Who’s Winning in Global E-Commerce?

You know that international e-commerce is big, but do you know how big? According to the latest research from Accenture, by 2020, almost one out of every three online consumer purchases will be made across borders. If that’s right, the international B-to-C e-commerce market will be worth $1 trillion by 2020. Online merchants are doing everything they can to win the biggest possible share of this gigantic opportunity. Or are they?

Not all international e-commerce is created equal. Too often, and especially important now as we enter the holiday season, merchants fall short in their efforts to reach consumers outside their home countries. To understand what drives cross-border success today — and to help merchants direct their international e-commerce efforts where they matter most — Digital River and PYMNTS.com are collaborating on the X-Border Payments Optimization Index, an ongoing research effort to track the state of global e-commerce across national borders.

So who’s winning the cross-border commerce game, and who’s lagging behind? And, more importantly, what can merchants do differently to sell more effectively to customers across national borders?

What Cross-Border Winners Do
The index tracks a representative group of cross-border digital retailers across 10 countries and nine industry segments. Our researchers conduct cross-border shopping tests on each of those retailers’ sites, measuring their performance across dozens of separate factors, from languages to payment methods. Our analysis of the data has found that only about a third of those factors significantly affect the ease of cross-border shopping. We use merchants’ performances against those most important factors to generate index scores.

So what factors have the most successful cross-border retailers mastered? Three are most vital. The most successful sites:

• are accessible in at least six languages;
• accept at least six global currencies; and
• offer at least four global payment methods.

These features should go without saying in 2015, but the latest edition of the index shows how challenging it can be to implement them. In Italy, for example, only 8 percent of our benchmark retailers price their wares in more than five currencies.

Optimizing your site for cross-border commerce takes significant under-the-hood effort. Anyone with a calculator can figure out pricing in any currency, but can your site serve the right local currency prices to the right users at the right time? Do you have systems in place to accept the payment methods your customers really want to use, not just the ones that are easiest to integrate with your systems? And can you serve your whole site, rapidly and fluently, in the right local languages? These capabilities aren’t necessarily cost prohibitive to create, but it does take a deliberate strategy to develop them. Not all retailers have grasped the importance of investing in the effort.

Beyond Language and Pricing: Holistic UX
For the most successful international merchants, language and currency are just parts of a total digital experience, designed from top to bottom with international consumers in mind. Among our key findings:

• Mobile counts: It should be no surprise that 95 percent of the American retailers we study serve mobile-friendly sites to shoppers on phones and tablets. What is surprising is that only three out of four French retailers do. If you’re hoping to reach customers outside your national borders, you’ve got to reach them where they are — even if they’re on a bus in Singapore (where 53 percent of online purchases happen via mobile devices).
• Shipping is decisive: Selling across national borders means shipping products long distances. Strategic partnerships with specialty logistics companies can help shorten international shipping delays. However, the most important finding is this: across retail segments, every single one of the most successful online retailers the index studies offers free shipping.
• It’s the little things: Designing a user experience that converts international customers takes precise attention to the subtlest aspects of the online shopping journey. For example, requiring a customer to complete a “user profile” before checkout adds needless friction and can easily scare off out-of-country shoppers. Therefore, it's not a coincidence that 80 percent of the worst-performing sites we studied insisted on profile creation. Or consider pages from homepage to checkout: the best sites speed international users from homepage to checkout in an average of six pages, while the worst took 13 or more. Sometimes, it’s the smallest details that matter the most. Our researchers discovered that providing localized address fields for shipping and payment had an immense influence on the overall experience of a customer.

Who’s Winning the Competition for Cross-Border Customers
While American merchants are still in the lead on most measures of cross-border retail expertise, China’s own online retailers are gaining in international capabilities. In fact, in some key areas they’re in the lead. American online merchants are in the lead with an average X-Border Payments Optimization Index score of 64; Chinese retailers are right behind, with an average score of 62. While American merchants are most likely to offer mobile-optimized websites, numerous payment methods and free shipping, China’s retailers beat the world in local savvy. Chinese merchants have the most country-specific address fields, and are most likely to offer more than six languages and currencies.

It’s not a two-horse race, however. While the U.S. and China are in the lead overall, the U.K. and Canada follow close behind, tied for third place with an average score of 59. The bottom of the index is more surprising: Among the countries the index tracks, the two where retailers are least optimized for cross-border commerce overall are Mexico and France. And the most sobering finding from the latest edition of the index is what’s missing. Brazil, among the most vibrantly growing retail markets in the world, had to be dropped from the list of countries the index tracks. Simply not enough Brazilian retailers met the minimum standards of cross-border optimization to be included this time.

These finding should put merchants on notice. Retailers in mature and highly sophisticated or fast-growing markets don’t necessarily have the holistic competencies it takes to compete in today’s truly global e-commerce marketplace.

Today, designing digital experiences that win sales across national borders takes strategy, determination and expertise. What are you doing today to win your share of the global market?

Hayden Reed is senior vice president and general manager of Digital River World Payments, a global online payments provider.