How U.S. Merchants Can Tap into Global Markets
E-commerce is booming. Online transactions are increasing every year by 14 percent globally, and at the greatest rates in international markets. While the U.S. is a world leader in e-commerce, few American companies are taking advantage of the incredible wealth of global markets by selling internationally.
Online shopping has gone global, and now is the time for U.S. companies to take their e-commerce efforts worldwide. American brands have a distinct advantage in the global marketplace: first, the U.S. is the world’s leading commercial nation. American brands are sought out worldwide. Between 78 and 93 percent of people surveyed in six global regions had a positive opinion of American brands. So, in order for U.S. merchants to adapt to meet global demands, accepting and receiving local payment methods is a must to greatly scale their customer base.
In a recent report , PPRO Group in conjunction with Edgar, Dunn and Company, new data is presented that demonstrates the significant opportunity for U.S. companies to grow via cross-border e-commerce.
The opportunity of global e-commerce does require companies to broaden the ways they receive payments beyond traditional methods. In a diverse global economy, local payment methods (LPMs) facilitate the needs of different geographies, cultures and domestic markets and are oftentimes preferred by the majority in a specific area. In other words, a customer in Kansas and a customer in Japan want to pay using different methods. The good news: it’s easy and safe to accommodate a worldwide cadre of customers.
Accept Local Payment Methods to Make Cross-Border Sales
Worldwide e-commerce markets are growing at rates that may seem improbable. A large portion of the world’s e-commerce sales are made in China, this has been an upwards trend with no signs of slowing down. Similar growth is predicted in India, Taiwan, and Brazil. The question: how to target and close the eager buyers in these markets.
Over 60 percent of Americans primarily use credit cards for payments. In the rest of the world, this number is significantly lower. Also, in the rest of the world, LPMs are the ticket to making confident sales. Highly regionalized, they’re familiar and offer security and convenience: LPMs can include e-wallets, money transfers, cash delivery, and mobile payments on smartphones. Each country, region, and even locality have their own preferred methods.
So, customizing your payment options per region is the only way to successfully scale globally. Applying similar payment systems from region to region is unlikely to yield great results. For example, Saudi Arabian and Argentinian markets primarily use cash payments. While iDEAL bank transfer payments are widely used in the Netherlands. U.S. merchants need to adapt with the global market region by region to stay on top of it.
Tap into the Global Market
According to industry research from PPRO, 15.7 percent of all e-commerce sales are made cross-border in Europe, and that number jumps to 19.7 percent in China. While the figure for US companies is just 11.2 percent. Globally, there is a rising middle class. As innovation spreads around the globe and out of big cities into more remote areas, wages are increasing, and the marketplace is becoming more competitive. Today, 85 percent of the world’s purchasing power is outside of the U.S.
With e-commerce being an American invention, U.S. companies already have a leg up. Combine this with the saturated digital advertising market in America [despite the significantly lower population, U.S. digital advertising revenue is more than double what it is in China], and international markets appear to be a great opportunity. In America, brands have to fight for market share. In many regions worldwide, the sales funnel is much less crowded.
There is a clear desire outside of the U.S. to shop internationally for U.S.-based brands at top prices. Markets in Asia and Europe are already taking advantage of this, and now is the time for the U.S. to establish a dominant position through the use of cross-border payments. Localizing payment methods and customizing sites and payment systems to specific markets is the only way to scale across borders. U.S. merchants can tap into the global market, and they need to adapt their e-commerce methods to do so.