Growth in Cross-Border, Mobile Cited in Ecommerce Report

Nearly half of U.S. consumers made a cross-border purchase from an overseas merchant last year, according to the 2017 Pulse of the Online Shopper report from UPS and comScore, up 4% from the prior year, indicating a growing interest in overseas goods.

“The unique products they can find (in other markets) is a very important reason for this growth,” said Louis DiJianne, director of consumer goods, apparel and retail at UPS. “The greater availability of goods on marketplaces and their pricing is taking a larger role in consumer buying decisions, and there is more competition from overseas.”

Marketplaces are a big part of the growth in cross-border commerce, the report found. Nearly all avid U.S. online shoppers (97%) made purchases on marketplaces in 2016, up from 85% in 2016, according to the Pulse report. Eighty-one percent of them cited price as the most important factor when searching for and selecting products online. Of those who purchased from an overseas retailer, 43% were driven by lower prices on U.S. marketplaces and 36% said they wanted unique products not found from U.S. retailers.

Given this increased interest, UPS and comScore will come out with a global version of their annual Pulse report later this year, DiJianne said.

The growth in mobile as a critical ecommerce channel was also called out in the report, which UPS and comScore unveiled at IRCE 2017 in Chicago. While total discretionary retail spending was up 2.5% and ecommerce grew 14% in 2016, according to comScore’s data from Q1 of this year, mobile commerce spending was up an impressive 43%. Overall smartphone usage was up 12% from 2016 to 79%.

“There’s no evidence we foresee see in the U.S. that there will be any slowdown in the channel shift from physical to online, and the use of mobile is accelerating that shift,” said Gian Fulgoni, co-founder and CEO of comScore, adding 22% of all digital spending was from mobile in Q1 of this year.

“There are larger screens and more mobile apps, and consumers are becoming more comfortable using them for both research and purchasing behavior,” DiJianne said. “Seventy-nine percent of all purchases were mobile affected through search, buying or a combination of the two. More retailers are able to make shoppers more comfortable by providing greater product details and visuals on mobile.”

DiJianne cautioned that if retailers don’t make their digital offerings more mobile-enabled and friendly, “consumers will quickly opt out, find another site or abandon the purchase. Retailers need to build apps that make the buying process easy.”

Fulgoni said free shipping continues to be a major sales driver. Three in five consumers will abandon their online shopping cart if they get to checkout and find there’s no free shipping option, he said, based on comScore data.

“One of the main drivers is Amazon Prime which has trained consumers to expect free two-day shipping,” he said “That expectation is pervasive, putting a lot pressure on retailers, and there is a significant cost involved. If one chases the channel shift they find their gross margin is affected.”

Pegging apparel’s share of overall ecommerce at 17%, Fulgoni said many observers see a tipping point when it reaches 20%. “Then there will be tremendous financial pressure on (apparel stores) to stay open,” he said.

Other findings from the report:

  • Even with the rapid growth in online, consumers still see plenty of value in physical stores. Reasons included the ability to touch and feel products (59% of respondents), solving immediate problems (54%), receiving superior customer service (52%), and participating in rewards/loyalty programs (52%).
  • Showing the increasing popularity of buy online, pickup in store (BOPIS), 50% of shoppers said they had taken advantage of ship-to-store programs in 2016, with 44% saying they made additional purchases in store and 41% saying they planned to use it more often.

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