Cape Town - Cross-border e-commerce offers aggregate growth rates not available in most other retail markets, according to a report by DHL Express.
Cross-border retail volumes are predicted to increase at an annual average rate of 25% between 2015 and 2020 (from $300bn to $900bn) – twice the pace of domestic e-commerce growth. Online retailers are also boosting sales by 10% to 15% on average simply by extending their offering to international customers.
An additional boost comes from including a premium service offering: retailers and manufacturers that incorporated a faster shipping option into their online stores grew 1.6 times faster on average than other players.
READ: Trust a big factor for e-commerce in Africa
DHL Express' research – The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity – looked in detail at the markets and products that offer the highest growth potential, the motivations and preferences of customers making international online purchases and the success factors for online retailers that wish to expand overseas.
It focuses in particular on the opportunity for premium products and service offerings, with higher basket values accounting for a significantly higher proportion of orders in cross-border transactions.
Brand Africa
“Contrary to what many retailers think, cross-border shipping is actually simple and retailers in sub-Saharan Africa are perfectly positioned to take advantage of international opportunities. ‘Brand Africa’ is something that has increased exponentially in popularity in recent years and it’s time for retailers to remove the boundaries and open up their business to seamless international trade," said Hennie Heymans, CEO of DHL Express sub-Saharan Africa.
"Often, retailers choose not to promote their businesses internationally, and worse yet, will turn down international sales interests due to the misconception that it’s too difficult to manage and deliver. Globally, our experience is that virtually every product category has the potential to upgrade to become premium, both by developing higher quality luxury editions and by offering superior levels of service quality to meet the demands of less price-sensitive customers."
In sub-Saharan Africa, the opportunity for intra-Africa trade should not be ignored, in his view, as Africa is home to one of the world’s fastest growing middle class, with an appetite for quality products and services. There are also a number of trade blocs in place to support intra-Africa trade growth and retailers should take advantage of this captive market.
The report shows manufacturers are increasingly taking advantage of e-commerce to move to direct retail models – bypassing the "middleman" and offering their products online to the end customer. They expect to grow 30% faster in cross-border e-commerce than other retailer groups.
Customers in many markets are also becoming more discerning, citing product availability and trust, as well as attractive offers, as the motivating factors for shopping with overseas online retailers.
The main challenges highlighted by consumers to cross-border purchases relate to logistics, trust, price and customer experience. At the same time, online retailers can take a number of relatively easy steps to identify, cultivate and service demand from abroad.
The report noted that the e-commerce trend has given birth to a new eco-system of facilitators and off-the-shelf solutions - such as payment providers and programmes that localise a website’s check-out experience for the visitor - helping retailers to adapt their offering to the digital world and to transact with customers in foreign markets.
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