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Cross-Border’s Slippery Cyber Slope

Cyber Monday 2015 is now one for the record books.

Analysts say that more than $3 billion was spent by consumers, a dramatic increase over 2014. Higher employment rates and lower gas prices have boosted consumer confidence, and that enthusiasm was reflected on the biggest digital shopping day of the year in the U.S.

Consumers were also using smartphones more than ever to make their purchases on the Black Friday-to-Cyber Monday weekend; eCommerce sales overall for the time frame were up, and more than 60 percent of that traffic originated on a mobile device. They’ve changed what Cyber Monday used to be, taking it off desktops and laptops …

But, as MPD CEO Karen Webster asks at the top of the recent PYMNTS Digital Discussion with Digital River, “Planning Beyond Cyber Monday: Why Cross Border Matters” … have we come all that far?

While there are more than 1 billion people who shop online worldwide, with many of them seeking to do so on mobile devices, PYMNTS and Digital River — in putting together the latest edition of the X-Border Optimization Index — found that most online merchants still aren’t ready to welcome those cross-border shoppers to their virtual storefronts.

Webster was joined by Jason Nyhus, Vice President of Global Marketing and Communications at Digital River, and James Gagliardi, Vice President of Solutions and Innovation at Digital River, to find out, now that Cyber Monday has morphed to become “Cyber December” and beyond, what merchants should be doing to take advantage of the related cross-border opportunity.

THE ONLINE ENVIRONMENT ISN’T OPTIMIZED FOR CROSS-BORDER SHOPPERS

Nyhus shares that 146,000,000 Americans expected to shop online this holiday season, with the average person expected to spend $800 on gifts for themselves or their loved ones.

Those are “impressive numbers,” he remarks, “until you consider that there’s 1.2 billion online shoppers across the globe.” Ergo, the U.S. only represents between 9 and 10 percent of the total opportunity.

Nyhus attests that “the best eCommerce sites” are able to reach as many as possible, if not all, of those shoppers, and make their checkout processes “just as easy for someone halfway across the globe as [they are] for someone down the street.”

He has observed that many North American sites focus on scale domestically, but not internationally, which means that “they’re leaving [cross-border] shoppers behind by making the process confusing, frustrating or, frankly, North-American-centric.”

Gagliardi adds that “people are likely coming to a U.S. merchant’s site from all over the globe,” but the retailers are doing anything to engage them, so the shoppers end up abandoning the site.

WHY ARE THE SCORES GOING IN THE WRONG DIRECTION?

Getting into the numbers from the latest Index, Nyhus shares that the average overall score was 55 (out of a possible 100), which was down from 56 last quarter. The highest score was 89; the lowest was 14.

The worst performing sites are the ones that have stopped supporting cross-border altogether (their billing and shipping address no longer support those outside of native country, they no longer supporting currencies or language, et al). There’s been 27 percent turnover for the lowest-scoring merchant in the report.

Gagliardi observes that these merchants were already doing cross-border poorly, so the ROI wasn’t there; that, or they struggled with regulatory issues. Hence the abandonment of the efforts entirely, rather than risk damaging their brand.

While the worst performing sites got worse, the better got better, and the ones in the middle “incrementally got a little bit better, as well.”

THE BEST OF THE BEST (AND THOSE THAT NEED WORK)

Nyhus shares that travel sites continue to perform best, averaging a score of 63. “They specialize in taking people cross-border,” he says, “so they have to have a solution that meets [those needs]” and ticks all the right boxes.

Jewelry remains the worst performing category, averaging a score of 50. The reasons for that are high price points, laws around exporting certain products (like diamonds), and the difficulty in comparing different products across multiple vendors, especially online. Lastly, observes Nyhus, “a lot of these brands are regional or domestic brands that don’t have a lot of value outside of [their country of origin].”

The areas to think about, he continues, are those “in the solid center” — apparel and accessories, toys and hobbies, “and everything in-between.”

WHAT THE GOOD DO RIGHT

In analysis of the “good” in the Index, PYMNTS and Digital River saw two very consistent things: a simplified checkout experience, and bridging the communication gap.

Simplifying Checkout calls for country-specific address fields, and allowing the user to check a box to indicate that the shipping address is the same as the billing address.

Nyhus remarks that it “sounds very simple, [but] you’d be surprised how many people aren’t taking advantage of it.” Doing those two items reduces friction and leads to a better shopping experience.

Gagliardi attributes sites missing the check box as often being simply “an oversight.” Implementing country-specific address fields requires “more research in understanding the cultural nuances” in different countries (such as the phonetic spelling of Japanese names). More simply, the merchant can re-order the fields (city, state, country).

Bridging the Communication Gap, explains Nyhus, requires that a merchant make its site “feel less international and more local” — and language is an essential aspect in that regard.

The more languages offered, the better. The good sites examined offer six or more language options; the best offered more than 20.

Gagliardi shares the statistic that consumers are actually “4 times more likely to purchase” when the merchant site supports their native language. And the Top 6 — including English, Japanese, Chinese, and Spanish — will give a merchant “the widest net.”

WHAT THE BAD DO WRONG

Nyhus lays out three mistakes that the worst performing sites in the Index made: Rise in requiring customer profiles; drop in free shipping offered; and fewer global payment offerings.

When it comes to the Rise in Requiring Customer Profiles, Nyhus points out that “Everybody wants to be Amazon or Apple” and create a one-click experience — but that puts merchants’ relationships with customers at risk by forcing the issue. If a site allows “guest checkout,” its conversion rate “will be dramatically better” than if it mandates a customer profile. The better time to present that option is after checkout.

If the frequency of purchase is low, adds Gagliardi, customers who already established a profile will often forget their account info, and will abandon to a site that offers a simpler approach.

As for the Drop in Free Shipping Offered, Nyhus refers to the importance of “the Amazon impact.” The best sites acknowledge it and offer free shipping options; the worst do not, even with a minimum purchase.

People have expectations for “free and fast delivery,” Nyhus points out. And not offering it puts a merchant at a disadvantage, since it’s widely available at other sites. Although cost is of course a consideration, Nyhus recommends building it in.

If a shipping process is going to be “long and inconvenient,” Gagliardi says that merchants ought to offer it for free.” Customers will still pay for faster shipping, if they desire.

Regarding Fewer Global Payments Offered, Nyhus explains that “It’s not about having the most amount of payment types available; it’s [about] having the right types available to consumers in their region.”

Gagliardi adds that it is important for merchants to support international credit cards in country, and, in some cases (like Brazil), installment payments.

THE MIDDLE’S OPPORTUNITY FOR IMPROVEMENT

Gagliardi highlights three examples of where “the middle” is doing well: Canada uses IP detection to provide overall right experience; in Germany, sites are efficient, containing fewer pages and requiring fewer clicks. In Spain (and China and Japan), sites are more likely to offer live support, which he says is a “confidence booster” for customers.

Webster raises the importance of rewards in the “middle” sites’ opportunities for improvement. Nyhus shares the finding that 60 percent of U.S. sites offer rewards; the U.K. is in second place, with only 32 percent of sites offering rewards. At the bottom of the spectrum is Italy, a mere 7 percent of whose sites offer rewards.

It goes back to the fact, says Nyhus, that “people build things for the markets where they have scale,” and attempting to scale in other countries leaves behind what makes, for example, a U.S. site valuable. Not all the same elements (such as mobile) transcend different regions.

Gagliardi attests that the importance of rewards varies in different countries, based on their particular cultures. “It’s still an experiment,” he says, in many places around the world; if it proves to increase overall lifetime value, rewards will take hold in those areas.

THE COUNTRIES THAT LEAD THE CROSS-BORDER PACK

Nyhus shares that the U.S. sites lead their world counterparts, thanks to their high performance in each category of the Index.

Chinese sites come in second. While they lead the U.S. in languages and currencies offered, they fall far behind U.S. sites in payment types, rewards and other categories.

The final results of the latest X-Border Optimization Index reveal key factors that drive the ease of use of purchasing cross-border. They’re categorized into 4 primary areas:

Shopping (languages, mobile ability, free shipping); Payments (depth and breadth of payment and currency options available); Consumer Relationship (forcing registration versus allowing for anonymity); and Time and Effort Required to Shop.

Referring to China’s Singles’ Day — the most recent of which outdid the $3 billion Cyber Monday haul in the U.S. by a multiple of “3 or 4” — Webster observes that China has to make some changes to its shopping environment in order to make that event a truly cross-border experience. Nyhus agrees, but also points out that retailers worldwide need to do their work to be able to take advantage of that promotion. 

SUMMARY

“The key takeaway” from the latest Index, says Nyhus, is for online merchants to “figure out more ways to go local.” Give international customers offers that are relevant, address holidays that they celebrate, and offer preferred languages and currencies.

Merchants who do those things, he continues, will position themselves “very well to service those customers and take full advantage of the cross-border opportunity.”

Merchants who fail to execute across any of those dimensions, on the other hand, are “doing brand harm and probably not recognizing the full revenue potential of cross-border countries and customers.”

In closing the discussion, Webster remarks that “If 1.2 billion eCommerce shoppers worldwide aren’t a big enough reason for merchants to get serious about cross-border,” she’s not sure what will be.

Digging Deeper Into Cross-Border Commerce

Canadians represent 37 percent of global cross-border shoppers, with over 60 percent or 15 million shoppers thronging to American sites. So yes, this Thanksgiving, Canadians were grateful for a borderless Internet. But why are they ditching retailers at home and flocking south? The X-Border Optimization TrackerTM for December has the answers. This edition etches the anatomy of Canadian eCommerce and where it lags or leads in fitting into the retail ecosystem.

Chinese Holiday Shoppers Painted Retail Red

A subdued yuan wasn’t going to stop shoppers. In a record breaking year, Alipay noted that the number of China-based consumers shopping U.S. brands online increased 700 percent over last year with millennials contributing a lion’s share. This edition of the tracker explains why 78 million Chinese online cross-border shoppers are buying from U.S. websites.
The X-Border December Tracker Updates

In this issue, we’ve profiled 59 global payment service providers, including five additions to the Tracker: 2C2P, Alternative Payments, Creditcall, Linkpay and PPRO. Of these providers, we also updated five players. Coinify was updated with information on currencies it accepts, Vantiv was updated regarding its fraud features, Cybersource on the number of countries served, and Digital River on its omnichannel services. The PAY.ON logo was also updated due to its recent acquisition by ACI Worldwide. Updates to all these players resulted in some adjustments to scores.

DOWNLOAD THE X-BORDER TRACKER HERE

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