2013 Cross-border E-commerce Report (V)

VISA has published a cross-border e-commerce handbook that explains the opportunities for developing e-commerce between the United States and Canada. This handbook provides B2C with information about the Canadian market, especially demographic factors, legal differences, etc. To profit from cross-border e-commerce, it is necessary to strengthen supervision and conduct multi-level, comprehensive anti-fraud management.

Online shopping is growing rapidly in southern North America and the Caribbean, while Latin America is also growing. These regions are potential customers for the United States and Canada, but at present, European e-commerce is developing faster. American online retailers expect to reach a turnover of $279 billion in 2015, accounting for 15% of the global total.

The weaker dollar has attracted more online buyers from Europe, Canada and Asia.

Although U.S. online merchants have been paying attention to e-commerce, retailers are still missing out on the great opportunities provided by cross-border e-commerce. While China is growing at a rate of 90%, Japan at 71%, and Canada at 55%, the United States is lagging behind.

At the same time, electronic payments have also contributed a lot to the physical growth of neighboring Canada. The United States should realize that 95% of the world's consumers live abroad, and cross-border e-commerce brings more opportunities than challenges. Online merchants can work with global acquirers and join credit card payment networks to gain global resources, which will make it easier for them to succeed in cross-border e-commerce.

The CEO of Cardless Payment Network believes that “it is not easy to build a multilingual website or find the right payment method, but it is still important to focus on developing e-commerce.” In the gradually recovering economy, merchants should look forward and find that joining cross-border e-commerce is a good way to increase profits.

3. Cross-border e-commerce in Asia: China’s middle class has surpassed that of the United States

There are strong connections between regions in Asia. The top three cross-border e-commerce regions are: Hong Kong (96%), Mainland China (90%), and Japan (71%). In terms of total card payments, the top five are all located in the Pacific Rim.

The high-wealth population in North America and Asia-Pacific increased by 11.5% and 9.4% respectively, and the wealth value increased by 11.7% and 12.2% respectively.

In addition to growing wealth and a thriving middle class, the spread of the Internet is an important driver of e-commerce, without which online sales would be impossible. In the ranking of Internet user growth rates, China and India ranked first and second respectively.

The development of digital industry in Asia presents different situations. In some countries, such as India, the Internet penetration rate is only 8%, but the number of users using the Internet is very high. In contrast, Japan has a relatively high Internet penetration rate (78%), but its Internet users are only 101 million, which is significantly smaller than India's 137 million Internet users. China has 586 million Internet users, which is less than half of the total population, but due to the large total number, China's online shopping is very active.

In the Asian online sales table, Japan and South Korea stand out, with 80% of their population active online and most of them shopping online. South Korea has a 4G network to serve the e-commerce market, and the connection speed is among the highest in the world.

25% of Korean and 18% of Japanese online shoppers shop overseas. China has 564 million Internet users, 50% of whom shop online and overseas. A fixed social media strategy is very important for successful e-commerce. When people on the social network rate a product highly, it will influence consumers' purchasing decisions. Consumer trust and brand are also decisive factors, which is why Asian customers are particularly loyal.

With a growing middle class of 300 million people (roughly the same size as the entire U.S. population), more than 500 million Internet users, more than 200 million online buyers, and a 78% annual growth rate since 2006, China is a gold mine for merchants looking to expand overseas. China’s current online sales are $1.9 trillion, and this figure will triple in the next five years, led by Alibaba and Taobao.

Although the Chinese e-commerce market is currently dominated by Alibaba, JD.com, Dangdang and Tencent all want to share this big pie.

There are big differences between urban and suburban China in terms of mobile phones, banks, and e-consumers. The rural system is very incomplete, and there are even bigger gaps in key factors such as logistics and distribution that e-commerce values. Shanghai, Beijing and Shenzhen are the top three e-commerce markets in China, followed by Hong Kong SAR and Macau SAR. The market leader, Taobao, created Alipay as part of Alibaba, which has led to the rapid development of B2C in China, and new e-commerce companies are also struggling to find their place.

About 30% of respondents agreed that the Pan-APAC region is taking a proactive approach to cross-border e-commerce by understanding barriers such as laws and taxes.

Payvision's CEO believes that "more and more e-tailers are emerging in Asia, and more and more consumer electronics products are being produced. Asia is attracting consumers from all over the world to buy directly here."

Connecting with existing global networks enables international PSPs and ISOs to provide their merchants with more efficient and secure cross-border e-commerce payment platforms, thereby meeting the greater needs of global consumers.

China's logistics service providers and global acquirers will work hard to promote the development of China's cross-border e-commerce. Due to the rapid growth of the middle class, China is becoming the most attractive paradise for international retailers. As long as Chinese merchants can cooperate with global acquirers and international payment service providers, Chinese export products will soon reach foreign stores. Among the top five Internet users in the world, three are Asian countries: China, Japan and India.

India has 137 million people using the internet out of a population of 1.2 billion. This is a relatively small percentage, mainly because only 3% of the population in remote areas of India has access to the internet. India's digital profile is very diverse, with a huge difference between urban and rural areas. 20% of urban Indians are online, compared to 60% in China. Online shopping varies across Asia.

Despite this, online transactions in India reached $100 million in 2011. We were also surprised to find that two-thirds of online transactions were done through mobile phones.

Internet penetration in India is rising rapidly, and e-commerce opportunities are huge. With the application of 3G and 4G technology, the Indian government plans to lay high-speed broadband in every village by 2014. If the right measures are taken and companies can carefully choose business strategies and models, the transaction volume is expected to reach US$260 billion by 2024.

Malaysia is also a potential stock for future e-commerce development, with more than half of the population online and a high proportion of bank customers. In India, travel expenses account for the majority of online payments, followed by book sales.

E-commerce in Japan and South Korea is more mature. Japan is the second largest e-commerce market in Asia, with online sales reaching $64 billion in 2012. Japan has a very high penetration rate of card payment services, with credit cards being the preferred payment method for 52% of Japanese online shoppers, and a total of 56 million Japanese bank cards in circulation.

Long before they became popular around the world, consumers in Japan and South Korea were already using innovative payment methods such as QRC (password) or NFC (near field communication technology).

NFC has been around for about 10 years, and mobile payments now account for 20% of e-commerce. Half of Japanese electronics buyers use smartphones and tablets to shop online. Travel payment revenue reached $1.6 billion, and retail sales of cosmetics, clothing, and small commodities grew by 125%.

The penetration rate of e-commerce in Japan is 97%, as most Japanese people live in cities, which explains why multi-channel sales are more profitable and providing logistics services in a country with a well-developed infrastructure and is relatively small.

Compiled by Zhang Yanzhe and Zhang Dongyang from the International Economic and Technical Cooperation Center of the Ministry of Industry and Information Technology