According to the Cross Border Research report, consumers in Australia, China, India, Japan, Singapore and South Korea spent an estimated total of US$594 billion on online shopping (both domestic and cross-border) in 2015.
China experienced not just a huge growth in the number of online shoppers now shopping cross-border (an increase of nine percentage points since 2014) in 2015. The country also came in second out of all 29 markets tested in terms of estimated overall online spend.
The amount is set to increase in tandem with the rise in popularity of online shopping in the region, with the fastest growth expected in India (53 percent), followed by China (28 percent) and Singapore (16 percent) by 2017.
The United States remained the top online shopping destination for consumers interviewed in APAC, with China, the United Kingdom and Japan based e-commerce sites following in terms of popularity.
This is reflected in the overall attitude towards cross-border shopping, with a majority of respondents (68 percent of online shoppers interviewed in APAC) preferring large ‘global’ stores such as Amazon when purchasing from another country.
Fashion (clothing, footwear & accessories) has surfaced as the top category, purchased by 53 percent of cross-border shoppers surveyed in APAC in the past 12 months, for cross-border shopping across all markets.
APAC shoppers display a pragmatic nature, with cost and value for money being one of the key considerations when shopping internationally.
Close to half of online shoppers interviewed from APAC (47 percent) cite free shipping as a factor that would motivate them to make cross-border transactions, while 46 percent value safe payment and 41 percent consider proof of authenticity as drivers for purchasing cross-border.
However, the study has revealed that consumers are now turning to e-commerce to fulfil basic needs, with groceries emerging as one of the top growth categories for online shopping in APAC.
In Singapore, online shopping for groceries industry is expected to grow by 21 percent in 2016. Children’s supplies and household goods follow closely with expected growth rates of 17 percent and 16 percent respectively.
Mobile spending cannot be ignored
Cross-border shoppers surveyed around the world estimated that they made on average 25 percent of their cross-border purchases via smartphones and tablets.
Consumers in India and China were the most mobile-savvy, nearly doubling the average with an estimated 41 percent of their cross-border online spend done via smartphones and tablets.
With greater access to the Internet, China and India were also expected to have the highest growth rate in terms of total online mobile spend, growing at 52 percent (CAGR to 2017) and 68 percent (CAGR to 2017) respectively.
Hamish Moline, vice president, regional merchant services with PayPal APAC, said that this presents a clear opportunity for businesses to embrace their export potential, with the data underscoring an opportunity to extend their reach to the global market without the exorbitant cost from traditional geo-expansion.
“With the transformation of consumer demand for online and cross-border goods, as well as the platforms now available, any business can become a competitive player in the global marketplace,” he added.
Trust and support still major concerns
Respondents also weighed in on their payment method preferences and regarded a safer way to pay (44 percent of cross-border shoppers), a trusted brand (40 percent), and quick payment processing (39 percent) as crucial in their choice of cross-border payment.
Merchants looking to sell to APAC consumers would need to ensure that their payment gateway provides customers with greater confidence when shopping online.
Despite the popularity of international online shopping by APAC consumers, barriers to cross-border shopping exist.
Shipping cost is the top barrier preventing shoppers from buying cross-border more often, as cited by 47 percent of APAC online shoppers interviewed.
Other key deterrents include insufficient help when problems are encountered (44 percent) and the possibility that products will not be received (42 percent).
Potential customers want to have the confidence that the goods they pay for will be delivered, and that they can easily return them if there is a problem, said Paypal.
In addition, currency conversion is also a concern in cross-border shopping.
Three-quarters (75 percent) of online shoppers interviewed in APAC prefer to have the option to pay in local currency or their own currency; 64 percent say that they conduct currency rate checks before committing to making purchases in foreign currency; while 52 percent would feel uneasy paying in a foreign currency.
Customers need confidence that their payment will be handled securely and they need the comfort and convenience of paying in familiar currency using their preferred method.