Cross-border e-commerce fastest growing sector in retail

Cross-border e-commerce is now the fastest growing sector in the retail market, with volumes predicted to increase at an annual average rate of 25 percent - from $300 billion to $900 billion - between 2015 and 2020.

This is twice the pace of domestic e-commerce growth, according to a report published by DHL Express.

The study, “The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity,” found that online retailers are boosting sales by 10-15 percent on average simply by extending their offering to international customers. 

By including premium service offering such as faster shipping options, retailers and manufacturers also grew 1.6 times their online stores 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 Ken Allen, CEO, DHL Express.

In Asia (Singapore, Hong Kong, and India) and Europe (Italy, Spain, France, Germany), key markets for high-value purchases are being expanded — with growth rates up to two or three times higher than the global average driven by rising consumer education and e-tailer awareness of opportunity.

The report also noted that the $30 billion market of high-basket value transactions is evenly divided between Asia, Europe, and North America.

Allen added that DHL Express sees 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,” he said.

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

On the other hand, manufacturers were also found to increasingly taking advantage of e-commerce to move to direct retail models – bypassing the ‘middleman’ and offering their products online to the end customer – and expect to grow 30 percent faster in cross-border e-commerce than other retailer groups. 

Moreover, customers in many markets are becoming more discerning, citing product availability and trust, as well as attractive offers, as the motivating factors for shopping with overseas online retailers, according to the report.

This trend has given birth to a new eco-system of facilitators and off-the-shelf solutions (such as payment providers and programs that localize a website’s checkout experience for the visitor), helping retailers to adapt their offering to the digital world and to transact with customers in foreign markets. 

Global logistics partners can provide support in identifying the right trade-off between centralized 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.