Becoming an international business is an appealing prospect for e-commerce brands and retailers. Expanding into new markets with your online store translates into additional revenue and a chance to build a truly global brand. But deciding which markets to enter can be challenging. Some regions are friendlier to cross border e-commerce than others. It’s important to know the pros and cons before entering any new market, so you can plan your global expansion accordingly.
Here are eight international markets that are heating up when it comes to cross border e-commerce, based on data from PayPal’s 2018 Cross-Border Consumer Research report. The report analyzed the frequency of cross border shopping in 31 global markets. The markets are rated in order of the highest frequency of cross border e-commerce activity. We’ve also examined what makes each market so hot, and any risks or considerations for market entry.
1. Ireland – 65% shop cross border and domestically; 19% shop cross border exclusively
Primary language(s): English, Irish Gaelic
What makes it a hot market: The U.S. has a close cultural affinity with Ireland, and with the U.K. preparing to exit the European Union (EU), U.S. companies can leverage the fact that Ireland will be the only European market that is a member of the EU and the Eurozone and is primarily English-speaking. According to Export.gov, Irish consumers consider U.S. goods to be of high quality and are more receptive to cross border offerings from U.S.-based brands and retailers.
Risks & considerations: While Irish consumers are more open to cross border e-commerce than those in the U.K., there is stiff competition for market share from Irish and U.K.-based brands and retailers. International businesses must price their goods competitively to win over shoppers and build brand loyalty.
2. Belgium – 56% shop cross border and domestically; 16% shop cross border only
Primary language(s): French, Dutch
What makes it a hot market: Widespread, readily available high-speed internet means that consumers in Belgium have easy access to online shopping. 74% of consumers in Belgium shop online. Considering that 56% of these e-commerce consumers are open to both domestic and foreign merchants, it’s easy to see that shoppers here are more open than most to international goods.
Risks and considerations: Export.gov notes that offerings to consumers in two languages can make Belgium a somewhat challenging market for cross border e-commerce. The key to success in this market is creating localized experiences for shoppers in both French and Dutch.
3. Israel – 64% of consumers shop cross border and domestically; 16% shop exclusively cross border
Primary language(s): Hebrew, English, Arabic, Russian
Currency: Israeli New Shekel
What makes it a hot market: Export.gov notes that Israel offers significant opportunities for cross border e-commerce, particularly brands and retailers selling consumer goods, due to high retail prices in Israel and the lack of domestic e-commerce competitors. Further, Israel’s middle class is growing and is open to high quality, less expensive goods, which means there is a growing number of consumers in this market that are more willing to buy from international e-commerce merchants.
Risks & considerations: In 2017, Israel changed its rules to make foreign companies subject to Value Added Tax (VAT) collection on digital services. A company must collect the country’s 17% VAT if it has an online presence targeting Israeli consumers. This applies to downloaded apps, software, music, games, television programs, films, and online gambling. The good news is, physical products may be exempt from this rule. Physical goods worth up to $75 are exempt from all taxes, and purchases of up to $500 are exempt from VAT.
4. Singapore – 59% shop cross border and domestically; 14% shop only cross border
Primary language(s): English, Malay, Chinese, Tamil
Currency: Singapore dollar (SGD)
What makes it a hot market: The World Bank ranked Singapore the second-easiest place to do business in the world. According to Export.gov, this ranking is due to its major telecom, distribution, and logistics hubs, as well as favorable commerce tax codes and large English-speaking population. This is a market that is eager for international goods: Approximately 60% of Singapore’s e-commerce sales originate from cross border retailers.
Risks and considerations: U.S. companies face export barriers in Singapore on certain electronics such as satellite dishes, direct-to-home satellite TV services, or paid television services. But overall, brands and retailers face very few barriers to market entry.
5. Hong Kong — 62% shop cross border and domestically; 13% shop cross border only
Primary language(s): Chinese, English
Currency: Hong Kong Dollar
What makes it a hot market: World Bank rates Hong Kong as ranked as the 43rd richest country in the world. A special administrative region of China that does not levy any customs tariffs and has limited excise duties, Hong Kong offers an ideal platform for doing international business in Asia Pacific. Consumers in Hong Kong are tech-savvy and own smartphones at a high rate.
Risks & considerations: E-commerce providers must compete with the estimated 350 department stores in Hong Kong that make in-store shopping highly convenient. One popular option in this region is order online, pick-up in-store. Brands and retailers who want to court Hong Kong shoppers will need to make their online stores and delivery just as convenient, if not more, than in-store offerings.
6. Austria — 71% shop cross border and domestically; 10% shop cross border
Primary language(s): German
What makes it a hot market: Austria’s population is small but mighty: at just 8.4 million people, an estimated 85% of citizens use the internet, according to E-Commerce Europe. eMarketer predicts that by the end of 2018, e-commerce sales in Austria will increase by 6.8% to total $7.93 billion. About half of the nation’s population – 4.3 million – shop online, and when they do, they’re big spenders. The average amount spent per online shopper was €1,759 in 2015.
Risks & considerations: According to Export.gov, a popular means of online payment in Austria is bank transfers. Brands and retailers will need to offer this as an option for frictionless online checkout. On average, online merchants selling in Austria should offer three or four different payment options.
7. Norway – 55% of consumers shop cross border and domestically; 10% shop exclusively cross border
Primary language(s): Norwegian, English
Currency: Norwegian Krone
What makes it a hot market: Cross border e-commerce is prevalent with Norwegian consumers, who are eager to purchase items that aren’t readily available in local stores, according to Practical Ecommerce. Norway consumers are fond of fashion – Statista predicts e-commerce spending on clothing to increase 10.34% by the end of 2019. Export.gov reports that mobile shopping is important in Norway, so brands retailers must support optimization for smartphones and tablets when localizing an e-commerce store.
Risks & considerations: Norway is the only Nordic country that is not a member of the EU. Brands and retailers selling into this market must understand that it has its own regulations for restricted goods, value-added tax and import duties. However, most international merchants are exempt from VAT.
8. Australia — 53% shop cross border and domestically; 8% shop cross border only
Primary language(s): English
Currency: Australian dollar (AUD)
What makes it a hot market: Export.gov points to Australia’s open trade, sophisticated consumers and a straightforward, English-speaking business culture as positives for market entry. Paypers reports that Australian consumers are most likely to buy from cross border e-commerce providers based in the US (84%), the U.K. (75%) and China (40%).
Risks & considerations: As noted by Export.gov, Australia has ready access to low-cost producers of goods in Asia Pacific, so competitive pricing is vital for brands and retailers outside of this region. Perhaps the most concerning development in the Australian market for cross border retailers is the Goods and Services Tax (GST) that came into effect on July 1, 2008 that places a 10% tax on all overseas purchases with a value of less than $1,000. Previously, the GST was only applicable to cross border retail goods valued at $1,000 or more; however, this new rule places the tax on all goods and services coming from outside of Australia. Amazon, which established an in-country presence in Australia in late 2017, has blocked access to its U.S. and U.K. e-commerce sites by Australian shoppers to avoid the 10% GST.
To learn more about how Flow’s console can help domestic brands and retailers go global quickly and seamlessly, contact our experts today for a demo.