Every year for the last four PayPal has released it Cross-Border Consumer Research report an annual report card on marketplaces progress and a snapshot on the where why and how of international commerce Its always an interesting reading because the digital era of payments has been in many ways what has powered the epoch of the cross-border consumer However in the summer 2018 with words like tariff and trade war making frequent appearances throughout media reports worldwide cross-border commerce is a bit more top of mind than usual and a lot more people than normal are looking at cross-border markets and wondering whats next Im ready to go to 500 US President Donald Trump told CNBCs Joe Kernen in a Squawk Box on Friday July 20 The 500 he refers to is the 5055 billion in exports China sent to the US in 2017 as compared with the 1299 billion the US exported to the country during the same period So far the US has placed tariffs on 34 billion-worth of Chinese products and China has shot back with retaliatory tariffs of its own The US has also placed tariffs on steel and aluminum imports from the European Union EU Canada and Mexico and the president has made noise about extending those tariffs to include EU cars and car parts The response from global audiences to the waves of tariffs has been to put in mildly negative German Chancellor Angela Merkel noted that tariffs posed a real danger for the prosperity of many people in the world while outlining possible German responses to a tariff on German car imports to the US With the headlines grim one could easily believe that cross-border commerce is perhaps in some trouble However when Karen Webster sat down with Adriana Bello PayPals head of Global Cross-Border Trade and Melissa OMalley PayPals head of Global Initiatives Communications to talk about this years report the headline isnt so much about tariffs as it is about building trust The Tariff Effect It is not that the tariffs wont be important or have any effect Bello told Webster but when thinking about them it helps to take a step back and think specifically about the cross-border consumer The average cross-border shopper she noted doesnt exist on a global scale Customers in different markets shop abroad for different reasons and the tariffs dont always come into conflict with those reasons So for example Bello told Webster if you look to the Chinese shopper they are shopping across borders online because they are looking for certain high-quality items they cant easily find at home and they are looking for a guarantee of authenticity with their purchase They arent bargain shoppers as a rule Theyre looking for something specific in the foreign market they are shopping in and though price is a factor at some point its far from the leading one It doesnt even make the top three quality access and authenticity all beat it out being a primary concern for 54 percent 36 percent and 34 percent of customers respectively Canada Bello noted is a similar story as Canadians are some of the worlds most avid international shoppers with 64 percent shopping cross-border sometimes exclusively Canadians are looking for unique products because there is as smaller domestic retail market They look at a lot of international merchants for things not found in their home nations and they are very close to the US so there is a long-established relationship there Bello said This is not to say there wont be an effect there certainly will be The US market could likely see a fall-off in conversions from France Mexico and Italy where the primary reason for shopping in the US is price One can imagine a situation where the trade war continues and becomes inclusive enough of consumer goods that price-motivated consumers could be guided to other cheaper markets that the US However she noted according to the report 21 percent of all international shoppers rank the US as their top shopping destination And when one looks at the results in places like China and Canada as well as Germany Australia or Spain access and authenticity are the overriding concern And those are things you cant really price into or out of Bello noted The Tricky Path To Trust When one looks closely at the numbers in the countries where international commerce is the most common Bello said down to the markets where it is the rarest what emerges is a story about trust and familiarity She said In the European market there is a lot of cross-border commerce activity particularly in the Eurozone Germans are comfortable buying in Italy Irish consumers are used to working with the neighbor UK The behavior is well-established and the buyers are quite savvy The comfort and trust are in the numbers she said Eighty-four percent of Irish customers shop domestically and internationally and 19 percent shop only internationally In Austria 81 percent of customers shop internationally In Belgium its 71 percent Flipping to the other side of the spectrum the discomfort is also readable in the numbers In Japan only 6 percent of customers report shopping cross-border We see big trust dips when it comes to online firms in general in Japan and foreign online firms in particular Bello said If you look at Japan that trend line for a long time has been a very low trust factor in the online brands of other countries The good news she said is that there are common themes in building on that trust which are straightforward and mostly boiled down to a single idea familiarity breeds trust That means offer a user experience that actually welcomes the international shoppers by offering full translations of the page since people often need to read the product description to make a purchase online It also helps a lot Bello said for prices to be listed in local currency since mystery pricing is not something most shoppers appreciate Beyond local currency pricing and payment methods she added consumers like payment services like PayPal that let them choose their local currency without having to necessarily supply their data to a foreign merchant with whom theyve never transacted before Just because you are comfortably using your card as a payment method doesnt mean you are necessarily comfortably giving the number to a merchant you dont know Using a tool like PayPal lets international merchants bridge that gap in a way that makes both the merchant and the shopper feel secure Bello said Moreover Bello told Webster the payment and pricing need to be transparent to the customer all the way through That means showing the consumer the price of the item and the price of shipping as a single cost before the transaction is complete because consumers shopping cross-border listed as their number-one fear and complaint that they dont always know what they are getting or what they are going to be finally charged Its the kind of sale we tell merchants they make only once The customer buys but eventually sees the whole cost and doesnt come back because they feel misled Bello said She noted that firms with a future in cross-border sales tend to build relationships because the customer always knows what theyre getting when their getting it and what they can expect to pay Whats Next Today Bello told Webster PCs still make up the bulk of cross-border commerce orders but the growth story is in mobile as nearly half of all transactions are coming in through that channel That proportion very much depends on market in places where mobile web leapfrogged desktop web mobile is just the channel on which things get bought That growth in mobile she noted really stimulated the development of cross-border commerce across developing markets and opened the door for new distribution processes that are making a wider variety of commerce activities available for more people worldwide And slowly we are seeing in lots of markets that people are getting more comfortable going outside their home nation to spend and shop she said They arent always comfortable there are markets like Russia where a majority of customers report being uncomfortable with shopping online across borders but where cross-border commerce is growing year over year nonetheless For an example closer to home the US market hasnt been the biggest adopter of cross-border commerce among consumers More people come here to shop than when we send people out to shop in the world but even among American consumers the trend line is heading up And American consumers Bello noted are beginning to trust in merchants worldwide because they are seeing familiar payment methods and getting guarantees that are familiar to them across eCommerce Americans are now 10 percent less concerned that they wont get their items and 17 percent less concerned about getting help with transactions than they were even a year ago according PayPals figures As those concerns drop out American customers are getting more interested in shopping beyond their borders And merchants worldwide Bello noted are increasingly able to live up to those customers expectations no matter their point of origin People are getting used to spending their money in different places she said and more familiar with using a wider net to get unique items from up-and-coming brands And I think that we are going to continue to see that growth for the rest of this year in the US and around the world - You Might Also Like china cross-border commerce cross-border sales cross-border shopping ecommerce Featured News International Shoppers News online shopping PayPal tariff trade war