Cross-Border Merchants Win with Added Functionality, More Languages

With international business-to-consumer digital commerce set to reach $1 trillion by 2020, retailers must learn to master cross-border transactions to get their share of this enormous and complex market. The latest X-Border Payments Optimization Index—an ongoing research effort to track the state of global digital commerce across national borders—validates earlier findings about functionality and language options.

The most successful retailers are using increasingly simplified checkout functionality and allowing users to choose to experience sites in a variety of multiple languages. The Index also shows that digital commerce sites looking to successfully reach customers in prosperous European markets must consider how diverse the continent and business requirements there continue to be.

Audience-Focused User Experience

For the last quarter of 2015, the Index showed that online retailers were working to increase the functionality of their sites, allowing users to get to checkout more quickly and reduce data errors that can cause problems downstream in the purchasing process. For example, 10 percent more businesses offer “same as” shipping and billing address fields so users won’t have to enter their address twice, saving time and effort. More merchants—11 percent more than in Q3—now have country-specific address fields, including auto-populating menus for common entries like country and state.

The best cross-border merchants are also expanding their language offerings so users can choose the language they’re most comfortable in. The Index found that fully half of the top 10 merchants surveyed offered at least 20 language options, up from 30 percent last quarter. (Top apparel sites also provide localized sizing options, since different countries often use different sizing charts.) By contrast, 80 percent of the bottom 10 retailers offer their site in only one language.

Fraud, Shipping Create Challenges

In a startling finding, the X-Border Index finds that international digital merchants are increasingly stumbling in some elementary user experience functionality that could be costing them revenue. In a well-intentioned bid to ease future transactions, 9 percent more retailers are requiring users to create a full profile to complete a purchase. But creating the profile is time-consuming and often relies on first-time customers to trust an unfamiliar out-of-country merchant with their information, creating the potential for abandoned carts at the brink of purchase.

In addition, retailers are increasingly requiring email validation before a customer can make a first-time purchase, meaning customers have to log in to their email account and click on a link sent by the retailer to prove they have the email address they entered — all before a purchase can happen. While email validation does reduce fraud, a worthy motivation, it also creates a hassle that could lead to more cart abandonment.

Customers also saw a decline in the number of cross-border retailers offering free shipping, down 13 percent from last quarter. Merchants looking to be competitive, take note: all of the top 10 retailers surveyed in the Index offer free shipping, while none of the bottom 10 do.

Europe Attractive But Complex

For 41 percent of North American retailers, the Index shows, Europe is the first choice for their international digital commerce expansion efforts. But it’s important for merchants to consider how diverse the continent is in language, culture, currency and payment preference. Here are the biggest challenges facing retailers looking to enter the European market:

  • European consumers’ preferred payment methods tend to vary by country — some Europeans strongly favor direct debit options that are not always accepted outside their domestic market, potentially creating friction at checkout.
  • Every European country has its own logistics framework that often involves expensive delivery and transportation costs, in addition to customs for some items that can add expense and delay delivery.
  • European value-added tax, or VAT, also differs depending on the country. And even registering and accounting for VAT can cost thousands of dollars per year for every European country a merchant does business in, although the European Commission is currently considering a work-around for this issue.

Opportunities Abound

The X-Border Payments Optimization Index studied and ranked 195 merchant sites around the world across 10 countries on a scale of 1 (low) to 100 (high). Nearly 60 attributes were evaluated for every site, covering details related to shopping, shipping, payment, information access, pricing, security, ease of use, support, and time and effort required to checkout. Statistical methods determined which of these attributes were more important than others and influenced scoring. The average score was 55, slightly lower than last quarter’s average (56). The US continues to lead the pack, coming in at 65, one point above last quarter. The rankings are as follows:

  • U.S. 65
  • China 61
  • U.K. 57
  • Canada 55
  • Germany 55
  • Spain 54
  • Italy 53
  • Japan 51
  • France 50
  • Mexico 49

For cross-border transactions, travel leads other industry categories with an average score of 63. Books, music and videos rose six spots largely by adopting core cross-border functionality. The industry breakdown is as follows:

  • Travel 63
  • Apparel/accessories 57
  • Books/music/videos 56
  • Mass merchants 55
  • Specialty 53
  • Computer/electronics 53
  • Housewares/home furnishing 53
  • Health/beauty 52
  • Toys/hobbies 51
  • Jewelry 50

Clearly, the Index points to several areas in which an enterprising merchant could differentiate itself from the competition. Simplified functionality and multiple languages are best practices cross-border retailers must adopt to stay competitive, and the true disruptors will find innovative user experience solutions to the problem of fraud. The opportunities are there for cross-border merchants to profit from this enormous market.

James Gagliardi is Vice President of Solution Innovation at Digital River.