The Power of Global Spending for U.S. Retailers
Our hyper-interconnected global economy has enabled goods and services to be made available to just about any consumer – no matter where they are in the world. Consumers are free to browse the web and find the best products, from anywhere in the world.
This is further evidenced by the recent Chinese New Year that saw retail growth rise 8.5 percent. . Chinese consumers are continuing to spend more around marquee events, thanks to a rise in spending of the middle class. This led to a record of $148 billion in sales for the seven day Lunar New Year. There is a major sales opportunity outside of the U.S. that retailers should look to take advantage of.
It is clear that consumers are purchasing more goods which should yield great results for retailers. Yet, much of this rise in spending is not within our domestic borders. A recent report by PPRO highlights how 85 percent of the world’s purchasing power falls outside of the United States.. American merchants should look to scale globally to keep increasing their annual sales figures.
U.S. retailers need to consider this rise in global spending as an opportunity to sell cross-border. In the U.S. 34 percent of consumers shop cross-border, while this figure rises to 38 percent in the UK and 40 percent in France. These figures demonstrate that global consumers are looking to shop outside of their native borders, presenting U.S. retailers with a golden opportunity.
This rise in global e-commerce is expected to increase, further proving the point that U.S. merchants should look to sell cross-border. According to PPRO, only 36 percent of U.S. online retailers are selling cross-border. This figure should be much higher as merchants are leaving billions on the table. Cross-border commerce is only 11 percent of the total United States commerce. This figure jumps to 16 percent in Europe and 20 percent in China. These statistics highlight the gap that U.S. merchants have to make up in the global market. However, American cross-border commerce is rapidly growing and is expected to reach $200.6 billion by 2021.This market will continue to increase, highlighting the major opportunity for U.S merchants.
The rise of the global middle class is fueling this increase in spending . But in order to connect with these global markets, U.S. merchants must account for the vast differences in global economies. Payment preferences and different security precautions play a major role in this. Local payment methods or LPMs are a great way for U.S. retailers to expand their operations globally. LPMs are those means of payment outside of traditional credit cards. LPMs facilitate the needs of different geographies, cultures and domestic economies across the globe. They tend to be market and geographically specific, and many times are preferred by the majority in specific regions.
For example, a consumer in Germany and a consumer in China will have vastly different payment preferences. In Germany 49 percent of online transactions are done by bank transfer, while in China 49 percent of online transactions are done by e-wallet.
It is imperative for U.S. retailers to know the direct audience they are trying to sell to. This rise in global e-commerce , presents vast opportunity for U.S. merchants. 2018’s holiday season was a great example of the world’s spending power and should be a clear signal to American retailers. These companies should factor in global spending increases to their 2019 plans to continue to see historic sales growth.
Steve Villegas, VP of Partner Management at PPRO:
A Sales, Marketing and Business Development Executive with over 20 years of experience building and managing sales, partner development and marketing teams which have delivered profitable results, built market share, and exceeded revenue goals while outperforming competition. A natural communicator and team leader with strong motivational skills, with the ability to build, produce and succeed.