It goes by many names — cross-border commerce, borderless business, international online retail. But more important than what it is, is what it isn’t. Global ecommerce is not a luxury. It’s not one strategy among many. Going global is a necessity.
Unfortunately, it’s also fraught with questions. Where to invest? What countries present the best product-market fit? How do you attract non-local buyers? Which is most important: translation, currencies, payment options, or something else entirely?
To help you meet the challenges and take hold of the opportunities, we’ve organized comprehensive data into 11 international trends.
- Global Ecommerce Definition and Market Size
- Domestic Shoppers Look Beyond Their Borders
- International Growth Reshapes the Map
- Ecommerce Moves Beyond the Western World
- China and APAC Are the Next Growth “Horizon”
- Product-Market Fit Varies by Region and Country
- International Analytics May Hold the Key
- Localized Language and Currency Matter Most
- Payment Preferences Vary Around the World
- Ethics and Expansion “Paths” Are Near Universal
- B2B’s Global Online Sales Dominate B2C
1. Global Ecommerce Definition and Market Size
First things first, global ecommerce is selling products or services across geopolitical borders from a company’s country of origin – normally defined as its founding or incorporating location. Products or services are sold into non-native markets via online sales and marketing. Cumulative data anticipates a 276.9% increase in worldwide ecommerce sales over the most-recently tracked period.
Numbers of that scale are hard to wrap our heads around. They’re at once invigorating and daunting. If your company is staring down that $4.5 trillion barrel and wondering, “Where do we begin?” rest assured, you’re not alone.
As Harvard Business Review wrote: “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.”
We’ll unpack that quote and more below. For now, the big idea is simple: the shadow of global ecommerce looms too large to ignore.
2. Domestic Shoppers Look Beyond Their Borders
To start, going global doesn’t necessarily require a global presence. Online shoppers are increasingly looking outside their country’s borders for purchases. In fact, during one six-month evaluation, overseas purchases were in the majority on all but one continent: North America.
None of that demands multiple storefronts for each location or setting up international warehousing and fulfillment. One of the simplest ways to begin testing foreign markets is to prioritize online advertising or social media abroad. This requires an international approach to Google Ads, Product Listing Ads, Facebook, and Instagram through geographic targeting.
Women’s Best’s Instagram presence is a perfect example. The brand has created multiple country-and-language specific accounts with only slight differences in actual content. The cost of launching geographic accounts — regardless of the platform — is minimal.
Promoting social content and advertising online in other countries, even if all you do is track engagement rather than sales, tests viability. But perhaps the best strategy is to experiment with marketplaces in target regions where 60% of global online sales now take place.
3. International Growth Reshapes the Map
Worldwide numbers aside, ecommerce’s regional markets rank as follows:
- Asia: $831.7 billion
- North America: $552.6 billion
- Europe: $346.5 billion
- Australia: $18.6 billion
- Africa and the Middle East: $18.6 billion
- South America: $17.7 billion
Looking at those same figures along country lines reveals the 10 largest ecommerce markets in the world currently are:
Of course, what truly matters isn’t where we are but where we’re going—the future of ecommerce. Using 2023 projections, a slight reordering appears, as well as one standout leader: China.
Due to the increasingly borderless state of commerce, it’s far from shocking that the United States’ share of global sales is decreasing. What many businesses fail to consider is just how rapid this decline truly is. Where the U.S. once held ecommerce supremacy, next year its stake is expected to be 16.9% (down from nearly a quarter in 2015). The same is true throughout North America and Europe. That means …
4. Ecommerce Moves Beyond the Western World
By 2023, retail ecommerce sales in Asia Pacific (APAC) are projected to be greater than the rest of the world combined. This is due to (1) rapid urbanization and technological advancements, (2) more than 85% of new middle-class growth residing in APAC, and (3) a host of government and private-led initiatives in China. On the B2B front, manufacturing in APAC and China has undergone a renaissance. As a result, the B2B disparity is even clearer.
Entering China — and to a lesser degree APAC as a whole — presents a handful of thorny challenges:
- Internet Content Provider (ICP) licenses from the Chinese government are a requirement for all domains and notoriously difficult to obtain
- China’s “Great Firewall” causes sites on foreign servers to load painfully slow, dragging down onsite conversion rates and search engine rankings
- Advertising and social content via Facebook, Instagram, YouTube, and Google are unavailable in China, even though Chinese companies are using those same channels to enter Western markets
- Chinese consumers use ecommerce fundamentally different from Western audiences; preferring marketplaces, mobile, and social commerce over standalone websites
Is there an answer?
5. China and APAC Are the Next Growth “Horizon”
Despite those challenges, numerous DTC leaders are already making headway (and significant revenue). Tim Brown, co-founder of Allbirds, recently called China the “brand’s horizon for future expansion.” The question is: how are they doing this?
Strategies typically cluster around three approaches. First, partnering with local vendors. Second, investing in an on the ground team. Depending on size, this may include localization, marketing, logistics, customer support, sales, and engineering. Third, establishing an online presence through third-party marketplaces — i.e., Tmall and JD — and/or a branded ecommerce site. Branded sites are more costly, but they provide more data and better customer relationships.
“There is no simple answer to China,” says Xavier Lee, Managing Director at Jumpstart Commerce, a Singapore-based agency with offices across Southeast Asia. “Reexamine your product to determine market fit. Start talking to Trade Associations. Get yourself on the digital ground with a WeChat account. Move around the different tier cities to glimpse how consumers behave. Be not afraid of growing slowly; be afraid only of standing still.”
6. Product-Market Fit Varies by Region and Country
Making tactical decisions on which geographies to prioritize hinges on product-market fit: that is, validating existing demand or opportunity for your offerings within new areas. For instance, despite much effort (and money), deodorant has never become a successful product in China due primarily to biological reasons.
Thankfully, Nielsen’s Global Connected Commerce report provides a detailed breakdown of the most-lucrative online industries by region. Aligning those verticals with your own provides a solid starting point to guide global decisions.
Equally important is determining geographic potentials. Once a region has been identified, a country-by-country analysis should follow. NC State University’s Estimating Market Potential: Is There a Market? does this by outlining seven steps as well as providing detailed worksheets to calculate total potential:
- Define the market segment
- Define the geographic boundaries
- Define the local competition
- Define the market’s monetary size
- Estimate reasonable market share
- Determine average annual consumption
- Estimate an average selling price
7. International Analytics May Hold the Key
Of course, even the best-informed speculation pales in comparison to the insights contained within the geography of current customers and visitors. You can uncover this by analyzing traffic and sales-by-country data.
With Google Analytics’ locations report (Audience > Geo > Location), set up segments to examine international traffic by continent, country, region, or city. Take special note of the areas where traffic and conversion rates are highest — these may represent where you’ve unknowingly gone global already.
Also, pay attention to the areas traffic may be high, but conversions are low — these are likely clues as to where there is demand for your products but something onsite (e.g., language, currency, payment options, etc.) is a barrier to purchase.
Alternatively, if your ecommerce platform offers native reporting, examine the dashboards that show sessions by location (traffic), customers by country (shipping addresses), and sales by billing country (payment addresses). “You wouldn’t believe the demand for Piper in countries like Australia, Japan, and Canada,” says Tommy Gibbons, Director of Marketing at Piper. “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.”
8. Localized Language and Currency Matter Most
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, language was a frontline issue in determining where they shop and whether they buy.
This last finding bears closer examination. Localization can often feel overwhelming, like an all-or-nothing endeavor: either everything has to be country-specific or why bother? It’s not.
The respondents’ focus on navigation and “some” content means that a site need not invest in holistic translation from the jump. Getting heavily scrutinized areas of a site right is critical: headlines, product titles, etc. Only after you’ve gained traction does full-scale translation using a native copywriter and local idioms make sense.
That principle, however, doesn’t apply to multi-currency. In a study of 30,000 online shoppers, nearly all said they “prefer” to shop and make purchases on sites that price in their local currency. Even more startling, one third are likely to “abandon a purchase” if pricing is listed in USD only.
But currency isn’t the only consideration when it comes to money.
9. Payment Preferences Vary Around the World
Online payment methods weigh heavily on buying decisions. Still, it’s easy to overlook how people pay. Cultural-centricity blinds us to the differences in purchase habits. Without carefully considering the data, companies may default to whatever payment methods have been working 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 and those same digital payments 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, or Asia.
For some, the differences in preference are small. For others, the gap is wide. However, while local differences in payment methods, language, and currency matter, globalization has essentially universalized two areas:
10. Ethics and Expansion “Paths” Are Near Universal
Fair business practices and the three “paths” to expansion (detailed below) are two places where a one-size-fits-all system makes sense. The best source for getting 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 business should face head-on:
As for expansion, Forrester indicates that digital businesses “tend to follow a similar path and prioritize the same list of countries.”
That list of countries is helpful, but the characteristics of each “path” should be weighed carefully.
- 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
- Uncertain political climates
- Emerging ecommerce markets with long-term potential
- Challenging infrastructures
11. B2B’s Global Online Sales Dominate B2C
Statista’s B2B Ecommerce Report summarizes the situation with a punch: “Even though B2C eCommerce has witnessed widespread adoption, it is the recent evolution and growth of B2B eCommerce that is attracting the attention of buyers, sellers and investors all over the world.” Comparing each market’s total annual value represents a nearly four-fold difference (278.6%).
Why is B2B ecommerce such a ripe global opportunity? First, B2B marketplaces (e.g., Amazon Business, eWorldTrade, Joor, Alibaba, etc.) operate much like their B2C counterparts. They provide ready-made connections between buyers and sellers. Second, the B2C preference for self-service has infiltrated B2B and alleviated the offline barrier of hiring a large sales force. Gartner found that B2B “customers now wait until they are 57% through the purchase process before contacting a rep.” This gives ecommerce a distinct advantage as self-guided online sales are already the norm.
Lastly, many wholesale customers prefer simple ordering experiences. This is particularly true for independent retailers, small-to-medium franchises, and B2C outlets. Such buyers still often rely on paper orders and invoices. Recreating line sheets in digital form and onboarding new wholesale customers with easy-to-follow reordering processes eliminates the need to create a wholesale channel with all the bells and whistles of B2C ecommerce.
If there’s one thing all the above data, reports, 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. That’s why we created a step-by-step framework for going global the right way …