Cross-border shopping: Huge growth area for start-ups

The lack of mature e-commerce infrastructures in numerous developing and developed markets means that many consumers are turning to buying goods from other countries, to make up for a shortfall in choice, value or brand names domestically. Although the likes of Amazon and eBay have traditionally held a strong share of this global market, demand for high-end fashions and niche goods is providing strong opportunities for new companies in this sphere. London corporate finance has been especially active in this sphere, with the likes of Net-a-porter and setting out to conquer cross-border e-commerce opportunities around the globe.

According to the latest B2C E-Commerce Report of the European branch organization Ecommerce Europe, the global e-commerce market was worth over one trillion euros in 2013, growing at an average annual rate of 20%. The more mature markets, led by the USA, the UK and Japan, are beginning to show signs of a slowdown, whereas France, Italy, Spain, Russia, Turkey and Poland are expected to continue their strong growth. This generates plenty of opportunities for both consumers and sellers to explore offers or target groups beyond their borders.

One of the predictions made in a report by Nielsen, a global consumer insight specialist, titled “Modern Spice Routes – The Cultural Impact and Economic Opportunity of Cross-Border Shopping” (2013) and commissioned by PayPal,is that cross-border shopping will generate 16% of total global online sales in 2013.

In the study, the USA came out as the favorite cross-border shopping destination (45% of respondents said to have ordered something there), followed by the UK (37%) and China (26%). The top reasons for shopping across borders were saving money (80%) and finding a broader offer than domestically available (79%). Popular product categories ordered from other countries include fashion, health & beauty, consumer electronics, PC hardware and jewerly/watches.

With emerging economies continuing to soar, Google and OC&C Strategy Consultants4 expect the value of British e-commerce exports to reach 43.9 billion euros 2020. The annual growth rate of foreigners screening British sites for products is estimated to be 46% on average.

The European Union (EU), with its open borders and trade agreements inherent to the “Single Market,” offers a favorable environment for trading online across borders. According to recent IMRG findings, more than one-third of yearly global cross-border take place in Europe, where cross-border sales represent 9% of total sales. A growth of consumer spending within the Single Market is important for economic growth of the EU, and thus stimulating cross-border (online) sales is one of the focus points of the Europe 2020 Strategy.

In 2013, Asia-Pacific was the largest e-commerce market for products and services in the world. With a B2C e-commerce turnover of 406.1 billion euros (+16.7%), this region was larger than Europe and North America.

However, the Middle East and North Africa (MENA) region experienced the fastest growth in 2013; its e-commerce turnover grew by 32.6% to 11.9 billion euros. It was followed by Latin America, which grew by 24.6% to 37.9 billion euros.



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