Brexit may have wider effects on the European retail sector beyond the initial disruption it causes
With disposable income rising in developing markets, e-commerce merchants and marketplaces are pivoting toward these regions, driving a surge in cross-border e-commerce that could hit $3.3trn by 2028.
According to a new study by Juniper Research, cross-border e-commerce transaction values will grow by 107% globally over the next five years, while domestic e-commerce transaction values to grow by 48% over the same period.
It goes on to predict that some 33% of e-commerce spending by that date will be international, with much driven by consumers in developing markets looking overseas for goods.
This, says the report, is due to the rapid expansion of key marketplaces, and how they have differentiated themselves. For example, JD Sports Fashion Group provides fast delivery times thanks to its strong logistics network. AliExpress offers considerably cheaper goods that offset the longer-than-preferred delivery times for consumers, while Amazon, Rakuten Advertising, and Mercado Libre provide value-added services, like streaming and integrated financial services.
Marketplaces must offer a differentiated consumer experience to be successful, but must also add value for merchants, in order to sustain rapid growth.
Social D2C in the driving seat
The report also finds that in an increasingly social media-dominated advertising landscape, the leading vendors are effectively marketing directly to consumers. Central to competing with domestic merchants is appealing to digitally engaged users in a direct way; making social media advertising vital for success. For example, Temu has accompanied launches into new markets such as the UK & US with highly targeted direct advertising to users, fuelling rapid growth. Cross-border merchants must therefore correctly identify the right social media and digital advertising channels in each market, or risk losing out in the battle for tech-savvy consumers.