5. eCommerce Consumer Behavior & PreferencesConsumer Behavior & Preferences
When considering entering into new international markets as a small business, it is important to carry out in-depth market research into consumer behavior and spending habits. Below is a list of countries which are planning to start or increase cross-border purchases within the next year and this makes a good starting point for your market research and a place to start to identify new market opportunities.
Countries Planning to Start or Increase Cross-Border Purchases within the Next Year
Increase: 39 percent
Increase: 34 percent
Increase: 33 percent
Increase: 35 percent
Increase: 32 percent
Source: Nielsen, 2014
What Are They Buying?A 2014 Nielsen survey asked consumers across the globe what they were buying. The product categories vary somewhat among countries. Also, the list doesn’t include products such as automobile parts, which eBay says makes up a nice chunk of its cross- border business. Books also are not on the list, but are popular, especially in electronic form. Low-weight items are cheaper to ship long distances.
The top cross-border online shopping categories from the Nielsen report are:
- Health and beauty (USD 7.6 billion)
- Personal electronics (USD 6 billion)
- Computer hardware (USD 6 billion)
- Jewelry, gems, and watches (USD 5.8 billion)
- Home electronics (USD 5.4 billion)
Who Are They Buying From? Advantage: United StatesThe United States is the biggest exporter in the world when manufactured goods and services are counted. Still, only about 4 percent of all U.S. companies export. And more than half export to only one country, mainly Canada. If you are one of these companies, or aspire to be one, you are a rarity, and an important one. E-commerce can help more companies sell more to more countries. And buyers in these countries seem predisposed to buy American, assuming other buyer criteria are met.
Also, two of the world’s biggest e-commerce platforms are U.S.-based: eBay and Amazon. Two of three logistics giants are U.S.-based: UPS and FedEx. With such visibility and presence, it’s no wonder that consumers worldwide are willing to have the United States as a preferred provider.
Who’s Selling?Not long ago, big companies dominated world trade. Today, most exporters are small and medium-sized companies. Large e-commerce platforms have increasingly enabled more small companies to engage in international trade. In a recent report, the online marketplace eBay said that 95 percent of its U.S. sellers (190,000 unique users) are exporters, with annual sales of more than USD 10,000. By contrast, the U.S. Department of Commerce says that about 4 percent of U.S. companies export. One conclusion is that marketplaces have become a magnet and an enabler for exporting companies, realizing that these companies often use a variety of selling platforms, including their own websites. Companies that sell globally online also seem to grow faster and survive longer.
Consumer Behavior & Preferences (eCommerce Guide)The world of e-commerce is the small business’s oyster, but prying it open to seize the pearl within will take some doing. That message is the main takeaway from a study of over 9,000 consumers in every part of the globe commissioned by logistics company FedEx.
The good news is that for the consumer, shopping knows no borders. From Brazil to Bahrain, people are buying what they see on TV shopping channels, mobile devices, and even small business websites.
Consumers who shop across borders prefer to purchase from well-known multibrand retailers that have established, strong reputations for service and fair dealing. Fifty-seven percent of consumers are buying physical goods rather than music or e-books.
Consumers in different parts of the world buy different things online. Buyers in the Asia Pacific region like food. North Americans buy video games. Everyone purchases apparel and clothing.
The United States, the United Kingdom, and China are the top three online exporters. Canadians are the biggest cross-border e-shoppers, with 91 percent of respondents from there reporting making a purchase. Sixty-eight percent of Brazilians said they bought from a goods supplier in another country. Europeans tend to buy from within Europe, perhaps because such purchases are duty free.
The study, conducted for FedEx by Forrester, a research firm, includes recommendations for small businesses, a customer segment that FedEx is eager to grow. Rather than rely on your own website to lure international buyers, the study suggests selling via eBay, Google, or Alibaba if your goal is the Chinese market. You may want to be in more than one marketplace, or different ones in different markets, depending on your strategy. Consumers look for unusual products that are not available or hard to find in their home markets.
They also want good products from known sources, a preference which helps explain the reluctance of some buyers to buy directly from a business’s own website even if it might be cheaper to do so. Consumers who don’t know you are worried about getting ripped off. Perhaps there is a contradiction in the data between wanting unusual products and being reluctant to buy from the websites of unfamiliar businesses in an unfamiliar country. Keep in mind that some buyers are in new territory here.
The FedEx study and other studies confirm what we already know: that cross-border e-commerce is growing fast, and so are the opportunities for your small or medium- sized enterprise (SME). We are in the age of omnichannel selling, or multiple ways of reaching buyers at a relatively low cost for SMEs. Let’s look now at the main types of channels.
eCommerce Industry eCommerce