reveals that cross-border e-commerce is predicted to grow at twice the rate of domestic online retail, with an estimated 25 per cent compound annual growth rate (CAGR) until 2020 worth $900bn.

The survey provides a detailed analysis of the markets and products that offer the highest growth potential, the preferences of customers making international online purchases and the success factors for online retailers that wish to expand overseas.

The report‒ The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity focuses on the opportunity for premium products and service offerings, with higher basket values accounting for a significantly higher proportion of cross-border orders, suggesting that retailers can grow 60 per cent faster with a premium service offering.

The report reveals that cross-border e-commerce offers aggregate growth rates not available in most other retail markets: cross-border retail volumes are predicted to increase at an annual average rate of 25 per cent between 2015 and 2020 (from $300bn to $900bn) – twice the pace of domestic e-commerce growth.

Chief executive of DHL Express, Ken Allen said: “Going global and going premium is an opportunity for retailers in all markets.”

The report finds that online retailers are also boosting sales by 10 per cent-15 per cent on average “simply by extending their offering to international customers”. An additional boost comes from including a premium service offering: retailers and manufacturers that incorporated a faster shipping option into their online stores grew 1.6 times faster on average than other players.

“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,” said Allen.

“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.”

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.

It casts a light on the evolving face of e-commerce, with “sophisticated manufacturers” using it as a tool to direct retail models – by passing the ‘middleman’ and offering their products online to the end customer – and expect to grow 30 per cent faster in cross-border e-commerce than other retailer groups.

The main challenges highlighted by consumers to cross-border purchases relate to “logistics, trust, price and customer experience.”