They certainly wouldn’t recognize the products: iPhones? Not much use for that in the 8th century during the two years it would take to travel from Italy to China along the ancient trading route, the Silk Road (although you could while away the time with a few games of Candy Crush). Fidget spinners? Even less useful. But those ancient traders would surely spot one thing, the same thing they realized when they began trading in highly-sought-after spices and other luxuries: an incredible opportunity for growth.
The size of the prize
By 2020, cross-border e-commerce will be worth US$9bn, tripling from US$3bn in 2015. To put this growth into perspective, cross-border e-commerce is growing at double the rate of domestic trade – yes, double. You probably don’t need a reminder that the internet really has changed the way we shop, breaking down international borders. In fact, every seventh online delivery is the result of a cross-border transaction.
The new spice trade
Today’s e-commerce habits are effectively the new spice trade routes. Those ancient trading pioneers crossed hazardous terrain, mile after treacherous mile. These original trailblazers brought new and exotic items from Asia, India and Africa to the pre-Roman and Roman markets. In the same way, but on a much grander scale, e-commerce is also changing commercial behaviors and rewriting the international trade playbook. Consumers are looking abroad for their purchases, in search of trusted brands, improved availability, and, perhaps most of all, attractive offers.
You’d be forgiven for thinking that much of this new era of global trading is in low-value items, but even that myth has been debunked: 20% of cross-border transactions have a basket value of US$200 or more. What’s more, both manufacturers and retailers are feeling optimistic about the state of international e-commerce.
More than two-thirds of retailers expect their share of cross-border revenues to grow in the future, while three-quarters of manufacturers also expect their revenues to grow. This is an important point: manufacturers now find it much easier to sell direct to the consumer, an idea borne out by real-world performance: manufacturers are growing their cross-border e-commerce sales 30% faster than retailers.
The logistics of international trade
What makes consumers hesitate over the ‘checkout’ button and abandon a purchase? Our own survey tells us that four factors are involved: trust, logistics, price, and customer experience. Trust is essential, as we all need to see some evidence that a supplier is legitimate. Social proof (customer reviews), trusted payment platforms, and well-known delivery service providers help instill confidence in the consumer.
You also need a logistics provider with the global express delivery coverage and time-definite services that your customers demand. Yes, sub-standard delivery can ruin the entire customer experience, but great delivery can also act as a competitive differentiator. In fact, 22% of retailers say guaranteed time-definite delivery helps set them apart from the crowd, while 17% of retailers say track-and-trace services help them stand out.
Price is self-explanatory: you need to offer competitive prices, as consumers often perceive overseas purchases to be dearer than buying locally. Finally, customer experience is the combination of all of the above, plus responsive communication channels and the all-important returns policy, a worry for nearly a quarter (24%) of consumers.