Cross-border eCommerce is booming, with over 50% of global consumers planning to increase international purchases in 2024. Brands that localize payment options, invest in logistics, and leverage social media influencers are best positioned to capture this growing demand.
As global markets become increasingly intertwined, cross-border eCommerce has emerged as a compelling growth avenue. According to Airwallex’s latest white paper, co-authored with Edgar, Dunn & Company, the latter half of 2024 is set to witness a remarkable uptick in cross-border purchasing activity, with over 50% of global consumers indicating plans to increase their purchase frequency from international merchants
The rise is fueled by digital transformation, consumer confidence, and a growing preference for diversity in product options. In this analysis, we delve into key consumer trends, the evolving technological landscape, and strategies for merchants aiming to capture a slice of the rapidly expanding global eCommerce market.
Key Drivers in Cross-Border Shopping
1. Tech-Savvy Consumers and Diverse Payment Preferences
The global eCommerce space has seen a seismic shift as more consumers embrace digital payment solutions. In the surveyed regions, from Australia to China, new payment options are gradually overtaking traditional credit cards.
For example, digital wallets such as Alipay and WeChat Pay dominate the Chinese market, with nearly half of surveyed consumers preferring these options. Meanwhile, digital wallets like Apple Pay and Google Pay are gaining traction in Western markets, with notable popularity in Australia (37%) and the UK.
Interestingly, a staggering 93% of consumers say seeing products priced in their local currency impacts their purchase decision, and 77% are likely to abandon their cart if their preferred payment method is unavailable. This emphasizes the importance of payment flexibility and local currency options in a globalized eCommerce model.
2. The Social Media Influence on Cross-Border Shopping
Social media has evolved into a global marketplace. From interactive live shopping on platforms like TikTok to influencer endorsements, social channels are shaping cross-border shopping behaviors, particularly in Asia. Around 75% of consumers said influencer endorsements impact their trust and purchasing decisions, especially in China, Hong Kong, and Singapore.
This trust factor is crucial for international merchants aiming to establish a footprint in new regions where their brands may be less familiar.
The power of social media doesn’t just rest with influencers; it also fosters a sense of immediacy that drives impulse buying. Airwallex’s research highlights that social platforms offer a unique environment where users can move from product discovery to purchase in a matter of seconds—a lucrative channel for brands focusing on capturing spontaneous purchases.
Consumer Expectations: Logistics and Payment Infrastructure
While consumer demand for cross-border shopping is clear, successful international sales hinge on a seamless shopping experience. From the flexibility of payment options to efficient logistics, merchants must tackle several operational aspects to meet customer expectations.
1. Logistics Solutions That Win Consumer Trust
Efficient shipping and transparent return policies play a pivotal role in maintaining consumer confidence in overseas purchases. Approximately 47% of consumers expressed frustration with lengthy refund processing times, while 44% are deterred by the high costs of return shipping.
These logistical challenges underscore the need for businesses to prioritize reliable shipping and return policies. Partnering with international logistics providers, such as ShipBob or Easyship, is becoming standard for merchants looking to streamline cross-border shipping and returns.
2. Building Consumer Confidence with Payment Infrastructure
Airwallex’s report notes that 65% of consumers feel confident in the security of their personal and financial information when buying from international merchants. This confidence is largely attributed to advancements in secure digital payment technologies, which play a central role in facilitating trust in international transactions.
Airwallex’s end-to-end payment solution, for example, offers merchants the ability to localize payment options, streamline currency conversions, and provide competitive foreign exchange rates, thus eliminating the hidden fees that erode customer loyalty.
For merchants, the lesson is clear: enabling local payment methods and optimizing payment infrastructure for security and efficiency can significantly enhance the international shopping experience.
Strategic Takeaways for Merchants Seeking Cross-Border Success
Given the multi-trillion dollar potential of cross-border eCommerce, businesses cannot afford to overlook the advantages of a global customer base. Below are strategies that emerged from Airwallex’s study, designed to optimize a brand’s international expansion.
1. Embrace Localization to Enhance Customer Experience
Localization goes beyond language translation; it includes pricing in local currencies, offering region-specific payment methods, and tailoring marketing campaigns to local preferences. This approach has proven effective across markets, as seen with brands like Australian luggage company July, which leveraged Airwallex to streamline currency handling and minimize cross-border fees. By pricing products in local currencies and reducing transaction fees, July was able to make a compelling case for overseas shoppers while driving global growth.
2. Leverage Social Media and Influencers
With regional variations in social media preferences, brands must be strategic about which platforms to prioritize in their target markets. For example, TikTok/Douyin reigns supreme in China and Singapore, while Facebook and Instagram dominate Western markets.
Merchants can maximize reach by investing in authentic influencer partnerships that align with their brand values, creating a relatable connection with local audiences. For instance, e.l.f. Cosmetics’ campaign on TikTok generated over three million user-generated videos, demonstrating the potential of well-curated influencer strategies.
3. Utilize Multi-Currency Accounts and Payment Flexibility
A seamless checkout process is fundamental to increasing conversions. According to Airwallex’s report, payment friction is a key reason behind the high global cart abandonment rate, which hovers around 70%. By using multi-currency accounts, merchants can sidestep costly foreign exchange fees and settle payments in the customer’s currency of choice.
This not only lowers the total purchase cost but also builds customer loyalty by ensuring transparency. Airwallex’s platform, for instance, allows businesses to settle funds in 23 currencies, automatically match payments in local currencies, and integrate with popular eCommerce platforms like Shopify and WooCommerce. Such tools simplify the payment process for customers while minimizing financial overhead for merchants.
Case Studies: Success Stories from the Field
Grams(28): Leveraging Buy Now Pay Later
Grams(28), a premium brand, faced a challenge with lengthy sales cycles typical of high-priced products. By integrating Airwallex’s Buy Now Pay Later option, Grams(28) shortened consumer decision time and saw a 20% increase in sales.
Founder Benjamin praised the seamless integration and localized currency management Airwallex provided, saying it saved considerable time on account reconciliation—a vital element for brands managing multiple currencies.
Two More Glasses: Cutting FX and Transfer Fees
Two More Glasses, a global wine retailer, streamlined their payment processes by integrating Airwallex with their WooCommerce platform. The move reduced FX fees by up to 5% and transfer fees by 25%, translating to an annual savings of US$30,000. Moreover, the time spent on payment management was cut by half, allowing the team to focus on scaling their business rather than administrative overhead.
The Managing Director noted the dramatic improvement in global revenue, attributing it to the ease and affordability provided by Airwallex’s platform.
Looking Forward: The Future of Cross-Border eCommerce
The cross-border eCommerce market is projected to reach US$7.9 trillion by 2030. As competition intensifies, the winners will be those brands that commit to building a frictionless, locally tailored shopping experience. This entails more than just an international shipping option; it demands an optimized payment infrastructure, proactive logistics management, and a culturally aware marketing strategy.
Airwallex’s white paper serves as both a guide and a warning: while the cross-border market presents a wealth of opportunities, only those merchants that invest in understanding and adapting to regional trends will thrive. From influencer partnerships to multi-currency payment solutions, the path to cross-border success is one of careful planning and relentless customer focus.
Download the full report here: https://www.airwallex.com/us/ecommerce-campaign-2024
