E-retailer? How to stand a chance in the USA E-tail market.
At this moment, advancement of technology is helping to open up commerce opportunities for everyone - across borders, anywhere, anytime and via any device. Understanding that this is a commerce revolution, PayPal in partnership with Ipsos, conducted a global market survey with approximately 23,000 consumers to examine how people shop online and across borders. We would like to share our view on this report with you.
The research gives us an insight in what factors are important in the decision making process of the consumers, and what you as a cross border company should keep in mind even between different countries. We've learned from this research that it is important for the USA market that your business is localized, mobile, available at marketplaces and that your solutions concerning shipping don't make the consumer pay any extra or that it will take much longer to get the products.
When reading the research results, you see that shipping is an important factor in choosing cross border purchases. Important factors include:
- Pricing – 47% of the consumers bounce when the shipping costs are too high, 50% of the consumers base their choice on free shipping.
- Shipping time – 35% of the consumers base their choice on a fast delivery time, 41% of the consumers bounce when they’re not sure when they receive the item and 38% of the consumers bounce when the delivery takes too long
- Domestic returns – 37% of the consumers bounce when the returning process is too difficult
What’s important to know is that, for example, Amazon Prime Users have the opportunity to use a free 2 days shipping feature on many products sold on Amazon. It’s therefore recommended when entering the US market to see if your shipping prices won’t have a negative effect on your competitiveness in the market. Another recommendation is to mention your logistics partner, so that the consumer can see that you work with a trustworthy organization and that their package will be in good hands.
A huge impact on the cross-border conversion can be a local return option, especially for European/Asian retailers selling on the US market a local return solution is recommended. It will make it easier to offer free returns, which makes a cross border purchase 38% more likely to happen.
It is important to localize your business in the area you want to expend, 35% of the consumers is more likely to make a cross border purchase when the website is available in their own language. What is moreover important is a local phone number, a local address and keeping in mind the local taxes and duties when shipping from abroad.
Compared to European consumers, in America online purchases are more often made by using a mobile device. To be specific, 36% of the purchases are made on a mobile device, as in Europe an average of 21,67% of the purchases are made on a mobile device. Almost every person is in possession of a smartphone or tablet nowadays. Even when they’re not actually buying, but pre-shopping, make sure that your website and webshop are readable on mobile devices as well. A recommendation is to pay special attention to the checkout; make sure its mobile friendly.
With a 64% first place, the main reason to buy at a specific place is “I prefer large 'global' stores (similar to Amazon) when purchasing from another country”. People want to know where they’re buying from, they want to recognize the name. If it’s unknown, they don’t know whether to trust it.
Make sure you sell your products not only through your own website, but as well via the big and known marketplaces as Amazon, Wayfair, Jet and Ebay in the US. These marketplaces have big influences, a lot of consumers in the US search for the product they like at the brand/retailers webshops, but purchase at a marketplace. Main reason seems to be free shipping for Amazon prime users and the possibility to easily compare the prices and the quality of the vendors based on reviews.
So based on the results in the PayPal/IPSOS Cross-Border Consumer Research 2015 we recommend when you want to enter the US market:
- Make sure that your shipping service/shipping prices are competitive with your competitors
- Offer a local return solution
- Localize your business as much as possible since the results are showing that it stimulates conversion, but in particular; Language, Phone number, address, client service and payment methods.
- Add the marketplaces in your Sales strategy as potential sales channels, but keep in mind that they aren’t free to sell on.