International online shops are in vogue among Europeans: more than two thirds of e-shoppers have already used cross-border e-commerce channels. However, purchasing behavior varies considerably from country to country. We introduce you to current trends in the relevant markets and give advice on how to adapt to cross-border business optimally.
Unlimited shopping possibilities are gaining importance
With the general growth in e-commerce – sales in Europe have almost doubled in the past five years from 307 billion euros to 602 billion euros – shopping beyond national borders is gaining importance. According to current studies, more than 70 percent of European e-shoppers have already purchased a product from a foreign online shop. Around 40 percent regularly order goods abroad. Cross-border e-commerce is regarded as an important growth driver in online trade: in 2018, around 137 billion euros were generated in the cross-border segment alone in Europe. By 2020, the figure is expected to rise up to 245 billion euros. For US companies, this development offers great potential – if they succeed in adapting to their foreign customers‘ needs. In addition to products from neighbouring countries and China, goods from the USA range highly on the wish list of European e-shoppers.
Pioneers: Customers from Austria and Ireland
Cross-border shopping has firmly established itself with consumers from Austria and Ireland. In both countries the share of cross-border shoppers is around 80 percent, followed by e-shoppers from Belgium (72 percent), Spain (61 percent) and Italy (54 percent). Up until now, cross-border shopping is less common in the UK (38 percent), France (40 percent) and Germany (32 percent). But even in countries with still manageable cross-border volumes, the acceptance of unlimited shopping possibilities is increasing, as a recently published survey conducted by the strategy consultancy Oliver Wyman illustrates. In this context, 1,000 German consumers were surveyed. According to the study, 45 percent of German survey participants stated that they have already purchased goods from a foreign online shop within Europe – 37 percent intend to do so more frequently in the future.
Important sales arguments
Important arguments why consumers in Europe are increasingly shopping in foreign web shops include price advantages and the lack of availability of a product in their own country. But the opportunity to discover new trends and products also plays a role. There is generally a strong demand for product segments such as fashion and consumer electronics, sports, outdoor and travel goods, furniture and cosmetics.
Popular with cross-border shoppers: online marketplaces
When shopping abroad, preference is given to global marketplaces such as Amazon, eBay and the shopping app Wish. These large retail platforms are already firmly established in everyday consumer life and are growing faster than other channels.
Furthermore, a look at regional platforms that are strong in the respective country proves worthwhile: Examples include Cdiscount (France), bol.com (Belgium) or Allegro (Poland), which have a high degree of recognition and a broad, loyal customer base. On the other hand, smaller or less established web shops are less suitable for cross-border shoppers, as they are lacking a certain degree of trust.
Overcoming obstacles, convincing customers
Although cross-border trade is growing steadily, suppliers face a number of challenges. For example, the Ecommerce Foundation’s 2018 B2C European e-commerce annual report shows that customers complain about longer delivery times (17 percent) and non-compliant or damaged products (9 percent). Other aspects that have so far prevented consumers from making more cross-border purchases include cumbersome return processes, higher shipping costs and the lack of common payment methods, as well as language barriers. For example, product titles and descriptions on marketplaces should be written correctly in the respective national language so that the products appeal to consumers as much as goods from local suppliers. In addition, regional holidays, celebrations and dates of sales must be taken into account for possible discount campaigns or special offers in order to benefit as much as possible from consumer spending.
Adapting the pricing strategy to global business
Due to the limitless shopping possibilities via the internet, international companies in particular are coming under pressure. Until now, they have benefited from national pricing strategies. Considering the increase of cross-border shopping, companies are now being asked to adjust their product prices globally. After all, customers can order the desired product at the lowest price from all over the world. Meanwhile, competition is increasing considerably with the continuous internationalization of trade.
The positive trend of cross-border e-commerce in Europe offers US companies interesting growth opportunities in the coming years. Security, convenience and pricing are key factors when it comes to convincing European customers. Companies offering free shipping and a well-functioning returns system can score points. Local payment habits such as credit and debit card purchases or PayPal (Payment in the EU: How consumers in Great Britain, Germany and France pay) should be addressed. Last but not least, short delivery times and related services are a decisive sales argument. For this reason, it is worth relying on a partner with know-how in logistics who can provide customers with up-to-date tracking information and details on delivery times.
Companies and brands that optimize their own online shop and customer service with regard to their cross-border activities have good chances of establishing themselves in European cross-border e-commerce and securing long-term competitive advantages.