One might expect that over a year into a global pandemic, life will eventually return to normal. But would normal be defined in the same way? The reality is that some consumer behaviours have changed for good, for example, when it comes to online shopping and in particular cross-border commerce.
Positive indicators in the global economy such as the continual rise of the US Consumer Confidence Index since May 2020, are contributing to a further surge in global online retail sales. This is reflected by a global rise in online retail sales, from US$3.35 trillion in 2019 to US$4.28 trillion in 2020 and a further growth of 14.3% is expected this year.
PayPal recently published its latest 2021 Borderless Commerce Report, highlighting consumer behaviours observed across 13 major consumer markets. In addition to the key markets that Hong Kong’s merchants are most familiar with, such as mainland China, the UK and the US, the report also looked into eCommerce and cross-border opportunities from emerging markets. This includes India, which is witnessing 20% annual eCommerce growth, and Mexico, in which over 65% of online shoppers have bought from international sellers.
This year presents a key opportunity for businesses to ride on the economic rebound. Our report aims to provide insights and inspiration they need in their cross-border ventures. Here are some of the top findings that could help businesses which are looking to capture opportunities.
A golden opportunity accelerated by changing behaviour of online shoppers
A continued surge in online shopping worldwide is expected and there is already evidence of this gaining traction. Over 85% of online shoppers surveyed said their spending would stay the same or increase in comparison to last year. The US for example, witnessed explosive growth in its eCommerce market in 2020, with 52% of online shoppers purchasing more online now than before the pandemic. Meanwhile in mainland China, which already has the world’s largest online shopping population of 710 million consumers, more than half of the population has yet to shop online, demonstrating an enormous untapped potential for any eCommerce merchant looking to expand into the mainland China market.
Another significant shift is the increasing receptiveness to cross-border shopping. Many of the surveyed consumers stated greater comfort levels with shopping with overseas merchants. Almost one in five (22%) of respondents said they became more comfortable with it since the pandemic, while 26% of online shoppers expressed their intentions to start or do more shopping on international websites in 2021/2022.
This group of cross-border shoppers also have greater spending power, spending more overall than their domestic-only counterparts. These trends point towards the existence of a conducive climate currently for businesses to consider or further expand their efforts to reach customers in new markets.
Mobile takes centrestage in eCommerce
Mobile commerce (mCommerce) has also reached a tipping point and is spurring a new social commerce trend. With an average 43% of surveyed consumers using their handsets to shop, smartphones have become the preferred device for online shopping. In fact, globally, mobile devices are forecasted to account for over two-thirds of all online purchases to be made within this year.
In mainland China, one of the world’s most technologically advanced markets, 96% of online shoppers are using their smartphones to make purchases. However, this is just the tip of the iceberg. With its nationwide 5G rollout, innovations such as livestream shopping are forecasted to generate up to 20% of mainland China’s eCommerce sales – doubling from just 10% in 2020. Businesses looking to harness crossborder growth will need to adapt to this global rise in mCommerce.
Fueled by mobile adoption, another trend worth noting is the rise of social media as a shopping channel. Markets including mainland China (47%), India (46%) and Hong Kong (42%) have seen almost half of their crossborder shoppers discover eCommerce websites through social media. Furthermore, social media marketplaces were ranked among the most popular crossborder shopping channels in almost all of the surveyed markets, signaling that social media as a shopping channel is an essential consideration for any crossborder strategy.
Shift towards digital payment
One trend reflected in the report is a significant shift to digital payments. Shoppers worldwide demonstrated a willingness to try various types of digital payments, including “Buy Now Pay Later” solutions in certain markets, as well as digital wallets the adoption of which is expected to double between 2019 and 2023. In Japan, 40% of payments are set to be cashless by 2025 – boosted by a government target to increase the adoption of cashless payments over the next five years.
This global shift towards digital payments is good news for businesses as it further removes the consumers’ barriers to cross-border spending. Successful cross-border merchants will be those that understand these market trends and can offer the payment methods which consumers prefer.
Cross-border growth has never been more accessible
A new era for online shopping has emerged and it is fueling the growth of cross-border shopping. This presents an opportune moment for merchants to capture the new sources of growth.
This articles is contributed by Tim Fu, Market Leader, Hong Kong, South Korea and Taiwan, PayPal