The global economy has faced much upheaval over the past few years, with economic and geopolitical shocks, inflation and energy crises to name a few. However, throughout all of these events, the enduring appeal of e-commerce for consumers was cemented.
I recently spoke with Matthew Merrilees, CEO North America of Global-e (Nasdaq: GLBE) about the rise of DTC cross-border e-commerce, what’s shaping global consumer behavior, and how brands are (or should be) responding.
Gary Drenik: When examining behaviors and preferences of online shoppers around the world, what commonalities do we see?
Matthew Merrilees: Consumers around the world want to buy directly from brands – data clearly supports that. In fact, a recent survey we conducted found that nearly 60% of respondents prefer to buy products directly from a brand’s website. This is especially noticeable among younger consumers, with 68% of online shoppers aged 25-34 preferring to buy directly from the brand’s website.
Online shoppers around the world are motivated by price, variety, and quality – and will opt to buying directly from a brand outside their market if it offers them these. A recent Prosper Insights and Analytics China survey provides a great example, indicating that the preference for US and European clothing brands among Chinese consumers has increased YoY by 1.6 and 2.2 percent respectively, while their preferences for domestic brands actually decreased.
What is consistent for online shoppers worldwide is their desire for a seamless and transparent buying experience. Our survey shows that shipping cost, return options, the ability to view prices in their currency, the option to use their preferred payment method, and full transparency with regards to the final cost of their purchase are all impacting shoppers’ decisions to place an order.
Drenik: How are consumers discovering and engaging with brands, both domestically and abroad, in the first place?
Merrilees: In the digital age consumers are increasingly engaging directly with brands on social media.
Our data found that 75% of consumers purchased from a brand because they engaged with it on a social network. In fact, if we delve further into specific demographics, we find that almost 1 in 3 of respondents aged 16-34 claimed that social media led them to buy from a seller outside their domestic market.
What’s also important to note is that social media’s influence applies across product categories. A recent Prosper Insight & Analytics survey found that Female consumers between the ages of 18-34, decided to purchase apparel and clothing (30.3%), beauty products (29.4%), and electronics (27.2%) after engaging with brands on a social media platform.
The effects of this are fascinating as social media is driving a digital landscape without borders. This presents an extraordinary opportunity for brands to reach and engage with consumers worldwide. However, international markets differ in many aspects, from language and currency to import regulations and preferred payment methods. Thus, a better understanding of local consumers buying preferences and delivering a streamlined localized experience that meets their expectations is key to converting global online traffic into sales.
Drenik: Looking at social media more carefully, what platforms do we see consumers utilizing most to engage with international brands? Do different age groups prefer different channels?
Merrilees: Our survey shows that Instagram is the leading social media platform that consumers have been using when engaging with brands. Over 60% of respondents who reported making a purchase after engaging with a brand via social media said they did so on Instagram.
However, if you delve into age groups, the data gets even more interesting. Not surprisingly Facebook is leading amongst older consumers (45-54, 55+) and TikTok is taking the younger generations by storm. In fact, 60% of Gen-Zs purchased from a brand after engaging with it directly on TikTok, compared to 35% for groups aged 35-44.
This reinforces the idea that the devil is in the details – it’s likely not enough for brands to have a presence on social media; if they really want to benefit from what these platforms have to offer, they should think carefully about who they want to target, how, and via which medium.
Drenik: You mention cross-border e-commerce. What are the main reasons online shoppers would be willing to purchase products outside of their domestic market? What are those products?
Merrilees: Our survey found that consumers are predominately willing to buy almost any product imaginable across borders. While fashion and apparel remain by far the leading categories in terms of consumer preferences, other categories have appeal as well, including toys, sports & leisure, etc.
The three main reasons that online shoppers buy from international brands are price (47%), variety (37%), and quality (28%). While price is the main reason for buying internationally online, younger consumers (aged 16-24) are strongly motivated by variety. Fast and low- priced shipping and returns are among the five top reasons for buying from a seller outside the domestic market, highlighting the importance of setting an attractive and transparent proposition when selling to international consumers.
Drenik: What do US retailers stand to gain when expanding their cross-border e-commerce operations? What are the best practices to do so?
Merrilees: What I’m seeing is that more and more retailers are saying that the domestic markets are saturated, and brands are looking for new ways to expand their revenue and reach consumers in more geographies. And there are tremendous opportunities. You just have to look to places like Latin America, where online retail sales are expected to reach an astounding $160 billion by 2025, to understand the almost limitless potential of tapping into a global consumer base. Mexico, for example, was the leading market in terms of cross-border ecommerce sales growth in 2022, according to our company data. We’ve seen also considerable growth in Gulf markets and APAC markets, such as Singapore, highlighting the growing potential in many worldwide markets.
In terms of best practices, brands should adopt a holistic, localized approach in order to stand out competitively and convert international traffic. This means that the entire shopping experience – everything consumers care about from price to delivery – is seamless and feels local, regardless of where the buyer and seller are physically. This is a challenge, but in the digital and technological age, it is one that brands can be well placed to overcome. How? By and large, the key is a combination of a globally-oriented mindset and the right solutions that provide advanced technological capabilities and local markets know-how.
Drenik: Matthew, thank you for sharing your insights on the ways consumer behavior is changing, what they care about, and how retailers should respond. The landscape is extremely competitive and expectations change quickly, so it’s very interesting to see how this is played out in the data. 2023 is sure to be an eventful year for DTC e-commerce.
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