PayPal Down Under: How Digital Is Changing How Customers Buy And Sell

When asked about their impression of an average Australian, odds are good that most people will describe one of three things – someone with a bowie knife fighting a crocodile, a person standing next to an adorable marsupial like a koala or a kangaroo, or possibly someone receiving medical treatment after having been bitten by one of the nation’s many poisonous snakes, spiders, jellyfish or octopi.

A more accurate mental image should have been of a consumer shopping online via PayPal, or of a small business owner in Brisbane developing a cult-like following of customers all over the world.

As it turns out, fewer than 1 percent of Australians have ever had a close encounter with a crocodile, let alone fought one. But 25 percent of Australians have active PayPal accounts.

“We have around 5.6 million active consumers and we are small country,” Emma Hunt, director of SMB for PayPal Australia told Karen Webster in a recent interview. “We have a total population of 23 million, so we’re pretty heavily penetrated. On the merchant side we have 110,000 active large and small business that receive payments on a regular basis through PayPal.”

With a consumer market penetration of 25 percent, PayPal is clearly performing strongly in Australia – but, as Hunt told Webster, the company is committed to pushing even further.

“Our goal is to be more and more central to consumers’ lives and the ways that they transact,” she noted.

A noble goal, noted Webster, but not an easy one, before asking how PayPal planned to attack that.

“The big push is moving out of our traditional heartland of online retail and into instead service verticals like travel and education.”

PayPal, of course, still wants to be the go-to source for traditional online retail, but as Hunt explained to Webster, the vision is broader as PayPal is increasingly present in the grey area between services that are purchased online, but redeemed in the real world.

Coffee, she noted, is a good example.

Among other surprising facts gleaned about Austrailians during Webster’s chat is that apart from being a nation of digital commerce enthusiasts, they are also apparently an island nation of “coffee snobs.” Tapping into what is apparently a highly pressing consumer need among Australians, has meant powering order-ahead payment to help the nation’s purveyors keep their clients happily caffeinated.

“Using the mobile phone to order coffee ahead [consumers] are not getting in a queue waiting. And that’s the approach PayPal is taking a lot. We’re integrating into mainstream apps and helping merchants have the mobile commerce they want and their customers need,” Hunt explained.

More surprising than discovering the land down under is actually full of coffee drinking e-commerce enthusiasts is possibly the other picture of Australia presented by the recent collaborative study between PayPal and IPSOS on cross border trade – a nation of small merchants selling on an increasingly large and open global stage.

“We knew that our merchants were opening up into new off-shore consumer bases, but we didn’t realize that it was as significant as it was,” Hunt told Webster when describing what about the IPSOS results had surprised her. “That is really one of the interesting points around cross-border-trade – technology has really enabled this. Now, it’s growing so organically and now locally a number of the local exporters are coming to work with us to really understand how to drive even more cross border opportunities.”

Even more amazing, Hunted noted, was that this effect was visible, even when a weak U.S. dollar was essentially identical in value to the Australian dollar. That situation has since changed – the dollar improved, currently about $.80 is equivalent to one Australian dollar, which is good news for Australian merchants who are now effectively offering any U.S.-based consumer a 20 percent discount.

Which many begin to explain the other surprise Hunt said she noticed in the PayPal/IPSOS data – that the market where Australian merchants are doing the best are North America and the U.K. – and to a lesser extent continental Europe, as opposed to the more expected and more local Southeast Asian markets.

“The largest markets are the U.S. and the U.K., but the fastest growing export markets are places like Russia and Israel. It’s really extraordinary where Australian merchants are expanding their businesses.”

Some of this can be chalked up to no language barrier for American and British consumers. But, notes Hunt, part of it comes from the changing shape of the goods that are coming out of Australia.

“Traditionally Australia exported raw materials and agricultural products and we’re seeing a big shift into fashion (a key export vertical) and geographically agnostic things like services.”

The digital world is a flatter world, notes Hunt, and one where it is increasingly attractive for all businesses to compete.

“The Internet has democratized cross border trade in a way. It was once just an opportunity for large multinational business, and now it’s creating a great opportunity for Australian small businesses.”

But why now, asked Webster. After all, the Internet is not exactly new and while mobile phones and smartphones are newish, they have existed as they do now for a few years. So why is 2015 the year that cross-border is blowing up for buyers and sellers all over the world?

Hunt noted there isn’t one answer, but instead a combination of factors that are relevant.

“Partly there are these global platforms that allow businesses and consumers to find each other in a very easy way,” she noted. More than able find each other, though, she noted that sellers can also feel safe transacting with foreign buyers because PayPal is the “man in the middle” guaranteeing its veracity. And that safety is also extended to the seller who may not know their buyer.

“PayPal seller protection is a key part of the PayPal platform,” Hunt noted. “When sellers are engaging with consumers in new markets, they might feel less protected if that transaction goes south. With seller protection they really can feel more comfortable that make them want to extend into a new market.”

The other important factor Hunt noted was that businesses are getting better at the Internet and getting better at leveraging different pieces into a single, smart and effective program for expanding their reach.

“More broadly, the broader social platforms mean that businesses are able to reach customers and consumers far more easily than they were in the past. And there are now far more small business using Facebook and Twitter to engage their consumers in a far more active way.”

She gave the example of Black Milk Clothing, a Brisbane based SMB that does 100 percent of its marketing through social channels like Facebook and Twitter. They have a global following at this point, and one that is developing its own slang.

“If you’re a Black Milk type you’re ‘sharkie,’” Hunt added. “And then #sharky travels virally all over Facebook and Instagram and is really enabling this business to engage in a really targeted way.”

And in someways the “sharkies” are influencing “what’s next” for PayPal in Australia in 2015 – as they want to help all their merchants push past the national boundaries to the broader world of commerce.

“We have a pretty small population here and for business to keep growing and keep driving that aggressive growth rate, we need to offer them more opportunities to find and serve consumers outside Australia.”

PayPal’s connection to eBay aids in that, too. Through the international platform that eBay offers, merchants who aren’t exporting their goods and services have an opportunity to work directly with those who are turning the opportunity of cross-border to their advantage.

“The fact that eBay is able to very, very painlessly help merchants present their products to customers in other markets helps merchants test out how that product is going to play in that new markets in a very low risk fashion.”

Because, from PayPal’s point of view “Down Under,” the goal is to help Australians expand into that bigger world as both customers and business owners.

And who knows, perhaps in 10 years Australians will be the people to ask about digital services or coffee products, instead of just about kangaroos and bowie knives.