The 'Daigou' Effect and Removing the Friction of International Checkout

August 2, 2019

Consumers who are willing to go through the effort and expense of leaving their home country and traveling abroad to make a purchase may sound extreme, but this is a real phenomenon. “Daigou” is Chinese for “on behalf of” and describes a trend in which Chinese consumers travel to another country specifically to shop for hard-to-get or expensive items. This is a very different scenario than a tourist who makes a few purchases while on vacation; instead, these consumers are travelling for the sole purpose of cross-border shopping. Once the goods are purchased, consumers ship them back to China to friends and family. This trend is so prevalent among Chinese consumers that it’s driving significant sales in Australia’s luxury retail economy. The Daigou Effect is just one example of how far international consumers will go to find the products they love at the price point they need, without wading into the confusing and costly world of cross-border e-commerce. And it is not simply limited to China; shopping tourism is also popular among Russians near the Finnish border, who want access to the quality and price of products unavailable at home. While this practice might not be eliminated entirely in the future, there is certainly opportunity for online brands to capture a portion of the demand for foreign goods from global consumers that prefer to shop online rather than travel.Even as cross border e-commerce is on the rise around the world, there are still many barriers global consumers face when it comes to buying goods online. Removing these friction points and making the cross-border e-commerce customer experience as painless and transparent as possible is crucial for international online merchants. Failing to master the international checkout experience will drive global customers away from your online store -- and some will even go so far as to book a trip to another country.The Canadian brand tentree realized that their confusing checkout experience was driving down their conversion rate for international customers. The environmentally-conscious fashion brand was struggling to accurately calculate the duties and taxes associated with each market they sold into. While this didn’t necessarily cause global customers to jump on a plane and fly to Canada to make purchases, it did cause high rates of abandoned shopping carts and delivery refusals. Recognizing the signals, tentree turned to Flow for help. Since partnering with Flow to create a streamlined and transparent international checkout experience, tentree has improved its conversion rate by 24%. If the time, cost and headaches of international travel are more attractive than the checkout process on a retailer’s cross-border e-commerce website, then clearly, there’s a problem. If an online brand can’t allow international customers to checkout in the first place, or are unable to ship their products to customers abroad, then that’s a missed business opportunity. The experts at Flow can help simplify cross border e-commerce. To find out more, get in touch today.