It’s not a luxury. It’s not for multinational conglomerates. And it’s not just one among many growth strategies.
Global ecommerce is a necessity.
Unfortunately, global ecommerce is also fraught with questions. Where should you invest first? What countries present the best product-market fit? Who should you partner with for global warehousing and third-party logistics (3PL)?
To help you overcome both challenges and take hold of the opportunities global ecommerce offers, here are 10 international growth trends and all the stats you need to know.
Ready to scale internationally?
If you’d like an executive summary distilling the future of expansion, download The Enterprise Guide to Global Ecommerce.
Inside, you’ll get one-pagers detailing …
- Data on the opportunities and threats
- Merchant spotlights for insights on growth
- A checklist for selecting the right global platform
1. Global Retail Ecommerce Sales Will Reach $4.5 Trillion by 2021
Total worldwide ecommerce sales in trillions of U.S. dollars. 2014: $1.3; 2015: $1.5; 2016: $1.9; 2017: $2.3; 2018: $2.8; 2019: $3.3; 2020: $3.9; 2021: $4.5
Cumulative data from Statista anticipates a 246.15% increase in worldwide ecommerce sales, from $1.3 trillion in 2014 to $4.5 trillion in 2021. That’s a nearly threefold lift in online revenue.
Numbers of that scale are often hard to wrap our heads around. They’re at once both invigorating … and mind-boggling.
If your company is staring down that $4.5 trillion barrel and wondering, “What do we do?” rest assured, you’re not alone. As Harvard Business Review wrote earlier this month:
“Business leaders are scrambling to adjust to a world few imagined possible just a year ago. The myth of a borderless world has come crashing down. Traditional pillars of open markets—the United States and the UK—are wobbling, and China is positioning itself as globalization’s staunchest defender.”
For now, the big idea is simple: the massive opportunities of global ecommerce are too big to ignore. Not just in retail and B2C, but in ecommerce’s most overlooked category as well …
2. Global B2B Ecommerce Sales Dominate B2C
Statista’s 2017 B2B Ecommerce Report: “B2B business is now dwarfing that of the B2C business.” B2C ecommerce sales: $2.3 trillion. B2B ecommerce sales: $7.7 trillion. 234.78% difference in market size.
By the close of 2017, B2C ecommerce sales will hit $2.3 trillion worldwide. B2B ecommerce, on the other hand, will reach $7.7 trillion. Those two data points represent a 234.78% difference in market size.
In fact, Statista’s 2017 B2B Ecommerce Report summarizes the situation with a punch:
“B2B business is now dwarfing that of the B2C business.”
The dominance of B2B ecommerce means at least two things.
First, self-service is on the rise. Data from CEB Now Gartner found that “customers are 57 percent of the way through a typical purchase process prior to proactively reaching out to a supplier’s sales rep.” This doesn’t eliminate the need for a sales staff, but it does give ecommerce a distinct advantage.
Second, wholesale customers — namely, independent retailers, small-to-medium franchises, and B2C outlets — largely prefer a simplified ordering experience. This eliminates the need to invest your wholesale portal with all the bells and whistles of B2C ecommerce.
3. Retail Ecommerce’s Global Spread Makes International Sales Non-Negotiable
The 10 largest ecommerce markets (by billion USD). China: $672. United States: $340. United Kingdom: $99. Japan: $79. Germany: $73. France: $43. South Korea: $37. Canada: $30. Russia: $20. Brazil: $19.
According to Business.com, the 10 largest ecommerce markets in the world are …
- China: $672 billion
- United States: $340 billion
- United Kingdom: $99 billion
- Japan: $79 billion
- Germany: $73 billion
- France: $43 billion
- South Korea: $37 billion
- Canada: $30 billion
- Russia: $20 billion
- Brazil: $19 billion
More vital than market size is understanding market fit. Thankfully, Nielsen’s Global Connected Commerce report provides a detailed breakdown of the most lucrative industries by country:
Aligning those verticals with your own — as well as taking into consideration the geography of your current customers and traffic sources — provides strong evidence to your global ecommerce decisions.
“You wouldn’t believe the demand for Piper in countries like Australia, Japan, and Canada. Shopify Plus allows us to easily see the location of our sales so we can quickly begin to advertise in parts of the world where we see the best product-market fit.”
Tommy Gibbons, Director of Marketing at Piper
4. The Center of Ecommerce Has Moved Beyond the Western World
US share of global retail ecommerce sales: 16% Western Continents: North America: $988 billion; Europe: $272 billion. 84% Beyond the West: Asia: $6,020 billion; Rest of the world: $383 billion
Given the rise of globalization, it’s far from shocking that The United States’ share of global retail ecommerce sales is steadily decreasing. What many businesses fail to consider, however, is just how rapid this decrease truly is.
Where the US once held ecommerce supremacy, by 2020 its stake is expected to be 16.9% (down from 22.2% in 2015).
As a result, the lion’s share of B2B global ecommerce sales in particular (84%) now resides outside of Western continents like North America and Europe (16%).
If the rapid growth of other countries isn’t enough to spur buy-in for adopting an international approach, then the diminishment of the West is another avenue to wake up any reluctant team members or leaders.
Of course, going global does not necessarily require a physical global presence.
5. Domestic Shoppers Look Beyond their Borders When They Go Online
57% of online shoppers made an online purchase in the past six months from an overseas retailer. Overseas purchases were in the majority on all but one continent: 63.4% Europe, 57.9% Asia-Pacific, 55.5% Africa, 54.6% Latin America, and 45.5% North America.
One of the simplest ways to begin testing and entering foreign markets is to prioritize online advertising abroad. This approach requires you to take an international approach to AdWords, Product Listing Ads (PLAs), Facebook, and Instagram … but it doesn’t demand creating multiple storefronts for each location or setting up full-scale international warehousing and fulfillment.
Because, as Nielsen’s Connected Commerce Report found:
“Shoppers are increasingly looking outside their country’s borders, as more than half of online respondents in the study who made an online purchase in the past six months say they bought from an overseas retailer (57%).”
Overseas purchases were in the majority on all but one continent: North America. And — for most of you reading this — that’s where you’re already successfully operating.
6. Fair Business, Advertising, and Marketing Practices Are Nearly Universal
Federal Trade Commission’s Electronic Commerce: Selling Internationally A Guide for Businesses. Do you provide truthful, accurate and clear information on your website? Can you back up the claims you make about your goods and services? Are your advertising and marketing materials identifiable to consumers as such? Do you disclose who’s sponsoring an ad if it’s not otherwise clear to consumers? Do you respect consumers’ choices not to receive email solicitations? Do you take special care when advertising to children?
While local differences in payment methods, taxes, language, and currency matter, globalization has essentially normalized fair business practices.
This is one of the few places where a “one size fits all” system makes sense.
The best starting point for getting your global ethics right is the Federal Trade Commission’s Electronic Commerce: Selling Internationally A Guide for Businesses, which 29 countries have signed. Their guide provides a host of questions every international business should face head-on:
- Do you provide truthful, accurate and clear information on your website?
- Can you back up the claims you make about your goods and services?
- Are your advertising and marketing materials identifiable to consumers as such?
- Do you disclose who’s sponsoring an ad if it’s not otherwise clear to consumers?
- Do you respect consumers’ choices not to receive email solicitations?
- Do you take special care when advertising to children?
The International Trade Administration’s (ITA) Country Commercial Guides is an even more thorough resource, containing the “market conditions, opportunities, regulations, and business customs for over 125 countries prepared by trade and industry experts at U.S. embassies worldwide.”
Within each guide, you’ll find a complete market overview as well as a detailed breakdown of everything from the challenges and opportunities to the political environments to “Customs, Regulations & Standards.”
7. Ecommerce Expansion Typically Follows a Three-Stage Global Path
Top-Tier Markets: United States, United Kingdom, China, Japan, South Korea, Australia Second Wave: India, Indonesia, Mexico, Brazil, Saudi Arabia, Sweden, Switzerland Wait and See: Russia, Argentina, South Africa, Nigeria
Forrester research indicates that digital businesses “tend to follow a similar path and prioritize the same list of countries.” The list of countries included in each phase are listed above, but what’s important is to consider the characteristics of each “wave.”
- Large and developed ecommerce presence
- Smaller markets with strong physical infrastructures
- Ripe product markets within smaller overall markets
- Early-stage ecommerce development
- Complex domestic regulations
- Digitally advanced countries but small market sizes
Wait and see
- Uncertain political climates
- Emerging ecommerce markets with long-term potential
- Challenging infrastructures
8. Online Payment Preferences Vary Around the World
Top three payment methods used by online shoppers: Credit card, Digital payment system, Debit card, Direct debit, Cash on delivery, Store gift card. Global, China, India, Asia, Western Europe, Eastern Europe, North America, Africa, Latin America, Middle East.
Online payment methods weigh heavily on buying decisions and local preferences vary depending on the country.
Still, it’s easy to overlook how people pay. Cultural-centricity blinds us to the differences in buying habits. Without carefully considering the data, we default to whatever payment methods have been working for us domestically.
It’s no surprise that in North America, credit cards are number one by a mile. Digital payment systems like PayPal and Apple Pay are a close second. At the global scale, credit cards — 53% — and those same digital payment systems — 43% — also dominate.
Unlike North America, cash on delivery is the number one choice in Eastern Europe, India, Africa, and throughout the Middle East. Similarly, enabling direct debit is a must if your target markets include India, Africa, and both China as well as Southeast Asia and the Pacific (listed as “Asia” above).
For some, the differences in preference are small. For others, the gap is wide. Wherever you’re planning to head next or have already set up shop (digitally speaking) sensitivity to payment methods is second only to the next trend we’ll look at …
Want an executive summary?
Download The Enterprise Guide to Global Ecommerce. Inside, you’ll get one-pagers detailing:
- Data on the opportunities and threats
- Business spotlights for insights on growth
- A checklist for selecting the right global platform
9. Most Shoppers Won’t Purchase from a Site That’s Not in Their Language or Currency
Going native makes or breaks global sales: 75% want to buy products in their native language; 59% rarely or never buy from English-only sites; 67% prefer or strongly prefer native navigation and content in their language. Localization also matters when it comes to currency: 92.2% prefer to shop and make purchases on sites that price in their local currency; 33% are likely to abandon a purchase if pricing is in US dollars only. Common Sense Advisory: “Localization improves customer experience and increases engagement in the brand dialogue. It should be a rigorously planned and executed business strategy for any company looking to grow internationally.”
Going native with your site’s language — beyond Google Translate — can make or break global sales. Of the 3,000 online shoppers Common Sense Advisory surveyed from ten countries, a full 75% reported wanting to buy products in their native language. Conversely, 59% rarely or never buy from English-only sites. And nearly 70% prefer or strongly prefer a site’s navigation and at least some content to be in their native language.
This last finding bears closer examination.
Localization can often feel overwhelming. We tend to think of international expansion as an all-or-nothing endeavor: either everything has to be country specific or … why bother?
However, the respondents’ focus on navigation and “some content” means that a site need not necessarily invest in holistic translation, especially to begin testing. Much like eye-tracking data in ecommerce, there are certain hotspots that matter more than others. Getting those heavily scrutinized areas of your site right is the key. Only after you’ve gained traction does full-scale translation using a native copywriter and local idioms make sense.
The only thing that matters more than language, is currency.
In a 2012 study of 30,000 online shoppers from Canada, the UK, Australia, and Germany, 92.2% said they “prefer” to shop and make purchases on sites that price in their local currency. Even more startling, 33% are likely to “abandon a purchase” if pricing is listed in USD only.
Common Sense Advisory puts it best:
“Localization improves customer experience and increases engagement in the brand dialogue. It should be a rigorously planned and executed business strategy for any company looking to grow internationally.”
10. International Warehouse and Fulfillment Partners Should Be Chosen Carefully
Adam Rosenberg, Director of Operations at ShipHero: “First, go visit their facility to see what kind of products they're shipping. While onsite, take note of the products that are similar to yours and ask if you can speak to a few of the business owners. Second, find out what their procedures are for different items that are important to your business.”
Robin H. Smith, Co-Founder of VL OMNI: “As an integral part of your 3PL partnership, the key thing to look at in an international warehouse — beyond services, space, and pricing — are what technologies do they use. Make sure your partner is giving you a clear picture of what their technology is, who supports it, and how flexible it is.”
Steve Izen, Co-Founder at Orderbot Software Inc.: “The big mistake everyone makes is to ask about price first. Price is one of the last things you ask. A good 3PL is worth its weight in gold. Reduction of errors and timely deliveries equal happy customers, and happy customers order more.”
Establishing global partnerships can be a godsend … or a nightmare.
When operating internationally, trust is paramount. As the above recommendations make clear, finding the right partner requires (1) on-the-ground due diligence, (2) a product-specific track record from prospective 3PLs, (3) technological transparency, and (4) a willingness to look beyond price.
Given how sensitive these relationships are, we’ve spent considerable time at Shopify Plus outlining not just the general pros and cons, but advice from industry leaders along with a series of questionnaires to guide your selection.
You can access those in-depth articles here:
- Third Party Logistics (3PL): Everything You Need to Know
- International Warehouses in Global Ecommerce
- Global Fulfillment: Finding the Right Shipping Partner
It’s Time …
If there’s one thing all the above data points, reports, guides, and trends reveal, it’s that global ecommerce isn’t a choice; it’s a necessity.
The future of your company’s growth depends on it. Maybe even its survival.
Whether the struggle you're facing is internal buy-in or external how-to, we’re here to help.