Cross Border Transactions 2016 Merchant & Consumer Comparison USA Report Ipsos MORI Contacts: Peter Attwell, Ellie Pettit, Laura Acey PayPal Contact: Melissa O Malley
Background & Objectives Advancement of technology is helping to open up commerce opportunities for everyone - across borders, anywhere, anytime and via any device. Understanding that we are going through a commerce revolution, PayPal in partnership with Ipsos, conducted a global 29 market survey with approximately 23,000 consumers to examine how people shop online and across borders. In addition PayPal commissioned Ipsos to conduct a six market survey with a total of 1,200 merchants to understand their cross-border business and strategy. This report is designed to showcase gaps in merchants cross-border strategies, compared to consumer demand/attitudes. Data from the Merchants survey is compared to data from the consumer surveys in the top 3 export markets for US* *Top 3 markets based on Merchants claimed contribution to cross-border revenue
, UK, and Brazil are USA merchants top cross-border corridors in terms of revenue - with alone contributing 41% of total cross-border sales value. Therefore, this report focuses on these three markets. Top Countries: Share of CBT Sales (%) Share of CBT Sales by Region (NET %) UK Brazil India 8 5 5 41 41 % Europe 25 % Middle East 4% Asia France Mexico Japan China Australia / NZ 4 4 3 3 2 77% Central/South America 12 % Africa 2% 15 % Ireland 2 MERCHANTS: Q3b. Thinking specifically about your online sales from foreign countries [ $ xxx thousand / million] what percentage of this comes from each of the following markets? Base: Online merchants who sell cross-border (n=74) 3
Using search engines is one of the top ways consumers access foreign websites they have not visited before. But less than 2 in 5 cross-border merchants use search engine optimisation, and only 14% use search engine marketing. How US merchants drive cross border traffic (% doing each) How consumers access cross-border stores (% doing each) Search engine optimisation 38 Social media 38 Recommendations 31 Unique publically known brand 27 Price/product comparison listings 14 Search engine marketing 14 Go directly to websites I have used in the past Go directly to websites I know the web address for When I use a search engine, sometimes this leads me to foreign sites I go to sites recommended by friends/ family I go to sites recommended or shown as links on social media sites I follow links from shopping comparison sites I click on advertisements or company pages on social media I click on online banners/ advertisements 33 26 39 32 37 27 28 22 18 15 29 16 17 29 10 13 19 8 19 47 49 61 64 Base = 331 UK Base = 224 Brazil Base = 261 MERCHANTS: Q8b How do you drive traffic from foreign online shoppers to your website? Base: Online merchants who sell cross-border (n=74) CONSUMERS: Q35. Which of the following best describe how you access online stores in other countries Base: Cross-border shoppers 4
A global marketplace presence is reassuring for online cross-border shoppers, who spend just as much on third party sites as they do on merchants own websites. However, only 53% of online merchants use a third party marketplace. Only 53% of US cross-border merchants use online marketplaces / third party sites to sell internationally But around two-thirds of online shoppers in top crossborder markets prefer global stores when buying internationally: 67% 72% 65% agree they prefer large stores such as Amazon when shopping cross-border Cross-Border Sales Channels Merchants Use (%) Cross-Border Retailer Share of Consumer Wallet (%) 73 31 20 32 27 19 22 19 32 31 32 15 16 23 17 48 Base = 313 UK Base = 251 Dedicated business website ebay Amazon Other marketplace Merchant's own website ebay Amazon Other marketplace Brazil Base = 249 MERCHANTS: Q1a. Through which of the following channels does your business accept online payments? / Q2d. Which of the below [third party sites / online marketplaces] do you use [to accept online payments]? Base: Cross-border sellers (n=74) CONSUMERS: Q30. Of the money you spend on websites from another country, what proportion do you spend on each of the following sites? Base: Cross-border shoppers, excluding don t know Q34b. To what extent do you agree or disagree with each of the following statements? Base: Online shoppers (: n=493 / UK: n=627 / Brazil n=532) 5
Mobile commerce already accounts for a significant proportion of crossborder shopping, and with mobile commerce growing faster than overall e- commerce, it will become more important that merchants offer optimization for their mobile customers 17% of US Merchants with their own website don t offer any kind of mobile optimization In top cross-border markets, respondents estimate that on average 21% 30% 21% Only 54% have a specific mobile version of their website of cross-border purchases are made via smartphone or tablet % of x-border cart abandoners who say lack of device optimisation was a reason for abandoning 4 6 6 80% CAGR* forecast 2014-2017 *Compound Annual Growth Rate 60% 37% 40% 29% 20% 8% 7% 0% 65% 25% All mobile commerce All e- commerce MERCHANTS: Q1b. Is your business website optimised for Internet browsers / apps on mobile devices? Base: Merchants who sell through a business website (n=140) CONSUMERS: Q33. Thinking only about the purchases you make on websites in other countries, what proportion of your purchases in the last 12 months do you think were made using each device? Base = Cross border shopper ( n=331, UK n= 224, Brazil n=261 ) / Q38 Which of the following have been reasons for you to abandon an online purchase from a website in another country? Base: online shoppers who have abandoned a cross-border purchase ( n=280, UK n= 216, Brazil n=320) 6
While the UK & are primarily English-speaking markets, 21% of Canadians speak French*, which is only offered on 9% merchants sites. None of the surveyed merchants offer Portuguese (official language of Brazil) Only 19% of USA online merchants offer language(s) other than English on their business website Foreign Languages on US Merchants Sites: But only: 25% 22% 47% Of online shoppers have ever bought from a foreign website not in their language And: 3% 4% 13% Of shoppers who have abandoned a potential CBT purchase did so because the checkout was not in their language Spanish: 15% French: 9% German: 4% Do not feel comfortable buying from crossborder site not in their local language Website not being in their local language has/ would prevent a purchase 21% 21% 29% 57% 71% 70% Consumers Language-Related Barriers and Drivers to Shopping Cross-Border Italian: 4% Polish: 1% Russian: 1% Website being available in local language would encourage cross-border purchases Customer support in local language would encourage cross-border purchases MERCHANTS: Q2b. Which languages is your online shop available in? Base: Merchants who sell through a business website (n=140) CONSUMERS: Q36. Which, if any, of the following reasons prevent you from making purchases from websites in another country (more often)? / Q39. Which, if any, of the following would make you more likely to buy from a website in another country? / Q47. Please state whether you agree or disagree with each of the following statements about shopping online in other countries: Base: online shoppers ( n=493, UK n= 627, Brazil n=532) / Q38 Which of the following have been reasons for you to abandon an online purchase from a website in another country? Base: online shoppers who have abandoned a cross-border purchase ( n=280, UK n= 216, Brazil n=320) 26% 25% 28% 27% 45% 46% UK Brazil *Data from the 2011 Canadian census (http:// www12.statcan.gc.ca/) 7
Offering the right payment methods is important for consumers, and different payment methods are preferred by shoppers from different countries. Merchants could increase accessibility by tailoring methods they offer to different markets. 35% of merchants who sell cross-border offer shoppers different payment methods in different markets 69 61 Cross-border payment methods offered(%) 50 31 7 27 8 18 5 Preferred cross-border payment method(%) PayPal 51 PayPal 63 PayPal 33 Visa Credit 21 Visa Debit 9 Boleto 21 MasterCard 15 Credit MasterCard Credit 6 Visa 14 Debit Card 2 Visa Credit 5 MasterCard 14 American Express 2 American Express 4 PagSeguro 6 Divers for encouraging Cross-border shopping (%) Safe way to pay Offers my preferred way to pay Visible, trusted payment logo 23 MERCHANTS: Q4a. Do you offer different payment methods depending upon the market of your foreign online shoppers? / Q4b. Please indicate which of the following online payment options your business offers to its shoppers, whether they are domestic or from a foreign country (thinking generally if you sell to multiple foreign markets) Base: Online merchants who sell cross-borders (n=74) CONSUMERS: Q39. Which, if any, of the following would make you more likely to buy from a website in another country? Base = online shoppers ( n=493, UK n= 627, Brazil n=532) Q44bWhich is your preferred payment method for online transactions /purchases from websites in another country? Base: cross-border shoppers ( n=331, UK n= 224, Brazil n=261) 20 25 25 25 32 36 38 51 UK Brazil 8
Being able to shop in their own currency is important to consumers, but less than half of merchants offer currencies other than their domestic one. 42% 26% of cross border sellers list their products / services in a foreign currency say they will offer more currency choices for online shoppers in the future Currently available currencies % of cross-border merchants 30 21 Euros 22 26 Canadian Dollars 15 42 Pounds Sterling Currencies intending to offer % of sellers intending to offer more* 32 8 8 Australian Dollars 26 Chinese Renminbi 3 5 Other Among online shoppers 28% 23% 33% 41% 44% 46% 37% 42% 30% Say that payment being in a foreign currency prevents them from making crossborder purchases/making them more often agree that they would not feel comfortable making purchases online in a foreign currency Say that costs shown/ payment possible in own currency would make them more likely to shop crossborder MERCHANTS: Q11a. In which currencies do you list your products/services online? 12b. Do you intend to offer more currency choices for online foreign shoppers in the future? Base: Online cross-border sellers (n=74) Q12c. Which currencies do you intend to use in the future? Base: Online cross-border sellers who intend to offer more currency choices for shoppers CONSUMERS: Q36. Which, if any, of the following reasons prevent you from making purchases from websites in another country (more often)? / Q39. Which, if any, of the following would make you more likely to buy from a website in another country? / Q47. Please state whether you agree or disagree with each of the following statements about shopping online in other countries: Base: online shoppers ( n=493, UK n= 627, Brazil n=532) 9
Just over half of US merchants do not include CBT taxes in their checkout price & very few of this group intend to. But in the top 3 CBT markets between a quarter & a third of cross-border cart abandoners cite unclear fees/taxes as a reason US merchants cross-border tax strategy (%) 49 Do USA crossborder sellers include CBT taxes in their checkout price? 51 Yes Unsure No 54 3 If no do they intend to include in the future? 43 But: 32% 27% 29% Having to pay customs duties/fees and /or taxes Not clear how much duties/customs fees/taxes I will have to pay Border Any additional customs fees/taxes/ duties for international shipping are shown before checkout Of shoppers who have abandoned a potential CBT purchase did so because it was unclear how much duty, tax or customs fees they would have to pay 38% 34% 41% 34% UK Brazil 37% MERCHANTS: Q5e. For items that your business sells online to shoppers in foreign countries, do you include the import duties and taxes (customs collection costs) for your consumers? Base: Online merchants who sell cross-borders, excluding don t know (n=72) / Q5f. Do you intend to include import duties/taxes costs for your customers at checkout in the future? Base: Online merchants don t currently include tax at checkout (n=37) CONSUMERS: Q36. Which, if any, of the following reasons prevent you from making purchases from websites in another country (more often)? / Q39. Which, if any, of the following would make you more likely to buy from a website in another country? Base: online shoppers ( n=493, UK n= 627, Brazil n=532) / Q38 Which of the following have been reasons for you to abandon an online purchase from a website in another country? Base: online shoppers who have abandoned a cross-border purchase ( n=280, UK n= 216, Brazil n=320) 24% 35% Consumers Tax-Related Barriers and Drivers to Shopping Cross- 47% 49% 10
Merchants realise that shipping and lack of clarity lead to cart abandonment. However, fewer realise that consumers may be put off by concerns about website security. Consumers Top 5 reasons for cross-border cart abandonment (%) The following are the top 5 reasons for cross-border cart abandonment as perceived by cross-border merchants: Shipping costs 26% Tax / duty amount unclear 24% Delivery time 23% Paying in foreign currency 19% Poor currency conversion rate 18% Website security concerns only selected by 12% of cross-border merchants Shipping / postage charges were too high 61 Unclear how much duty/tax/custom fees I would have to pay 32 Currency conversion rate was poor 25 Didn't want to register for an account 22 Wanted to look for a better price 21 Shipping / postage charges were too high 46 Unclear how much duty/tax/custom fees I would have to pay 27 Concerns about website security 26 Delivery time was too long 25 Didn't want to register for an account 20 Shipping / postage charges were too high 37 Delivery time was too long 34 Unclear how much duty/tax/custom fees I would have to pay 29 Concerns about website security 29 Currency conversion rate was poor 26 MERCHANTS: Q10. What do you think are the main reasons that online cross-border shoppers abandon merchants websites without completing a purchase? Base: Online merchants currently selling cross-borders (n=74) CONSUMERS: Q38.Which of the following have been reasons for you to abandon an online purchase from a website in another country? Base: Online shoppers who have abandoned an online cross-border purchase n=280, UK n= 216, Brazil n=320) 11
A third of US domestic-only merchants aim to begin selling cross-border & 18% of CBT sellers expect growth. Merchants focus on UK &, but Brazilian consumers are the most likely to say they are going to shop more next year. 33% of merchants who currently only sell domestically intend to start selling crossborder in the next year 18% of current cross border sellers expect they will have a higher proportion of CBT sales in the next year Will start selling in: 16% 11% 4% Will start selling /grow sales in: 40% 28% 13% Among online domestic-only shoppers Among online cross-border shoppers 6% 8% 26% 14% 8% 26% Intend to begin shopping cross-border in the next 12 months Expect their overall crossborder spending will increase over the next year MERCHANTS: Q6a. How do you think the proportion of online cross-borders shoppers will change for your business in the next 12 months vs. the past 12 months? Base: Online merchants who sell cross-borders, excluding don t know (n=60). / Q6b. Do you intend to start accepting payments from cross-border shoppers within the next 12 months? Base: Online domesticonly sellers, excluding don t know (n=110) / Q6c. In the next 12 months, do you plan to start selling in any new markets, expand your sales in any of your existing markets, or stop selling in any markets where you currently sell? Bases as per Q6a (cross-border) and Q6b (domestic) CONSUMERS: Q31. How do you think your overall spending on websites in other countries will change in the next 12 months as compared to the last 12 months, regardless of category or country? Base = Cross border shopper ( n=331, UK n= 224, Brazil n=261) / Q32. In the next 12 months, how do you think your online shopping habits will change, if at all, in terms of how often you purchase from online stores in your country or from another country? Base: Online domestic-only shoppers, excluding don t know ( n=122, UK n=303, Brazil n=168) 8% 8% 12