by Immy Spence, Head of Sales, SME & Growth, EMEA, Airwallex
The global cross-border eCommerce market is now a trillion-dollar industry, with advances in technology facilitating huge sector growth and potential. As 54 percent of consumers are expected to increase their international online shopping in the next 6-12 months, online retailers must be equipped to seize this opportunity – or risk missing out on growth.
Behind the shift
Technology has shaped the way consumers and merchants of all sizes interact online, and their access beyond their domestic market. We have seen the proliferation of marketplaces, like Etsy, which allow merchants instant access to global audiences, removing many of the logistical barriers they previously encountered when looking to expand internationally. At the same time, smaller merchants have access to new customer segments through platforms like WooCommerce, allowing them to create and manage their online stores seamlessly from anywhere in the world. Purchasing international products has also become easier than ever before for customers with new payment technology enabling fast, safe, and secure transactions with methods that are local and familiar.
As always, there are two sides to every coin. So while technology has unlocked access to new markets and potential for commerce businesses, it has also increased competition across the sector. So what are the practical steps online retailers can take to harness this opportunity and thrive?
Establishing trust
First, online retailers have to start with trust. Digital security breaches and attacks can have devastating implications for businesses and retail tops the list of industries targeted by cybercrime. Data breaches or non-compliance can have devastating implications financially for retailers in the short term of course, but they also erode consumer trust and impact purchasing intention over the long term. Consumers are far less likely to engage with online merchants with a reputation for not protecting customer information seriously.
The good news is that consumer confidence is increasingly growing with 61 percent perceiving international merchants to be trustworthy. For online merchants, building this trust and credibility can come from working with payment providers who comply with local regulations.
Partnering with a reliable payment provider that implements strong security measures is critical when it comes to keeping customers’ personal and financial data safe. A reliable payment provider will be up-to-date with industry standards – such as the Payment Card Industry Data Security Standard (PCI DSS), a global compliance standard for payments. In addition, they will follow data privacy laws in the markets where merchants operate and transact. For example, in the EU there is General Data Protection Regulation (GDPR).
Using a payment provider will not only free up time which you can redirect back into your business, but will also protect your customers and business against the consequences of non-compliance with regulation. Ultimately, it helps prevent the erosion of brand trust and can create customer loyalty.
Creating a consistent payment experience
Localising the checkout experience for customers should be another essential priority for merchants. In a competitive market, it also makes you stand out as a business.
77 percent of consumers say they would abandon their cart if their preferred payment method was not offered. From a consumer perspective, familiar payment methods make the process of checking out a whole lot smoother. For example, if you are purchasing a product and typically use a digital wallet such as Apple Pay or Google Pay, a lack of these options at checkout can be frustrating as you may not have your physical card handy.
While credit and debit cards are popular options, in certain countries customers prefer to use other methods. For example in the Netherlands shoppers use iDEAL and in Germany, Sofort and Giropay are some of the most popular payment methods.
Creating a payment technology stack that accounts for localised payment options is essential to business success. This can be done by using a payment service provider (PSP) that lets you integrate popular payment methods into your website checkout. For an eCommerce store with a custom website, using a PSP that offers an API with support for local payment methods may be an alternative option.
Managing multiple currencies
Hidden costs such as currency conversion fees are an increasing frustration for consumers and also a huge factor for cart abandonment on non-domestic purchases.
This is where multi-currency payment technology can be leveraged. The technology allows merchants to accept and process payments in numerous currencies while avoiding currency conversion fees. These savings can then be passed on to customers directly as a type of competitive pricing option. This technology can also be integrated into your eCommerce site, allowing for pricing in local currencies so customers are free to browse for products without doing any conversion maths.
It’s a win-win situation where customers can view products and pay in their preferred currency while merchants can receive these funds that are automatically converted into their chosen currency for settlement.
It is also worth bearing in mind that localisation also goes far beyond offering local payment and currency options. Merchants should also take into account local languages, behaviours, and customs to create a truly authentic checkout experience.
Winning in a new era of commerce
The businesses that thrive in this new connected global economy will be the ones that can harness financial technology successfully, the ones that can establish global trust, and the ones that can serve their customers with ‘native’ experiences, no matter where they are based in the world.
For online retailers, the work begins now if they are to benefit from the opportunity presented by the cross-border commerce boom.
