By Laura Stevens
E-commerce made it a breeze for a shopper to buy something from
the other side of the country. Now, retailers and delivery
companies are making it just as easy for shoppers to buy something
on the other side of the world.
Blogger Shannyn Allan recently saw a $70-plus faux stone
necklace in a boutique near her home in Chicago. She snapped a
photo, ran it through Google Image and found a website where she
could get the same one for $16 with approximately $7 added for
shipping. It arrived on her doorstep about three weeks later--three
weeks, because it was coming from China.
FedEx Corp., United Parcel Service Inc. and other global
delivery companies are banking on cross-border shoppers like Ms.
Allan, who believe geography is no object when it comes to finding
what they want.
Late last year, UPS bought i-parcel LLC and FedEx bought Bongo
International. Both acquisitions are designed to allow foreign
shoppers to easily purchase goods on a retailer's site,
automatically changing options to reflect the country from which a
consumer is shopping. The sites adjust the currencies and shipping
methods depending on where a shopper is based, and calculate
shipping costs, taxes and duties. FedEx said in April it would buy
Europe-based TNT Express for nearly $5 billion to expand in Europe,
while UPS is doubling investment in Europe to nearly $2 billion
over five years.
Cross-border online shopping has taken off as access to the
Internet and mobile shopping spread and shipping options get
cheaper and faster. Companies like Amazon.com Inc. and Alibaba
Group Holding Ltd. have fueled the trend through letting smaller
retailers sell their goods internationally via online
marketplaces.
Now, a stronger dollar has encouraged more U.S. consumers to
play the game, and that has accelerated the trend.
While cross-border shopping is still a fraction of total global
e-commerce spending, it is the piece growing most quickly, at a
rate of more than 25% annually, according to delivery company
executives. By 2018, about 130 million people are expected to buy
online from a country other than their own, spending an estimated
$307 billion--nearly triple the amount spent in 2013, according to
a Nielsen Company research study commissioned by PayPal. Already,
about a quarter of all e-commerce purchases are made with a foreign
retailer, according to a survey of nearly 20,000 global shoppers by
comScore and UPS released in March.
Busy trade lanes, which the 2013 PayPal study calls "the modern
spice routes," have been developing between the U.S., the U.K.,
Australia, Germany, Brazil and China. The primary online shopping
destinations are the U.S., China and the U.K., according to a
Forrester Consulting study for FedEx released in December.
Australian cosmetics brand Mirenesse is shipping big envelopes of
lip gloss to U.S. shoppers. Chinese consumers are buying powdered
baby formulas online from Germany. Amazon marketplace fulfilled
orders to customers in 185 different countries last year from
sellers in more than 100 different countries.
"All of a sudden, e-commerce puts the consumer into the driver's
seat," says Thomas Kipp, CEO of DHL eCommerce, a unit of Deutsche
Post AG. "The consumer has the choice of when he buys, where he
buys, how he wants to pay."
The process has become so simple, consumers often don't know
they are ordering from a foreign retailer. When they do, "the No. 1
driver is that they can't find that item in their country," says
Carl Asmus, FedEx's vice president of international marketing.
Global e-commerce presents myriad logistical complexities for
retailers and manufacturers. Each country has its own customs
policies, duties and taxes. Consumers want to know the full cost of
a purchase at the outset. If the retailer gets the math wrong, a
customer may have to pay unanticipated duties or an order might get
stuck at the border.
DHL's Mr. Kipp was charged an extra $33 in duties when a pair of
$120 sunglasses were delivered to his home in Germany from
Australia last month. He wasn't surprised but a consumer not in the
shipping business might have been.
Claire Bauling, who lives in northern Italy, buys everything
from art supplies to greeting cards from her native U.K. Usually it
is worth the extra she pays on shipping, she says. But not always.
Her "personal low" was an order of tea bags from Amazon. "I won't
tell you how much I spent on shipping," she says. "It was quite
embarrassing."
Online merchants can find themselves in a logistical quagmire of
language barriers, currency differences and return hassles.
Returns-- now a key part of the online purchase decision--can be
unpredictable if not impossible.
FedEx, UPS and DHL are racing to re-engineer their service
offerings to make cross-border shopping seamless. As a retailer, "I
can try to build all that expertise myself, or I partner with some
other organization that makes it easier for me to do that," said
Steve Brill, UPS vice president of global business-to-consumer
strategy.
The delivery companies are hoping global e-commerce will fuel
not just more business but more premium-priced "express" business
from eager shoppers like Frances Salvador, who ordered her wedding
dress through the crafts marketplace Etsy Inc. in January for her
nuptials in July.
The custom-made white lace dress with the sweetheart neckline
and circle train was ready in April. Because she had gotten such a
deal--a $2,000 dress for about $400--Ms. Salvador splurged on the
$40 express delivery, from China. The dress arrived in a vacuum
pack on her sister's doorstep in Ohio in just about four days. With
a bit of tailoring, the dress is ready to go--which is lucky,
because returns aren't yet a part of the equation with most
cross-border purchases.
Global shipments don't always go so smoothly, which is part of
the reason some analysts aren't as optimistic that international
e-commerce will be as hot a growth market as delivery companies
hope.
Sitejabber.com, which allows consumers to review online
businesses, lists "lousy stuff from overseas" as its No. 2 top
consumer complaint of 2014. Consumers worry about long delivery
times and fake or inferior products, according to the study of
9,000 global online shoppers by Forrester.
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