Cross-Border Online Shopping: Pros & Cons

Cross-Border Online Shopping: Pros & Cons

Cross-Border Online Shopping


According to the just released PayPal Second Annual Global Report (done in conjunction with Ipsos), the leading 10 countries in terms of cross-border shopping have the US, UK and China, being the top 3. For online shopping, another popular source country is Singapore while new markets such as Canada and Germany also came up in the Report.


Factors that Promote International Online Shopping


The study also highlighted a couple of reasons why the millennials tend to prefer buying from foreign websites.


1. New Technology and Product Variety Millennials are more open when it comes to adopting new and emerging technologies such as smart phones, iPads and tablets that greatly facilitate access to cross border online shopping. For online cross-border shopping, the biggest product categories are clothing, footwear as well as both male and female accessories. For the millennials, the next big group is consumer electronics. Even when it comes to the jewelry and watches segment, this new class of consumers do more cross-border buying. What is rather interestingly is that they also shop online for events tickets.


2. Product Quality and Reputation Younger shoppers on average feel that the quality of foreign products is better; products are more interesting and come with better prices. Many consumers, especially in developing countries also tend to have more confidence in the reputation of overseas online stores. They trust the product authenticity and their product return policies are seen to be more generous and flexible.


3. Product Promotions The availability of discounts, promotions, and coupons on these sites are powerful motivations for the millennials. Marketers have perfected the art of selling to the online consumer with catchy incentives.


Factor that Limit Cross Border Online Shopping


When it comes to drawing cross border buyers, shipping costs becomes a major factor. Shoppers will want the variety and quality offered by shopping online abroad, but they will not want it to be more costly than it would cost them if they got the same product from a local retailer.


For the 2nd year in a row that the PayPal and Ipsos study has been conducted, the key to getting increased earnings from cross border online based shopping lies in removing or drastically reducing shipping costs, diversifying the product offerings and ensuring safe buying process. Merchants will need to develop new strategies on how to decrease shipping rates or offer free shipping incentives.


A major stumbling block to international online shopping has been payment being made in foreign currencies with their restrictions and exchange rate fluctuations. Some buyers are also concerned about either not even receiving their item or regarding fraud and identity theft. As one opportunity for fraud closes, online fraudsters are very quick in opening another with growing professionalism.


The Advantages of Local Buying


Local online buying has recently become a growing trend, flying in the face of perceived advantages of international online sourcing previously favored by shoppers. Today it all comes down to balancing out the inherent disadvantages of cross border online buying.


Products bought locally typically come with a more reliable warranty, which if necessary you can easily follow up by visiting the concerned store. When you buy locally, you are likely to benefit from after sales services, something that may not be practical for a product purchased online across the border. When buying cross border, buyers usually only come to learn about some hidden fees when paying, typically in the form of taxes incurred due to international trade, changes in exchange rates and price fluctuations.


However, the leading benefit of buying domestically is that you will incur minimal, if any shipping fees and hidden levies. Major brands will normally have a branch of their store in your city thereby eliminating all shipping and brokerage fees.



Vincent Lin Posted by Vincent Lin

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