Cross-Border Buying: What It Means for Retailers Here and Abroad

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Cross-Border Buying: What It Means for Retailers Here and Abroad

By Susan Wall, Vice President of Marketing, Bronto Software - 12/22/2016
The ecommerce world is shrinking. Consumers in the United States who might have once searched an international site as a last resort are warming to cross-border shopping. In fact, a study we commissioned from Ipsos Research in late 2016 shows 77 percent of Americans are open to cross-border shopping. Additionally, 42 percent had already done so, with 39 percent having made a cross-border purchase during the week before they spoke with the researchers.

For apparel retailers, this openness to shopping abroad provides both challenges and opportunities. For retailers from countries where the dollar is strong compared to the local currency, selling to shoppers in the United States can mean an immediate benefit. But for all brands, developing a cross-border strategy with effective pricing, shipping and marketing is critical.

A closer look at the research
According to our research, U.S. residents are motivated to shop cross-border by better prices (61 percent) and unique merchandise (55 percent). The barriers? Sixty-seven percent note shipping costs, 43 percent are concerned that delivery will take too long and 41 percent cite worries about online payment methods and security. Men (44 percent) are more open to cross-border purchases than women (40 percent), and younger consumers are more likely to purchase outside the United States than older shoppers. In the 25-34 age group, 58 percent are likely to buy cross-border, while only 35 percent of those 65 and older are interested in buying from outside the US.

A prime opportunity for Canadian brands
As we reviewed the research results, our first thought was, "Oh, Canada." More than three-fourths (77 percent) of U.S. residents say they would consider purchasing from our North American neighbor, and 20 percent have already done so. While U.S. residents have bought from other countries at higher rates (56 percent have purchased directly from China and 27 percent from the UK), Canada's close proximity and its favorable exchange rate for U.S. shoppers could provide a bonanza to Canadian ecommerce merchants. And our research suggests just the area to exploit. Good quality merchandise will entice 38 percent of U.S. residents to shop cross-border.

Couple the U.S. consumer's interest in quality with a desire for unique merchandise (55 percent of U.S. shoppers say that is a factor that motivates cross-border shopping), and you've got a winning marketing combination.

One downside is that in the apparel world, there aren't that many Canadian brands with U.S. name recognition. Lulemon/Athletica is the most prominent, but its strong U.S. presence means it isn't exactly a cross-border shopping play. Outdoor apparel company Roots has ventured outside of Canada but is still selling in the U.S. primarily through its website. It directs U.S. customers to the U.S. version of the website, offers free standard shipping and prominently highlights international holiday shipping deadlines. Its higher-end outdoorsy clothing and leather products could definitely attract a US shopper interested in quality. Other Canadian apparel brands that could be poised to take advantage of US cross-border interest include Silver Jeans and Mondetta. 

What this research means to U.S. retailers
While there is enthusiasm for cross-border shopping, there are also plenty of reasons for consumers not to take the risk. Thirty-seven percent of U.S. shoppers are concerned about free returns, and 42 percent worry about hidden costs. Older shoppers show much less enthusiasm for buying cross-border. More than half of those below age 44 are likely to purchase outside the U.S., but that percent falls steeply starting at 45-54 (41 percent) and goes down to 28 percent at 55-64 and 25 percent for those over the age of 65.

Whether it comes from neighboring Canada or the Far East, U.S. apparel brands and retailers can stave off cross-border competition by focusing on the benefits of shopping in the US. The retailer with brick-and-mortar operations has an immediate advantage: Emphasize the ability to order online and then pick up or return in the store. Consider a shipping cost approach that provides a good value on overnight or one-day shipping, and emphasize those features (plus data security) early in the shopping experience.

Don't forget to think about your target market. For those whose products are more interesting to older consumers, spending a lot of time worrying about fending off cross-border poachers is not worth the effort. And women are slightly less likely than men (40 percent to 44 percent) to want to shop cross-border.

Also, remember: It works both ways. There's nothing stopping you from selling overseas. In fact, our Australia and UK research suggests those countries are even more open to cross-border shopping than U.S. consumers. Do some research, and see where it makes sense for you to expand your efforts. You might just find a whole new market ready and waiting for you. 

Susan Wall is vice president of marketing for Bronto Software, a provider of commerce marketing automation solutions.