If you were an entrepreneur in the 15th Century, you would probably be a spice trader. These fellows hawked their barrels of cinnamon, cardamon and turmeric all over the globe in return for gold and native goods. (Which they’d then turn around and resell in their homeland as precious, foreign treasures.) They understood the value of taking an item commonly found in one country and selling it in another. They were only trying to make a buck, but the traders of the Spice Routes inadvertently helped the spread of culture, language and some amazing food.
Paypal just released a new report for Nielsen that looks at today’s cross-border selling as a modern version of the old Spice Routes – bringing culture and commerce to all parts of the globe.
They analyzed activity in six major markets and found that there are 94 million consumers who regularly buy directly from an overseas vendor. They say those deals will add up to $105 billion US dollars. They expect this number to rise to US$307 billion with 130 million cross-border online shoppers by 2018.
Looking at this map, you see that the US is the most popular shopping destination for those living on the other side of the ocean. The UK came in second with 37% with China and Hong Kong in a near tie for third place.
What are people buying? Most are looking for clothes, shoes and accessories.
Why are people shopping cross-border? 80% said they do it to save money. 79% said that shopping internationally offered more variety than shopping locally. Some said they knew they could get better quality items from other countries and items that are authentic.
If you’re looking to get into the cross-border market, Paypal has identified five types of shoppers:
— Fearless Adventurers: Like to be different and are always on the hunt for new overseas websites. Love shopping on their mobile devices and are happy to pay more for unique items not available locally. Do 30% of their shopping on overseas websites.
— Efficient Explorers: Busy people, so convenience is very important. Mostly buy from overseas sellers whom they know and trust, and will spend a lot for an online purchase, like entertainment or air tickets.
— Value Voyagers: Love shopping and keeping track of the latest trends. Check and compare overseas purchases using their favorite online tools to ensure they find the best quality and good value products.
— Safety Seekers: Shop online more for leisure, but like the variety and brands found on overseas websites. Careful about what they buy and only shop from trusted online sellers or those with a return policy.
— Deal Hunters: Don’t shop online very often and when they do they mostly buy from their own country’s websites. If they spot a bargain or lower price on overseas websites, they will snap it up.
In all cases, online security was a primary concern. People need to feel comfortable sending their money to a foreign country.
Paypal and other online payment systems have made it easier for buyers to convert prices to their own monetary unit and then pay with minimal fuss and fees. The other factor in increased cross-border sales is the speed of international shipping. If you’re willing to foot the bill, you can send almost anything across the world in a day or two. International shipping is also easier and more secure than it was just a few years ago and I thanks eBay for that. (Those guys have clout!)
Mike Walsh, an independent futurist says:
“Throughout history, wherever goods have been traded, their exchange has had a cultural, as well as a commercial impact. And while in ancient times spices and silks from the East influenced the food and fashions of the West, today’s picture is more complex, with micro-cultures springing up side by side as individuals express themselves in different ways by shopping in a virtual, global marketplace.”
If you don’t currently offer international shipping on the products you sell, you’re missing out on an amazing revenue opportunity. Sure, it’s extra work and can be a little more risky that staying in country but the rewards are worth it. Especially if your product is a hit in a country with a great exchange rate. They get a deal – you get a sale and everyone goes home happy.
Want to learn more? Download the entire report from Paypal here.