It’s no surprise that during the year of COVID-19 consumers shopped more from online retailers in their own countries. But it’s now clear that many also shopped more from online retailers in other countries, and that those consumers plan to do more cross-border online shopping in the future.
32% of consumers from 40 countries said they bought more in 2020 from online retailers in other countries because of the pandemic, and 51% said they plan to do more cross-border online shopping in the future. The data comes from a survey of 33,594 frequent online shoppers in 40 countries by International Post Corporation, a consortium of national postal service operators that has conducted this Cross-Border E-Commerce Shopper Survey every year since 2016.
Even more shoppers are shopping online from domestic merchants. 51% said the coronavirus outbreak caused them to buy more from online retailers in their own countries and 67% said they would do more such online shopping in years ahead.
“COVID-19 has had a major impact on consumer online purchasing throughout 2020 and this report highlights there were big increases in the online purchase of groceries, clothing and health and beauty products throughout the last year,” IPC CEO Holger Winklbauer says in the introduction to the report. “Importantly for postal operators, consumers expect to shop more online in the future from e-retailers based in their own countries and from e-retailers based abroad.”
The report says 30% of consumers surveyed bought more apparel from foreign websites in 2020, including 8% who bought significantly more; 26% bought more groceries (10% significantly more); and 27% bought more health and beauty products (7% significantly more).
The survey is skewed to cross-border shopping and frequent web shoppers in that all respondents had bought physical goods in the past year from an online retailer based outside their home country as well as at least one online purchase in the past three months. Still, it represents a large sample of avid online shoppers from 40 countries that IPC says account for 95% of global ecommerce.
Germany attracts more cross-border online shoppers
Chinese ecommerce sites attracted the most foreign shoppers, as they have for each of the five years of the survey, but their share dropped to 34% in 2020 from 36% a year earlier. German online retailers attracted 14% of cross-border shoppers in 2020, up from 12% a year earlier, while the share for e-retailers in the United Kingdom slipped to 12% from 13% and e-retailers in the United States held steady at 11%.
U.S. online retailers led the way in only four of the 40 countries surveyed: Canada (51% of consumers said their most recent cross-border online purchase was from the U.S.), Mexico (50%), South Korea (47%) and India (28%). China took the top spot in 23 countries, including Russia where it accounted for 80% of purchases from foreign retail sites. AliExpress Russia, a joint venture between Alibaba Group and several major Russian ecommerce firms, is a leading online retail player in that country.
Indeed, AliExpress—the Alibaba Group marketplace that enables mostly Chinese retailers to sell to consumers worldwide—was No. 2 among all retailers in cross-border purchases, according to IPC, behind only Amazon.com Inc. EBay Inc. was No. 3, followed by Wish, another marketplace that mostly features inexpensive goods from China.
Why China may lose ground in cross-border ecommerce
Low prices are a big selling point for Chinese goods, and a looming change in European Union regulations could undermine that advantage. The EU plans to begin as of July 21 charging value-added tax, or VAT, on all imports into its 27 member countries, eliminating an exemption on parcels with a value of less than 22 euros ($26.40).
VAT is typically around 20% in EU countries, which means a consumer buying a 20-euro item from China will have to pay another four euros after July 1. 37% of cross-border purchases were for less than 25 euros, according to the IPC study.
Recognizing that EU change was coming, IPC asked consumers if they would stop buying from China, or reduce their purchasing if prices went up by various amounts. The survey shows a 1-euro increase would lead 17% of respondents to stop buying from China and 40% to buy slightly less. That went up to 34% not buying and 41% cutting back at 2 euros, 60% not buying and 28% reducing purchases at 5 euros and 77% halting purchases from Chinese sites and 13% buying less if the price went up by 10 euros.
When do online retailers collect customs duties?
The survey found 15% of consumers paid customs duties on their cross-border purchases. 52% paid at the time they checked out on the retailer’s website, 23% while products were en route and 23% upon or after delivery. 1% were not sure. The percentages do not add up to 100% because of rounding.
10% of consumers surveyed said they were dissatisfied with the duty-payment process, with 3% being very dissatisfied.
“My main takeaway from this data is that conversion and satisfaction are inherently tied to consumers being aware of what their total costs are,” says Craig Reed, senior vice president for global trade at Avalara Inc., which provides software that helps online retailers calculate taxes and customs fees. “Whenever consumers are aware of what the total they have to pay is, conversion rates go up and dissatisfaction goes down.”
The highest level of dissatisfaction was with delivery speed, with 17% reporting some level of unhappiness. 31% of shoppers reported their purchases from foreign websites took more than 15 days. The IPC report says that may be due to customs delays and the disruptions caused by the pandemic. Many governments have stepped up inspection of small parcels crossing their borders as they seek to collect more revenue tax and customs revenue from the growth in international ecommerce.
Other findings from the IPC report include:
- 61% of consumers said they received free shipping on their last cross-border purchase. The reasons for free shipping were: 35% due to retailer offer, 9% due to a promotion (such as Black Friday), 11% due to high product value and 5% because the shopper belonged to a retailer loyalty program like Amazon Prime.
- 5% of respondents said they returned all of their most recent cross-border purchases, and another 4% returned part of a multi-item order. 84% expressed satisfaction with the returns process, including 33% who said they were extremely satisfied.
- 73% said they would prefer carbon-neutral delivery of their online purchases, with 31% strongly agreeing with that statement, and 68% said they would be willing to wait a few days longer for delivery to reduce the environmental impact (27% strongly agree). But only 40% said they had changed their behavior in the past year to minimize the environmental impact of their online buying, including 10% who strongly agreed with that statement.
- 47% of the most recent cross-border orders weighed under a half of a kilogram, or 1.1 pounds.
Amazon is No. 1 in the 2020 Digital Commerce 360 Top 1000, which ranks North American retailers by their online sales. Amazon also is No. 3 in the Digital Commerce 360 Top 100 Online Marketplaces, which ranks global multi-merchant shopping sites by the total value of goods sold. EBay is No. 5, AliExpress is No. 11 and Wish, No. 14. Nos. 1 and 2 in the marketplace ranking are Taobao and Tmall, two retail portals owned by Alibaba Group Holding Ltd. that sell to consumers in China.
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