There are some things businesses simply have no control over.
They can’t control inflation, or how aggressively central banks respond to it. They can do little about rising costs, which are pushing their expenses higher while squeezing their customers’ budgets. They also have little control over disruptions to global supply chains. While some businesses may be able to find a new supplier for that vital but hard-to-get part, there’s a good chance they’ll face delays getting it.
They can, however, hedge against challenging times by taking advantage of the tectonic shift to borderless e-commerce and the international opportunities it presents. Why should they limit their business to one market when they can sell to the world?
Turbulent times ahead, best to be prepared
Crystal-ball gazing is always a little hazardous, but there’s a consensus among key global institutions that growth is likely to be more constrained in the year ahead. Global real GDP growth, according to IMF, will slow to 3.2% in 2022 and contract further under the impact of tighter monetary policy. While inflation has been a little subdued in Asia than in the west, it’s been challenging enough to prompt central banks to react in a number of markets.
An environment with a higher inflation, slower growth, coupled with the sting of sluggish supply chains, is posing a threat to many businesses.
But it’s not all bad news. After two years of restrictions brought on by the pandemic, many countries have re-opened their borders, with revenge travel seeing tourists flocking to beaches and malls. More significantly, the pandemic created a boom in e-commerce, which is expected to continue as people become more comfortable shopping at online stores and beyond their borders. This massive shift to e-commerce presents new opportunities for businesses, who now have easier access to international markets than they have ever had before.
Borderless e-commerce to the rescue
For many businesses – the future is digital and global. It’s not just easier to be online and sell internationally, it’s a rapidly growing market for businesses of all kinds.
Statistics show that online retail sales around the world are expected to grow by 50%, reaching a staggering US$7.4 trillion by 2025. PayPal’s 2022 Borderless Commerce Report found that e-commerce is growing by double digits in every market we surveyed in Asia. The sole exception was China where China’s e-commerce market is larger than the next 10 markets combined, and shopping innovations like livestreaming e-commerce are trends that the rest of the world is still catching up to.
Across Asia, customers are more willing than ever to buy from overseas. In fact, 42% of online shoppers surveyed said they were more comfortable with shopping cross-border than they were in 2020. In Japan, there is a growing trend to buy internationally, with the rate of cross-border e-commerce rising 10% from previous year.
Also, consumers across the region are getting more comfortable shopping not just from home, but on-the-go from their mobile devices. Laptop and large screens are getting replaced rapidly by smart devices. In China, an astonishing 96% of respondents said they shop via smartphone. The number is 85% in Hong Kong SAR and 84% in Singapore . Even for Japan, where conventional shopping experiences remain popular, 77% shop on their phones . The message to merchants is clear: for those looking to succeed in Asia, the mobile experience is paramount. Businesses need to think how they can tie the offline and online mobile experience to create a seamless and personalized purchase journey.
Social media is equally important as a marketing channel for cross-border transactions. In Hong Kong SAR, for example, 47% of online shoppers surveyed who shop cross-border find an international site via social media, predominantly through Facebook or Instagram. How businesses leverage these channels and adopt influencer marketing strategies will likely make a difference to their bottom line.
Interestingly, out of all Asian markets we surveyed, consumers were in every case likely to buy from other Asian markets, including Singapore, Hong Kong SAR, Japan, China. The reason is pretty simple: they think they can get a better deal. Price is even taking precedence over instant gratification, with 61% of surveyed shoppers saying they will endure longer shipping times for a lower price.
But price isn’t everything. There has also been a clear trend towards considerations when consumers make a purchase. In China, including the Hong Kong SAR, shoppers are value and conscious about a brand’ are willing to pay a premium for those who demonstrate integrity in how they do business.
Curating seamless digital experience
As e-commerce becomes more ingrained in our daily lives, businesses are using novel shopping experiences like livestream commerce, voice commerce, or shopping through augmented reality (AR) or virtual reality (VR) apps to stand out – and shoppers are noticing.
What remains unchanged on a shopper’s mind, though, is security, convenience, and overall experience.
Undoubtedly, customers in the global e-commerce wave want a seamless digital experience. Profound changes in consumer shopping behaviors today require brands to be creative when they upgrade their checkout experience online. Thankfully, setting up payments for a global business is easier than ever.
Retailers can seek out partnerships that will help them elevate their digital experience, keep up with the trends and leverage some of the best cross-border payment solutions.
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