In the 19th century BC, the term ‘International Trade’ simply meant trade over long distances. Earliest records of barter between nations can be dated back to Egyptian trade in the Red Sea, importing spices from the “Land of Punt” and Arabia. Now we have modern trade routes that make it amazingly easy to buy American munchies here in India or French designer clothes in Hong Kong. According to PayPal, Cross Border trade accounts for nearly 25% of their total payment volume.
PayPal recently had a a research conducted on cross border shopping in 6 key markets – U.K, U.S, Germany, China, Australia and Brazil. Among the other key points the data revealed that Russian, Argentinean and Israeli consumers were among the top 5 fastest growing export markets for PayPal merchants.
Here is a Video showing what is PayPal’s Modern Spice Routes:
The report was compiled from 6000 online surveys of consumers aged 18 and above. All the respondents had made international purchases from websites in the previous year.
Some of the Key points covered in the report:
- Cross-border online shopping in the 6 key markets that were surveyed will amount to $105 Bn in 2013 with 94 Mn cross border online shoppers buying regularly from overseas websites. This figure will increase to $307 Bn with 130 Mn consumers by 2018 with a 200% growth rate.
- U.S stood the most popular overseas market to purchase from with 45%. This was followed by UK (37%), China (26%), Hong Kong(25%), Canada (18%), Australia (16%) and Germany (14%).
- Accessories, Shoes & Clothes category was the highest in spend volume for customers with $12.5 Bn. This was followed by Health & Beauty Products ($7.6 Bn), Personal Electronics ($6 Bn), Computer Hardware ($6 Bn), Jewellery, Gems and Watches ($5.8 Bn).
- PayPal is the most popular payment method for cross border online transactions with 8 out of 10 people having used it once already.
- 7 out of 10 shoppers said fear of identity theft or fraud was their biggest concern for not making an overseas purchase.
The emergence of these ‘modern spice routes’ is good news for businesses all over the world according to PayPal. Their message to merchants is “ if you are looking for new ways to grow your sales, especially in an economic downturn, start selling directly to 94 million cross-border shoppers in these 6 markets and own a piece of this $105 billion market.”
"Traditionally, the small merchant was left out. Here comes the Internet, and small merchants can basically make the world their backyard market” said David Marcus, President of PayPal. "The scale of cross-border online shopping has never been mapped before and what is clear from this research is not just the current size of this market, but its massive potential for consumers to buy directly from merchants around the world,” he added.
PayPal says the ‘Spice Route’ makes it incredibly easy and safe for consumers to buy items from different countries with different currencies with the help of their buyer protection program. They can help consumers to connect with merchants worldwide Through their own internal research insights and cross border trade data.
According to the research, being unable to find the required items locally, saving money on a purchase were the most common reasons among consumers for making an international purchase.