There is a consumer hunger for cross-border eCommerce but with very specific stipulations, which is why retailers are nervously awaiting the outcome of the UK government’s discussions with the EU over Brexit and the dangers of tariffs cannot be underestimated.
The backdrop is an eCommerce industry that has enjoyed burgeoning growth in recent years with both retailers and brands reaping the rewards of fast-growing customer bases not just in the UK but overseas too.
Underpinned by sophisticated, intuitive, cross-border platforms, it is no surprise that eMarketer estimated that the worldwide eCommerce market would total $2.290 trillion by the end of 2017. Which is why the prospect of Brexit looming on the horizon is keeping many retail CEO’s awake at night.
From a poll that we carried out amongst 275 of the UK’s top eCommerce retailers at The Delivery Conference in January, it was clear, however, that Brexit was a major challenge that they perceived to their businesses this year, with over 27% singling it out.
But perhaps this particular cloud has a silver lining. Online shoppers are determined and shrewd and they are unlikely to be put off buying from the UK as long as they perceive they are still getting a good deal. This was apparent in MetaPack’s annual consumer research which seeks the views of over 3500 consumers in the UK, USA, France, Germany, Italy, Spain and the Netherlands.
They indicated that it would be ‘shopping as usual’ from the UK once it exits the European Union with 58% saying it would make no difference to their shopping behaviours. French (67%), Dutch (65%) and Italian (62%) shoppers were most likely to keep buying goods – but even 54% of German and 48% of Spanish shoppers said they’d keep buying British. Just over a quarter (27%) of US shoppers said that post Brexit, they’ll be buying even more goods from the UK.
Online merchants can take some comfort from this. This is a large international cohort of online shoppers and the sentiments are positive. But make no mistake, in return for their loyalty they will expect delivery prices to be maintained and no hidden costs. Possibly the solution to this will be an increase in the ‘de minimis’ level, the valuation ceiling for goods including documents and trade samples, below which no duty or tax is charged and clearance procedures are minimal. At the moment the de-minimis for imported goods into the UK is low, whereas in the USA it is $800, but this could be raised in the UK and the EU perhaps to 500 euros, which would provide significant relief and remove future complexity for cross-border eCommerce between the UK and the EU.
Certainly, when we asked what the deterrents would be to purchasing from the UK, we found that over three quarters (77%) of shoppers said if goods became more expensive than those they could purchase locally, 63% said if delivery costs increased, whilst 36% said if delivery times increased. This is not just in relation to Brexit, 45% of cross-border shoppers would be put off from making any overseas purchase at any point if they perceived that delivery was too expensive.
Clearly, delivery has the power to make or break the online shopping experience, and overseas customers are all too aware that delivery options could be affected by the UK leaving the EU. Which is why retailers and brands can’t afford to be complacent about the strategic role that delivery plays in their eCommerce strategies post-Brexit.
Other statistics show clearly the impact of delivery on the overall customer journey, to the point that half of all shoppers in our survey said they would abandon online shopping baskets if delivery choices on offer were unsatisfactory and 60% said they would buy their goods from one online retailer over another if they offer more convenient delivery options.
Retailers and brands also need to understand the cultural differences of each country that they are selling to. Those UK retailers eyeing the US market need to be aware of, and accommodate, the very particular delivery expectations of US customers, for example. Three quarters (75%) of US shoppers prioritise purchasing from online retailers that offer a delivery loyalty programme – compared to 44% in the UK, and 63% of US shoppers want the freedom to choose which carrier delivers their online orders – but this appeals to only 25% of UK shoppers. In the US, whilst 23% of shoppers had purchased at least once from overseas, a further 33% had made between two and five overseas purchases in the last year, compared to 21% of the total cohort.
German shoppers prioritise free delivery on international purchases higher than any other country we surveyed, with 65% saying this would be more likely than anything else to make them shop more overseas.
The impact of online shopping deliveries on the environment is a growing concern for consumers, particularly amongst US (48%) and Italian (37%) shoppers who said they cared a great deal about it, compared with just 12% in the Netherlands. But when it came to suggesting consolidated delivery as a possible solution to the environmental impact, it was Spanish consumers who were most in favour with 83% saying they would like all of their deliveries to be made in one go compared with 72% in Germany and the US and 69% in the UK.
While 36% of international shoppers don’t want to pay any additional taxes, what is perhaps more important in the context of Brexit, is that 48% would cancel their online order if additional taxes that weren’t explicitly described were applied at basket checkout. Being upfront about delivery costs is vital, particularly since 52% then went on to say they would place the order regardless and 69% of US shoppers said they would be happy to pursue their shopping quest should this happen.
Don’t make assumptions
In 2018 we will undoubtedly see the emergence of ever-more confident cross-border online consumers who are not put off by the prospect of Brexit. These are seasoned, Internet shoppers who don’t hesitate to look beyond their domestic markets to in a bid to hunt down bargains or procure items not available in their home territories. Retailers and brands already know this, but the key is to keep listening to what those consumers are saying. If they don’t want to pay extra taxes, those costs need to be clear. Amongst international millennial shoppers 77% already check to see what extra taxes will be applied to their purchases in addition to the shipping price, but this doesn’t apply to all other age groups.
Retailers and brands cannot afford to make assumptions about anything. When we spoke to them, the majority regarded delivery options and returns as pressing customer experience concerns, but amongst the consumers in our research, free delivery was the number one delivery consideration, with 59% saying that this would determine which website they bought from. This is despite the fact that over one-third (35%) of shoppers said they are only too willing to pay for greater delivery convenience and speed when it suits them.
One of the most complex parts of eCommerce retail is meeting customer expectations, and getting a grip on what these expectations are is possibly the hardest task of all. Brexit is inevitable and will have an impact, but if retailers and brands keep listening to customers and most importantly of all, keep being open and straightforward about delivery costs, this will stand them in good stead.
Bruce Fair, Chief Revenue Officer at MetaPack
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