Road to U.S. Emergence in Global E-Commerce: How Cross-Border Payments Can Lead the Way
While nations across the world have traded purchasing and sharing goods for thousands of years, only recently can they do so instantaneously. It’s a potential game changer for online retailers across the globe. From telecommunications to healthcare, the global marketplace continues to offer more and more innovative ways to bring people together. So why aren’t U.S. online retailers taking advantage of this opportunity?
The rapidly growing global middle class means there are more potential shoppers worldwide than ever before. India’s e-commerce market is worth $31 billion a year, Brazilians spend $22 billion a year, and Germany’s is over $100 billion. E-commerce has great potential in regions worldwide already, and it’s only growing.
It’s time for American retailers to get in the game. That means expanding e-commerce operations and targeting international consumers. Cross-border payments are the opportunity that U.S. retailers need to seize now. A recent report from PPRO Group in partnership with Edgar, Dunn and Company quantifies the opportunity and offers guidance on how retailers can effectively target specific regions.
The American Advantage
American retailers not only can expand globally, but also have a distinct advantage as compared to their international counterparts: U.S. brands are sought after worldwide. According to recent data by J. Walter Thompson, between 78 percent and 93 percent of people surveyed in six global regions react positively to American brands, most commonly associating them with terms like “quality” and “innovative.”
U.S. retailers also have a unique advantage in the global sales funnel. American advertising and marketing channels are oversaturated; their e-commerce channels struggle to stand out. It’s less of a challenge in global markets. The global average banner ad display time is 58 seconds compared to 44 seconds in the U.S., equating to a global paid search clickthrough rate of 1.4 percent, while the U.S. rate is just 0.9 percent. American merchants have the experience, making them capable of commanding sizable shares in a global marketplace. Failing to capitalize on these advantages allows international competitors to command the e-commerce market.
Localization is the Key to Global Success
U.S. merchants can branch out into global e-commerce and cross-border sales by using local payment methods (LPMs) to take a commanding share of the market. These payment options help international consumers feel more comfortable with an e-commerce experience. Consumers that see their preferred payment method are less likely to abandon their cart. Many consumers in global markets don’t use credit cards as primary payment sources. According to recent data, 47 percent of online purchases in the Philippines are paid for with cash, while 57 percent of online transactions in the Netherlands use iDEAL bank transfers. In China, one of the largest international markets, online platforms like Alipay are most common for digital payments. American merchants should leverage ways to cater to regional preferences in order to make the sale — and establish a foundation of mutual understanding as markets grow.
American retailers have all the tools for prominence in global e-commerce, but will face growing international competition if they wait too long. Only 36 percent of U.S merchants currently sell cross-border, while the North American region uses traditional payment methods significantly more than local payments.
Cross-border e-commerce in the U.S. is expected to grow to $203 billion by 2021. Therefore, U.S. retailers should now, more than ever, scale their e-commerce globally. American merchants have the marketing capabilities and advantages to position their brands successfully in global markets. Leveraging cross-border payments will convert more sales and lead to sustainable global growth.
Steve Villegas is vice president of partner management at PPRO Group, a cross-border e-payment specialist.
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