Online merchants positioned to sell internationally are poised to see considerable growth, according to a study just released by international express services provider DHL. Entitled “The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity”, the report highlights significant growth opportunities for retailers and manufacturers with international ecommerce platforms.
Among the key findings of the report, cross-border ecommerce gross merchandise volume is expected to grow at the rate of 25 percent through 2020. This represents an increase from $300 billion in 2015 to $900 billion by 2020.
An expanding class of cross-border shoppers is driving this growth as they are increasingly being drawn to the ready attainability of products they can’t find on store shelves where they live. While this has traditionally pertained to fashion and electronics, some of the most severely underserved categories currently include cosmetics, pet care, foods, beverages and sporting goods. Further, cross-border purchases of these products typically bring more profit than domestic purchases and, tapping into these markets is much easier today than any other time in history.
“Shipping cross-border is much, much easier than many retailers believe,” says Ken Allen, CEO, DHL Express. “Every day we see the positive impact selling to international markets can have on our customers’ business growth.”
One of the biggest opportunities for merchants lies in premium products. Higher quality luxury editions of even the most mundane products make offerings considerably more attractive to newly wealthy international consumers hungry for the good life.
“Virtually every product category has the potential to upgrade to premium,” says Allen. “In addition to developing higher quality luxury editions, manufacturers and retailers can add cachet by offering superior levels of service to meet the demands of less price-sensitive customers.”
With that said, the main challenges for cross-border ecommerce lie in logistics, trust, price and the customer’s experience. The trust issue can be assuaged with secure enterprise ecommerce software designed specifically to process international transactions and interface with the existing ecommerce infrastructure and financial institutions in the customer’s homeland. The resulting “localization” of a user’s checkout experience goes a long way toward engendering trust.
Meanwhile, global logistics partners can help retailers achieve the right balance between localized warehousing and shipment, so customers get products in their hands in a timely fashion. People like immediate gratification, so getting product to buyers quickly, increases customer satisfaction. This, in turn, goes a long way toward engendering customer loyalty and the repeat business it entails.
“Our global door-to-door time definite network is perfectly positioned to support any retailer developing a premium service offering,” Allen says. “We can also provide valuable assistance to marketers looking to reach new overseas markets without investing resources in warehousing or distribution.”
One of the biggest opportunities in all of this exists for manufacturers who can now successfully reach an international customer base without engaging the services of a wholesaler or a retailer. Through cross-border ecommerce, they can also do so without a lot of local knowledge. This gives them the ability to move into a new market quickly, affords them better control of their brands and the customer’s experience, all while realizing higher margins by eliminating the middle people.
According to DHL, the cross-border ecommerce report is based upon research and in-depth interviews conducted by a leading global management consultant, along with more than 1,800 responses to a survey of retailers and manufacturers in six countries. Based upon its findings, with international demand becoming increasingly sophisticated and global logistics evolving to keep pace, there is tremendous growth potential for forward-thinking ecommerce entrepreneurs.
