Western Europe is one of the largest online markets for cross-border trade: In 2014, Western consumers spent €26 billion on cross-border trade, representing 17% of eCommerce sales in Western Europe. Our recently published Forrester Research Online Cross-Border Retail Forecast, 2013 To 2018 (Western Europe) shows that cross-border trade depends on sales flowing into a country from domestic cross-border purchases and sales flowing out of a country from nondomestic shoppers. Cross-border trade gives retailers an opportunity to expand outside of their domestic markets with minimum upfront investment. To succeed, retailers must understand the cross-border shopper and how to compete internationally.
Online cross-border shoppers:
- Are looking for the best price. Price-sensitive online shoppers drive cross-border sales. The price of domestic goods in countries like Luxembourg, Switzerland, and Ireland make the consumer more likely to shop cross-border to find a bargain.
- Are looking for the best choice. The consumer choice offered by large online retail markets in countries like the UK, France, and Germany make the consumer less likely to shop outside of their domestic market.
- Spend more online, have higher incomes, and are younger than domestic shoppers. Retailers need to know the types of categories bought online to better target the cross-border shopper.
Cross-border retailers need to understand how to compete:
- Large retailers dominate online cross-border retail sales. Smaller retailers need to understand how they can differentiate themselves from the larger retailers that offer competitive pricing through economies of scale and a wide product choice.
- Cross-border trade correlates with a country’s average price of goods. The higher the price, the higher the opportunity for online shoppers to find retail items cheaper outside of their domestic market.
- Marketplaces are being used to promote cross-border trade to the small retailer. eBay uses its Global Shipping Program to encourage retailers to trade cross-border by managing the logistics of customs, international postage, and delivery for a domestic parcel delivery fee. The Fulfillment by Amazon service helps retailers leverage Amazon’s inventory supply centers and a discounted supply chain to facilitate cross-border trade.
Investment in cross-border retail is strong. Alibaba has committed to strong international growth and Rakuten recently launched its online marketplace in the UK to allow independent retailers to sell online. To learn how our forecasts can help you with your investment decisions, read our ForecastView overview.