Online cross-border shopping is a massive opportunity for retailers and brands

While we tend to focus on the current difficulties in the retail sector, the much less talked about growth of online cross-border shopping is a massive opportunity for retailers and brands. It’s interesting that while M&S is shrinking its domestic store footprint, it is also launching 46 new international websites to cater for the sharp growth in online overseas sales, which were up by 75.4% in the first half of the financial year.

Most analysts agree that the store remains a critically important touchpoint for the customer. However, in the current period of structural change – accelerated by the pandemic - online cross-border sales perhaps offer the most significant growth opportunity for retailers. And, for some, may even mean the difference between survival or failure.

We’ve been talking about the global retail ‘village’ for at least 20 years, probably more. And while logistics and regulations may sometimes get in the way, surely we’re at the point now when we can say we have a truly global marketplace for retailers and brands? In theory at least – and not withstanding the pandemic and recent Brexit issues - the Internet has removed all the barriers to promoting and selling goods and services anywhere in the world.

There’s no denying that we’re in the midst of huge structural change, but it can’t all be bad, can it? With our understandable focus on the domestic market, we often forget that the internet has opened up massive opportunities for retailers and brands. Today’s technology means it’s never been easier for brands to understand or sell to consumers, or for consumers to get whatever they want, whenever they like, wherever they choose. And the global e-commerce leaders such as Amazon and Alibaba have helped to bring about a single global market place for goods and services, at least for non-food products.

Major retailers around the world are investing significantly in growing their international online businesses and recent data demonstrates the importance of global markets. In the US, fashion retailer Nordstrom ships to over 200 countries, while fashion retailer Next’s annual accounts for 2019/20 show overseas online sales to 70 countries at £436m – a pretty significant 10% of group turnover, which looks set to keep growing.

Source: PostNord 'E-commerce in Europe 2020'. Survey undertaken in Q2 2020.

Various forecasts suggest continued strong growth in cross-border e-commerce over the next few years, while survey results from PostNord’s ‘E-commerce in Europe 2020’ report confirm that a large and growing proportion of European consumers have been buying online from overseas markets in the last five years (see graph). Key drivers for this trend include the ability to source products not available in a domestic market, or simply to get something cheaper.

So, once the pandemic has subsided, the message to retailers and brands is clear: there’s a big wide world out there - go forth and sell! However, it is worth noting that even in the leading online markets such as the UK and China, the vast majority of retail sales still touch the store at some point, whether this is through direct sales, returns, click & collect, showrooming or just a ‘halo effect’ which enhances the wider brand presence. And getting the store location strategy right is just as important as it ever was.