Cross-border Ecommerce for North American Merchants
Cross-border online sales will reach $627 billion by 2022, with the highest growth rates occurring outside of North America and Western Europe. Yet expanding into new markets is no simple endeavor. Nearly 60 percent of surveyed U.S. merchants reported that their ecommerce sites did not accommodate global shoppers.
Many merchants shy away from cross-border expansion due to fear of the unknown. After all, selling internationally means different currencies, address formats, payment methods, shipping and fulfillment needs, local tax laws, and more. Those are challenges in fulfillment, but they’re also challenges in evaluating transactions for fraud. And merchants will need to do that, because international expansion also means new — not returning — customers to vet.
By using a solution such as Riskified, merchants can focus on effectively marketing, selling, and fulfilling in new regions (no small feat) without concern for fraud.
Not all consumers share the same passion for purchasing abroad. Asia-Pacific shoppers have the greatest affinity. Ecommerce retail sales in this region grew 14.7 percent in 2017. Singapore (89 percent), Australia (86 percent), and Hong Kong (85 percent) have the highest percentage of cross-border consumers in the world. Nearly 60 percent of Chinese shoppers buy from overseas merchants at least once a year. The Middle East, too, has much potential, as cross-border shoppers account for roughly half of all ecommerce sales in the region.
Shopping behaviors differ among countries, and among consumers within those countries. Cross-border shoppers tend to spend more than their domestic-only counterparts. Thus fraud rules that slate orders for review based on value may need to be adjusted for different markets.
“Embracing Cross‑Border eCommerce,” Riskified’s free, comprehensive report.
According to Riskified data, orders placed with U.S. merchants using international credit cards are more lucrative than orders made with domestic cards. For example, shoppers buying with credit cards issued in Latin America and the Middle East spend, on average, 41 percent more on each order. Orders made with cards issued in Asia Pacific are nearly 25 percent higher in value.
But too often merchants’ fraud-prevention systems decline international orders. Some never even make it the payment gateway, as merchants block orders with international shipping or billing addresses. But even without a cross-border shipping option, merchants should allow shoppers to pay with international cards and ship domestically. Failure to do so results in lost revenue from international customers.
Shopping behaviors vary widely among regions. Consider these tips when expanding into new worldwide markets.
Overseas consumers celebrate dozens of holidays beyond those in North America. A good example from the Middle East is Ramadan (a month of fasting for members of the Muslim faith), which typically starts in May. North American merchants often experience a spike in sales during this holiday. In 2017, Riskified saw the region’s median order value increase by over 10 percent during the first three weeks of Ramadan. Shorter work hours and a festive atmosphere give consumers a chance to browse the web and shop online. The weeks before Eid al Adha in August (another Middle East holiday) proved to be even more fruitful, with sales increasing by over 200 percent.
Mobile ecommerce is surging, especially in Asia Pacific and Latin America, where consumers often access the internet only from their mobile phones, not computers. Riskified data corroborates this: Nearly 65 percent of orders with an Indian billing address were made via mobile devices. Ninety-nine percent were safely approved on Riskified’s platform. Thus, if you’re expanding into a mobile-first market, make sure your ecommerce site is optimized for mobile, and that your fraud process is adapted to vet orders from those devices.
Higher order values
Riskified’s data reveals that orders placed from outside of the U.S. have higher values in some industries. Fashion orders from Asia, Europe, Latin America, and the Middle East have higher dollar values, on average, compared to domestic U.S. orders. For example, fashion purchases from the Middle East are worth 65 percent more than domestic U.S. orders, while Asia-Pacific shoppers typically spend 33 percent more. Orders for auto parts from the Middle East have a 63 percent higher value than from domestic U.S. buyers.
Cross-border shoppers can generate new revenue for ecommerce merchants. A sound, research-based expansion strategy is key to success, as are tools for fraud management.
Riskified uses localized data sources and customized models to monitor fraud across different regions. We’ve processed billions of transactions worldwide. We know how fraudsters function across borders. Our models are adapted to local behavior, local shopping patterns, local device settings, and local payment methods — from almost 200 countries across the globe.
Riskified improves global ecommerce for merchants and consumers. The world’s largest brands trust Riskified to increase revenue, manage risk, and improve customer interactions. Riskified helps merchants in virtually any industry — from luxury fashion houses to gift cards to online travel agencies — by increasing their approval rates and providing instant decisions. For more, please visit Riskified.com.