NEW YORK, N.Y. – This holiday season, it’s almost as simple to shop on the other side of the world as it is to buy from a store down the block.
International online payment services like AliPay and PayPal are trying to ensure that a South Carolina fashionista can buy a faux fur vest from China with just a few clicks on her computer and a New Zealand biker can use his smartphone to pick up a rare part from a Colorado company.
These services come as shoppers and retailers alike have a growing appetite to buy items from any country, regardless of distance and regulations. In fact, a PayPal report estimates that by 2018, about 130 million shoppers will be spending over $300 billion a year across the border, up from $105 billion in 2013.
“The reality is pretty much nothing in a store is locally produced, so 99 per cent of what you’re buying is already a cross-border transaction. We’re cutting out the middle-man,” said Anuj Nayar, senior director of global initiatives at PayPal, which is being spun off by eBay Inc.
Companies are working on fixing the biggest hurdles for international shopping: The perception that it costs a lot and takes a long time. They’re handling the conversion of currency behind-the-scenes and giving shoppers the prices in their own currency. They’re including tariffs and customs duties in the overall price of an item. And they’re being transparent about shipping times and enabling shoppers track packages online.
Daniel McGaha, 24, a youth and college minister from Greenwood, South Carolina, ordered a baseball jersey for himself and some tassels for jewelry making and a faux fur vest for Christmas presents at AliExpress.com, which is owned by Chinese e-commerce company Alibaba. McGaha was happy that he got free shipping and that he was able to track his packages online.
“I will keep buying from AliExpress,” he said.
Online retailers are benefiting from the interest in overseas shopping. About 25 per cent of PayPal’s transactions, for example, are international, with about 2,000 cross-border transactions per minute. And some retailers that work with PayPal, like Australian-based companies KeepCup, which sells reusable coffee cups, and WallFry, which sells wall art for children’s rooms, have opened warehouses in other countries like the U.S. and U.K to keep up with demand from overseas.
Pro’s Closet in Boulder, Colorado, which was founded in 2005 as an online-only bike parts and accessories store, also has seen big gains. By selling on eBay and working with PayPal, 45 per cent of the company’s orders are international. Orders come in regularly from shoppers in Canada, Australia, Germany, Brazil and China.
Founder Nick Martin said he wouldn’t be able to reach customers in other countries without eBay and PayPal’s help. As a global marketplace, eBay already has marketing reach, with international ads on the site. EBay also translates listings into customers’ language and currency.
“We joke that it’s easier for someone in China to purchase something than for customers to walk into our front door” since the company doesn’t have a brick-and-mortar presence, Martin said.
Since 2011, luxury deal site Gilt.com has worked with Borderfree, which offers retailers cross-border selling logistics services. Gilt.com chose to work with Borderfree to target customers outside of the U.S. who were asking to be able to shop on the site. Now, about 20 per cent of its sales are international.
It teamed with Alibaba’s Alipay this year, as well, working with both companies to send out localized emails to promote sales on the day after Thanksgiving known as Black Friday and the Monday after known Cyber Monday.
Marshall Porter, senior vice-president and general manager of Gilt’s International business said the holiday season broke records for the company internationally, although he declined to give specific sales figures. “It’s a U.S. driven holiday, but global shoppers are taking advantage,” he said.