Debunking Common Misconceptions In The World Of E-commerce

By: Steve Villegas VP of Partner
Management of PPRO

E-commerce continues to change the way
we live, work and play, and much of the disruption taking place has somewhat paralyzed
online merchants. Many U.S. online merchants, in particular, are immobilized at
the thought of selling across local borders – distinctly fearing a combination
of unforeseen scenarios from fraud to security concerns and constant

Frankly, they have it all wrong – and it’s hurting their
chances in taking advantage of the abundance of e-commerce sales offered on a
global scale.

Recent PPRO research reveals that in
the United States only 11 percent of total e-commerce revenue came from
cross-border sales in 2017 – a stark detriment considering the world’s
admiration for American brands.

When it comes to expanding e-commerce business outside of
local borders, there are many false facts floating around for online merchants.
The truth is that there are many different payment options that specific global
regions prefer. Many US-based online retailers are misinformed around local
payment methods and the benefits they can bring to their business as well as
global consumers.

It’s time to debunk these misconceptions.

Let’s share a few common myths in the current e-commerce climate
and reveal the real truths behind them.

Myth 1: American merchants
are reaching their full potential selling throughout the United States

Many U.S. based retailers are only selling to consumers
within American borders. In fact, 64%
of American merchants only sell to U.S. consumers
.  This is causing American merchants to fall
behind some of their global counterparts. Cross border
sales represent 40.6% of all revenues in Western Europe and 34.7% in Asia.

Fact: Global markets
present a great opportunity for U.S. merchants to expand.

Emerging global markets represent a great way for U.S.
merchants to expand operations globally. According to PPRO, 64% of Canadian
consumers shop cross border and this rises to 66% for Mexico.  Currently, only 36% of U.S. merchants sell cross-border.
This figure should be much higher as U.S. merchants are ultimately leaving
billions of dollars on the table. By 2021 U.S. cross-border e-commerce is
expected to rise to $203 billion.

Myth 2: Offering
credit card payment options is enough to reach global e-commerce shoppers.

Credit cards are a very popular payment method in the United
States as 57%
of all online purchases in the U.S. are paid by card.
 Most American merchants offer them as their
main payment method as US credit card penetration is 66%.
Just about every consumer has a credit card, so many merchants believe there is
no reason to look to into other payment options.

Fact: Online
merchants need to offer a variety of local payment methods to connect with
global consumers.

Not every consumer uses the same payment method. In fact,
different global markets have different ways that native consumers prefer to
pay for goods. These are referred to as local payment methods or LPMs. LPMs are
payment methods outside of traditional credit cards and brands that facilitate
the needs of different geographies, cultures and domestic economies across the
globe. LPMs tend to be market and geographically specific and are many times
preferred by the majority in a specific region. For example, an American
consumer and a shopper in the Netherlands will have vastly differently
preferences when it comes to online payments. While Americans
mainly prefer to pay with credit cards, 57% of purchases are paid as such, consumers
in the Netherlands prefer to utilize online bank transfers like iDEAL.
These payment preferences vary across different regions around the globe. In
China, for instance, 49% of online payments are made by E-wallet, while 70%
of online purchases in the Ukraine are handled with cash.

Myth 3: Global
customers are only driven by competitive pricing.

A popular method of sales is offering the lowest price
possible. Many online merchants believe that the only way to attract customers
worldwide is through competitive pricing.

Fact:  Ease and convenience are just as important as
competitive pricing.

While offering low prices is very vital to consumers who
frequently shop online, ease and convenience of payments is just as
important.  Global consumers want to pay
for goods with methods they are most comfortable with – or they will go
elsewhere. Almost 50% of consumers will end a transaction if their preferred
payment method is not available. Offering local payment methods
catered to the needs of global consumers will lead to higher sales conversions.

With 85 percent of the world’s spending
power outside of local borders, U.S. merchants should look to scale their
business models globally to reach a new wave of consumers. The global middle
class is rising, and American good are in demand By offering locale payment methods,
U.S. merchants can make global consumers feel more comfortable with
transactions and in turn, reap the financial benefits.

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