Trends and new technologies continue to expand in the ever-transforming marketplace, but recently it seems as though a lasting international movement is gaining momentum, establishing itself among digital consumers worldwide. With the widespread availability of digital devices and the expansion of logistics capabilities, consumers who shop online can have access to a wider range of products, brands, and cheaper price tags when they shop outside of their own country. This trend of shopping abroad is known as cross-border commerce, or known within the retail industry as cross-border sales. Cross-border sales have grown exponentially in the past few years, with the combined global market value exceeding $1 trillion and showing no signs of slowing down. More frequently, shoppers would prefer the option of purchasing from a wider variety of sites, regardless of what country their order will ship from. In order to plan for and capitalize on this growing trend, it will likely be important for retailers to understand the growth of cross-border commerce. This includes knowing which countries are emerging as the top markets for cross-border transactions, recognizing what products shoppers are buying, and why shoppers are choosing certain goods.

Cross-border sales

Digital shoppers are growing the market for cross-border sales exponentially and retailers should consider taking note, regardless of the size of their current global footprint. Digital shoppers worldwide make nearly a quarter of their purchases from websites outside of their home country, with approximately half of these purchases occurring on U.S. sites. Among U.S. digital shoppers, 54% reported making online purchases from foreign retail sites in the past. But this behavior isn’t specific to the U.S. alone. According to research conducted by UPS, 82% of global shoppers have made at least one purchase from a merchant abroad this year. Out of the 14 countries evaluated in North America, Europe, Asia, and Latin America, nearly 20,000 respondents reported making at least two digital cross-border purchases in a typical three month time period. Worldwide, 35% of consumers currently shop on sites based outside of their home country, up from 26% in 2014. Though there can be dramatic fluctuations from country to country (for example, 90% of Canadians purchase cross-border as opposed to less than 60% of the Japanese population), shoppers around the globe that engage in cross-border commerce spend about $300 on foreign items in a given year, an amount that is gradually increasing. As cross-border shopping becomes more habitual for consumers, it’s projected that the total global revenue will amount to nearly $2 trillion of worldwide retail sales by 2018. With the continued maturation of the cross-border commerce network, interesting trends have been emerging from different locations across the globe and some retailers are eager to capitalize on these new opportunities.

Why customers are shopping abroad

With cross-border commerce becoming increasingly popular, it’s important to ask why the trend is emerging. Globally, 67% of consumers who shop abroad are buying because prices are lower outside of their own country. These prices are usually low enough to make up for additional fees or taxes associated with cross-border commerce. Other reasons can include the accessibility of brands that aren’t available in their own country, a wider range of products, and better customer service. However, it should be noted that geographic proximity and demographics can also be a key influence on what priorities global consumers place on these areas of their cross-border commerce experience. For U.S. consumers, the top three reasons for buying goods abroad are cheaper prices (49%), the ability to obtain brands that aren’t available in the U.S. (43%), and because shoppers are looking for unique or specialty products that aren’t found in U.S. stores (35%). Other miscellaneous reasons include higher quality goods and the perceived status acquired from shopping internationally. Chinese consumers have a unique hurdle to jump when shopping since many products produced domestically are counterfeit. As much as 70% of goods in their domestic market are counterfeit and one of the most popular centers for fake products is actually located across the street from the U.S. Embassy within Beijing. There is also a lack of availability of certain goods in China, so shoppers have to look abroad for the products they prefer. In a study by DHL, 77% of respondents cited the need for goods unavailable in China as their top reason for cross-border shopping, with 67% stating they wanted better quality assurance when buying items to ensure the legitimacy of their purchases. Other factors included cheaper prices and wider product selections. In Asia, Europe, and Latin America collectively, customers also shop abroad primarily because the products they want are not available in their own region, the prices are lower elsewhere, and because there are better promotions that decrease the overall cost to acquire certain products.