Consumers’ favorite runway looks are often just a click away, but not when buyers shop cross border. In this month’s Cross-Border Retail Payments Tracker, Greg Spillane, CEO of fashion eTailer Fancy, explains how localized payments and advanced fraud detection capabilities attract and convert luxury fashion’s most coveted consumer base.
The cross-border commerce sector has been on the rise over the past 16 months. Global eCommerce sales are now expected to exceed $4.8 trillion by 2026, and the business-to-consumer (B2C) sector is projected to grow by 27 percent over the next five years. Consumers in the U.S. alone spent about $795 billion in online goods last year, with cross-border purchases accounting for 34 percent of those transactions.
Logistical advances have fueled much of the sector’s growth, but they are not the only reason behind this shift, according to Greg Spillane, CEO of Fancy, a New York-based eCommerce platform that sells clothing, accessories, art and gadgets from brands and artists worldwide. He told PYMNTS that consumers want something different and are willing to shop with merchants and brands across borders to find exactly what they desire.
“More and more brands are moving away from distribution to big-box retailers [and instead are] setting up shop and building a direct[-to-]consumer marketplace,” he said. “Fancy is really much closer to a social network, even in its eCommerce platform. It’s a place for people to share really cool and interesting products worldwide.”
Fancy, founded in 2010, offers a selection of global fashion products and other goods from an internal purchasing team that searches the internet for distinctive styles and items. Spillane said the company also routinely receives pitches from designers, although less than 1 percent make the cut. Cross-border commerce accounts for a significant share of Fancy’s sales. Global merchants or brands sell 30 percent of the company’s products, and 35 percent of purchases from the site are made outside the U.S.
These international sales come with challenges, however. Speedy and simple checkout is essential for every eCommerce merchant, Spillane explained, and the goal is to remove barriers, such as requiring the creation of an account to complete a sale. Accepting digital wallets, such as Apple Pay and PayPal, has helped by sparing customers from having to hunt down their cards when they want to make purchases.
Reducing Shipping Costs To Curb Cart Abandonment
One of the biggest hurdles eCommerce sellers face is cart abandonment, and this holds true for cross-border merchants as well. Spillane said that Fancy confronts the issue daily due to pricey global shipping fees, which can ultimately keep customers from clicking “buy” and instead see them abandon their carts at checkout. He shared an example involving one Japan-based merchant on the site that offered unique products. While many of the items the merchant sold piqued customers’ interest, products could take up to three weeks to arrive, and shipping a $10 item cost $20. These fees can be a big shock to customers who are used to paying little to no money in shipping for their online purchases.
“One of the things Amazon has done, for good or bad, is train [consumers] that we don’t pay for shipping,” he said. “Amazon can do that because of their scale. We can’t do it as inexpensively as Amazon.”
Spillane said Fancy determined that absorbing at least some of the costs was necessary because it was what consumers demanded. The company now offers free shipping for orders over $49 and a flat rate of $4.99 for all others, and it splits the costs with sellers. These moves are intended to help it address consumers’ cross-border shipping fee concerns without having these costs eat too much into its margins.
Easing The Cross-Border Purchasing Experience
Simplifying checkout and mitigating shipping fees are not the only actions Fancy is taking to ease cross-border commerce. Spillane said that the platform also accepts 135 currencies, and the number is growing. Offering localized payment types and currencies can be crucial to completing sales, as even the slightest bit of friction surrounding the process can send customers to other merchants or platforms.
Another challenge is fighting fraud. Fancy deploys a solution that helps it reject transactions from stolen credit cards while swiftly and seamlessly approving legitimate clients’ transactions. This has allowed the company to cut its fraud rate to less than 1 percent, Spillane said.
Merchants and eCommerce platforms are reassessing how they can streamline their cross-border operations as global purchases begin to represent a growing share of their total sales. It is becoming clear that several factors are key to keeping customers satisfied in the age of international commerce. Brands must be able to accept the payment types and methods that consumers prefer while keeping shipping fees low and checkout times fast. Accomplishing this is no mean feat, but doing so can help merchants drive continued growth and foster long-term customer loyalty.
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