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Cross Border e-Commerce: A Global Hedge for Merchants

Nitin Sumangali |

There has been no greater boon to retailers looking to expand their reach to consumers than e-commerce. The Internet has helped sellers find new buyers and enlarge their presence to more geographically remote areas within their home markets. According to Euromonitor, cross border e-commerce volume represents more than $300 billion globally and is growing twice as fast as in-store retailing—amazing accomplishments for a retail channel that didn’t exist 20 years ago. The challenge going forward is for merchants to utilize the power of the web to connect with consumers around the world.

The market for cross border e-commerce shopping is significant: According to comScore and Euromonitor, cross-border e-commerce represents 14% of e-commerce volume, approximately $44 billion. By offering their products to consumers around the world, retailers can hedge against economic conditions in their home markets by capturing foreign consumers who are financially healthier. By decreasing their reliance on domestic consumers, merchants can smooth out the peaks and valleys in their own country’s economic cycles.

Merchants in the United States and the United Kingdom are well positioned for international expansion via the web due to their success with domestic e-commerce. The United Kingdom has geographical advantages by being located near continental Europe, while the United States is attractive to the growing economies of Latin America. When asked by GfK Roper for their primary motive for international e-commerce, 41% of cross border shoppers said it was to purchase products not available domestically, while 40% cited lower prices.

By focusing on the growing demand beyond their own borders, U.S. and U.K. merchants can augment their existing e-commerce customer base with an international one. Retailers can reach the most attractive consumers around the globe while shoppers can access the best products at the best prices. International e-commerce has the potential to revolutionize retailing around the world, and those who harness it early will have a clear advantage.

Also appears on MasterCard’s The Heart of Commerce Blog.

Topics: Payments Strategy

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