Discover the current and upcoming shopping behaviours that will shape the future of cross-border commerce, and emerging trends that will help integrate and bring seamless shopping experiences to your customers.
During the pandemic, 10 years of forecasted growth happened in the span of 90 days. This year, the global e-commerce market is expected to be valued at US$5.55 trillion and will reach $6.17 trillion by 2023, making up nearly a quarter of total retail sales. Though retailers have often shied away from expanding into new markets due to their complexity, closed borders pushed businesses to venture beyond their native markets, supported by the advancement of merchant tools. In a recent webinar hosted by Inside Retail Asia, luxury flash sale showroom OnTheList shares its international expansion journey amidst the pandemic, with global payments provider PayPal advising strategic tips for merchants looking to enter foreign markets.
The pandemic impact
The fight for survival spurred by product shortages and in-person shopping safety accelerated consumers’ digital adoption, as countries with the lowest e-commerce penetration saw the largest migration to online shopping with Southeast Asia welcoming 70 million new shoppers since the beginning of the pandemic with no signs of slowing down. As shoppers become more comfortable with the online environment and shopping globally, consumers’ expectations have increased, urging retailers to keep up and meet their demands in competing with new entrants. Having the wealth of product options suddenly available (albeit faced with shipping challenges) has lured shoppers away from brick-and-mortar to the world wide web.
Despite national campaigns and broad sentiment to support local retailers, consumers are choosing to shop outside of their home countries for numerous reasons. A study by PayPal revealed that Japanese consumers favour shopping abroad due to price sensitivity and unique products available. Equally, businesses have been casting their net beyond their home markets in hopes of recapturing lost businesses overseas. Cross-border merchants have found new revenue opportunities abroad and larger audience reach, all the while competing with local sellers. One in two surveyed e-commerce merchants in Hong Kong had been actively looking to reach new customers in other markets as part of their efforts to recapture lost businesses.
Originally starting with a 7000sqft physical showroom in Central, Hong Kong, the space had been temporarily shut during lockdowns. Shifting from a 90 per cent offline presence to online, members were pushed to snatch Jimmy Choo flash sales online, all the while inventory build-up became a problem for luxury retailers.
“Many of them (brand partners) were impacted at different stages with regards to traffic in their stores or even stores being closed, so this posed an opportunity for OnTheList to step in and partner with them to find solutions for their inventory”, shared Adele Leong, SEA MD at OnTheList. The organic transition to online catapulted OnTheList’s digital transformation to scale and expand to Australia, Malaysia and South Korea all within a short period.
What normally was recognised as slow sales seasons in the months of March and April, PayPal equally witnessed a volume uptake in transactions and merchant sign-ups as more consumers turned online for products and services overseas that were not available locally due to supply shortages.
“A lot of businesses had to look for new ways of survival; they have to think about being agile and responding to new ways of catering to consumer demands” explained Syd Wong, head of enterprise sales at PayPal (Hong Kong, Taiwan, Korea). As new consumers migrated from traditional in-store experiences to online, more than 67 per cent of transactions were also taken on mobile rather than desktop, prompted by the government’s push to use digital payments and wallets during subsidy payouts in an attempt to reignite the retail economy.
Entering new markets
The challenges of global expansion and localisation cannot be tackled with just one global site and a currency converter widget. Truly understanding customers abroad is the key to every successful market entry, where localisation plays a huge part in connecting and retaining local consumers through understanding cultural nuances and adapting content appropriately. E-commerce marketplace Techsembly identified localisation can increase a site’s conversion rate by up to 70 per cent, where consumers are more likely to purchase if the retailer’s website is displayed in their native language with their preferred local payment options available.
“We just couldn’t make that trip to each market to see what has happened to find opportunities, particularly for offline. We had to really depend on the local teams to maximise our operational expertise,” said Leong.
From an organic China expansion to cross-border scaling, OnTheList is a successful case study of a retailer’s international growth during the pandemic, all the while remote. The brand relied on brand partners and members as the main basis to explore new market openings.
“There’s really no big secret. We took the time to understand all the localisation factors that were important for us to be successful. For example, the type of brands that we worked with, the way we communicated with our members and understanding the types of shopping habits, cultures and payment methods” revealed Leong. OnTheList expanded into new markets as pure online retailers, all the while dabbling with physical pop-ups to test market potential to expedite expansion.
The long-standing debate between outsourcing to service providers or building in-house for cross-border retail and payments stands to benefit retailers without remote resources abroad.
“One of the barriers to think about is the sensitivity to some of the local country’s consumer behaviours and their types of payment preferences,” commented Wong, noting specific local payment behaviours vary from Octopus-loving Hong Kongers as opposed to consumers in Europe in comparison.
PayPal prides itself on its flexibility, being able to work with local partners and shopping cart solutions to integrate payment options for a seamless checkout experience, with language and customer support provided.
“Work with a global partner with experience and feet on the street of each market that you’re actually expanding into so you can actually leverage some of the expertise and experience in the local markets” suggested Wong. “We have actually started to work with local partners to accept local payment types to cater towards local consumer preferences to help merchants go into new markets easier” he adds.
With over 180 fiat currencies available, it is suggested at least 30 to 40 currencies need to be available in order to be recognised and supported in order to gain substantial sales benefits. Offering multiple payment options may be complex, but payment technology providers such as PayPal have simplified cross-border payments, allowing merchants to scale into new markets with ease.
Future payment trends
With the rise of social commerce, consumers have higher expectations for convenience and seamless checkout experiences. Retailers like OnTheList are pressured to invest in improving their e-commerce platform and apps to cater to the demand and new expectations. Mobile payments are deemed a must-have as 99 per cent of Gen Z have the highest smartphone usage compared to all generations.
“You need to present a smooth user interface across all devices for consumers, especially the ability to checkout and pay, regardless of what devices you’re actually on,” emphasised Wong.
As Gen Z and Gen Alpha enter the workforce with new spending power, young and aspiring professionals wanting to spend more at certain times have prompted the uptick of ‘Buy Now Pay Later’ schemes. Though more prominent in Western countries such as the US, UK and Europe, the trend is also seen catching up in Asia.
Leong reports: “This for us has been particularly interesting because it brings us a very new and interesting pool of aspiring customers, people that are in the earlier stages of their career who may not be able to afford full-price luxury. But by having Buy Now Pay Later, they can experience luxury brand products before becoming a full-price customer eventually.”
As Asia adapts to the new normal, so are solutions and services that have been evolving ever since to better serve the various different markets and changing consumer behaviours. Brands are to face the latest demands with agility to cater for the future generation of consumers under new opportunities, across the borders.
View a recording of the Inside Retail and PayPal webinar online, here.