By Angus Burrell, SVP Retail, emerchantpay
Across the globe, the COVID-19 pandemic has acted as a catalyst for a seismic acceleration from cash to digital transactions. Experts predict that eCommerce sales will continue to grow, amassing a market value of $6.5 trillion by the end of 2023.
Businesses have been forced to adapt quickly to changing consumer behaviour. To remain competitive in an increasingly digital world, merchants have to optimise their eCommerce models to deliver a seamless user experience and fast, frictionless and secure payment options to customers around the globe. As such, we will likely see a corresponding rise in partnerships between merchants and payment providers that can equip precisely this.
Understanding consumer behaviour across the globe
Research by DataReportal found a strong correlation between the level of internet penetration in a country and the rate of eCommerce, and this is a trend we have seen magnified in several regions over the past year. In India, for example, a country that has 700 million internet users across the country, has seen its eCommerce sales increase from $30 billion in 2019 to over $40 billion in 2020.
Similar trends can be found in Europe. In Germany, it was reported that consumers planned on shopping less during the pandemic, citing fears over the economy, yet eCommerce activity in essential sectors such as food and groceries continued to rise. Indeed, emerchantpay’s 2021 Regional Payment Trends eBook found that German consumers spent just under $80 million in online groceries in 2020 – a significant increase compared to the $70 million recorded in 2019.
The pandemic has transformed how consumers are spending their money, and data has shown that eCommerce has gained significant momentum internationally over the past year. What’s more, for merchants that are equipped to expand beyond their local market and tap into a global audience, this opens up significant growth opportunities.
Simultaneously, it’s safe to argue that it’s not only the sheer turn to online channels that has reshaped eCommerce over the past year. The increased appetite for digital payments globally has equally changed eCommerce and the way consumers want to shop and pay, not just for today but for the future. In fact, a Gartner report found that in the US alone, 46% of consumers said that they had decreased cash payment or did not pay with cash at all, and by 2024, it’s expected that global cash in circulation will be reduced for the first time after decades of continuous increases.
Like most things in life, payments are a matter of familiarity; the more acquainted consumers become with digital payment methods, the less likely they will be to return to pre-COVID habits.
The cross-border opportunity
The potential for merchants to capitalise on the eCommerce boom to expand their business overseas is immense. This said, entering foreign markets can be a daunting process for ill-prepared businesses, especially when considering that they must compete with established global giants such as Amazon.
As it stands currently, the cross-border market has an expected year-on-year growth rate of 120%. If done correctly, it presents a huge opportunity for merchants to unlock a much wider pool of consumers that are essential for both survival and growth.
The potential increase in revenue streams for merchants entering new markets can be significant. Still, in order to reap these benefits, it is essential to provide prospective customers with a positive, frictionless experience. This requires a deep understanding of local market preferences, including currency and payment methods, as well as conforming with regional regulations, which can be complex to an outsider. Fortunately, there is help at hand. Payment providers with the right reach, expertise and scale can be an invaluable partner for merchants when entering new markets and can make the difference between success and failure.
Understanding market nuances
In order to successfully tackle cross-border payments, merchants must understand market nuances across the regions they’d like to enter. Considering factors such as payment preferences and currencies are essential for a merchants’ success in a foreign market.
There are currently over 180 currencies in circulation globally, and merchants must ensure that their services align with currency preferences in the countries they operate in. Taking this into consideration will help improve business’ conversion rates. Indeed, research shows that over 13% of online shoppers will abandon their basket if the price is labelled in a foreign currency.
Not just this, but customer preferences also differ across the globe. Our Regional Payment Trends eBook has shown that in countries like Spain and Germany, Buy Now Pay Later solutions such as Klarna show prominence in eCommerce sales. Therefore, merchants looking to enter these markets that do not offer this payment method could severely limit their potential, resulting in lost revenue.
To successfully penetrate any market, merchants must look for payment providers that offer up-to-date and future-proof technology that accommodates the evolving payments landscape. India for example often relies on biometric authentication methods for digital payments, and merchants have to be equipped to handle preferences like this. A payment provider that understands these varying preferences can offer merchants the chance to successfully leverage cross-border opportunities.
Unlocking the potential of global eCommerce
Looking ahead, it’s clear that eCommerce and the increased adoption of digital payments show no signs of slowing down. As merchants continue to recognise and capitalise on the potential of changing consumer behaviours and cross-border payments, we will continue to see an increase in holistic and integrated partnerships between businesses and payment providers.
For merchants that choose payment providers with the proper knowledge, expertise and technology, the opportunity to access billions of potential new customers is theirs for the taking.