The retail industry has undergone many changes over the last 21 months, particularly in the eCommerce space.
Consumers quickly adapted to the massive digital shift out of necessity, and as a result of the unremitting digitization of the modern world, eCommerce transactions are now anticipated to account for 22% of global retail sales by 2023, up from more than 14% in 2019. Yulia Drummond, CEO of Voda Swimwear, said many companies were unprepared to sell their products online when the pandemic began, however.
“All the brands started scrambling, [thinking], ‘Oh my goodness, what do I do? How do I get to the next level? How do I sell [products for] the business? How do I not lose my business?’” she said. “So, the biggest thing [is] to get your business to the point where you [are] able to sell across different regions and countries, where you increase your market share, and you increase your product availability in different countries.”
Cross-border business-to-consumer (B2C) eCommerce is expected to reach $1.2 trillion in 2022. The growth in this space presents a unique opportunity for merchants hoping to expand their businesses to foreign markets — a welcome trend as consumers become more comfortable making overseas purchases. Cross-border sales undoubtedly are the life source of the global economy, but enabling such transactions requires a focused investment in payments innovation and the adoption of local payment preferences.
Popular Payment Types Appease Larger Pools of Customers
More than 200 different payment types are currently available in the market, and each geographic location has its own preferences. While most American and U.K. consumers prefer to pay with debit or credit cards, Chinese consumers favor AliPay and WeChat Pay, for example. Incorporating a variety of regionally popular payment methods into the customer purchasing experience directly correlates with an increase in revenue. Statistics show that sales spiked between 6% and 45% after more payment options were incorporated.
“The challenges [are that] you don’t really know what’s the best method in each country,” Drummond said. “You just kind of have to [make] a big guess and figure it out. What you can do is offer as many payment solutions for each customer, and hopefully it works for them … [So] for us, it’s really [about] offering localized payment options. It’s really offering as many payment solutions as we can for all kinds of customers. And hopefully one of them works with a lot of international customers.”
Merchants often feel overwhelmed by the abundance of payment options available and the costs incurred to accept each of them. It is an investment in this new way of doing business, Drummond explained. While innovation is not cheap, it is a necessary step a company must take in order to grow. U.K. retailers that disregard the digital changes happening in their market risk losing 44% of all U.K. customers, for example.
“You can’t be everywhere at the same time,” she said. “What you can do is offer the best and [the] majority of the most popular. … You just have to be flexible and offer as many options as you can to make sure that they are something that works.”
Evolving With Technology and Consumer Demands
The digital-first mindset that developed during the pandemic shows no signs of slowing. PayPal had nearly 400 million active users in 2021, and almost one-third of internet users have used digital payments technology. Further, the cross-border payments market is anticipated to reach $156 trillion in 2022.
“COVID-19 definitely changed a lot of things in the industry,” Drummond explained. “Everybody had to adapt so quickly and so fast to new regulations and new demands and everything, but I think, at the same time, COVID-19 really brought a lot of new technologies [that] really skyrocketed super fast.”
A study revealed that 63% of eCommerce retailers globally view their checkout processes as an opportunity to gain an advantage over competitors when it comes to meeting shifting consumer preferences. The plethora of payment options available creates ample opportunities for sellers to engage with customers and reduce cart abandonment, increase the likelihood that the customer will complete the transaction and ultimately improve consumer retention. As such, merchants should research the markets in which they intend to sell and innovate accordingly.
“Let’s evolve with technology, let’s evolve with demands, let’s evolve with what customers want, and we’ll do our best,” Drummond said.