The advent of digital payment technology has allowed shoppers to purchase at will, regardless of location or time of day, safe in the knowledge that this method of payment is both easy to use and offers transaction security.
The convenience of online shopping, coupled with increasing trust in the digital checkout, is changing how consumers shop - and new research from PayPal has discovered that many shoppers are looking further afield to find bargains, which may not be readily available at home.
Beyond price and promotions
Results* showed that 40% of consumers in the UK, Germany, France and Netherlands purchase products and services online from international sellers at least once a month. This behaviour is influenced by lower prices compared to those available locally, as well as unique product offerings and a wider selection. Additionally, the decision to finalise purchases is primarily shaped by the security and convenience of the checkout process. However, companies have significant room for improvement, as nearly 50% of customers abandon their carts at this stage due to unmet expectations.
“Our research reveals a fascinating gap in cross-border e-commerce,” said Jonas Breding, Managing Director for PayPal Ireland, Northern Europe and Benelux. “Merchants often think international shoppers are just looking for bargains, but that's not the whole story. What customers also want is unique products they can't find at home, trusted payment options, and a smooth shopping experience from start to finish.”
Building loyalty
There was a further mismatch revealed between merchants' retention strategies and the actual drivers of consumer repurchase behaviour – with the data showing that while many merchants prioritise promotions and discounts to encourage loyalty and repeat sales, consumers actually place greater value on enjoying a seamless and convenient shopping experience — particularly in areas like shipping, payment options, post-purchase support and, most importantly, security.
Research revealed that 88% of consumers are concerned about trustworthiness when it comes to cross-border online shopping. Further findings showed that 78% felt that high shipping costs could influence their decision on whether or not to go through with a purchase and 75% would abandon their cart if the final costs were not transparent. While 73% of those surveyed would do the same if they were not offered secure payment options and 65%, if their favourite payment method was not available.
The results show that while consumers are keen on buying from international sellers, merchants need to do more to ensure that shoppers’ interest is supported all the way to the checkout, by ensuring a seamless and trustworthy shopping experience.
Payment preferences of international shoppers
There seems to be a disconnect between how merchants are catering to shoppers needs and what the consumers actually expect and want from their shopping experiences abroad. While merchants believe that international consumers favour paying for goods by card with 90% offering this payment method, compared to just 60% offering digital checkout, the consumers themselves say they prefer using digital wallets for cross-border purchases – with 70% of consumers saying digital checkout is the most trusted payment method to keep the payment secure when shopping across borders.
Undoubtedly concerning for retailers, this behaviour highlights the fact that payment solutions play a very important role in addressing these concerns and improving international purchase success rates.
On the contrary side, those who have invested in advanced payment technology for cross-border expansion, have been clearly reaping off the benefits. Having questioned over 300 merchants in a number of European countries, including Ireland, Finland, the Netherlands, Belgium, Denmark, Norway and Sweden, the study found that those who implemented advanced payment solutions are rewarded with substantial improvements in revenue growth, gross profit margins and payment success rates – figures showed that 35% of merchants credited revenue growth to investments in advanced ecommerce technologies and the same percentage linked their success to investments in digital marketing and efforts to enhance their online presence, particularly in Denmark (45%) and Ireland (42%) and among large businesses across all surveyed markets (56%). This allowed businesses to achieve strategic objectives more effectively and improve the online shopping experience for consumers, which can in turn increase payment success rates, boost conversion rates and enhance customer loyalty.
Bridging the gap
Jonas Breding says that as 79% of merchants view cross-border ecommerce as crucial for diversifying revenue streams, providing a safeguard against economic downturns, and addressing market-specific challenges in their home country, it is important for them to move with the times when it comes to providing secure and robust payment systems to their customers.
“The key to success in global selling isn't just about price or promotions – it's about truly understanding and meeting the needs of international customers,” he said. “Businesses that can bridge this gap between consumer expectations, offering diverse products, preferred payment methods, and seamless experiences, are the ones which will thrive in the global marketplace."
*All stats used in this article are taken from PayPal’s Cross-Border Report, produced by IDC, commissioned by PayPal, 2024. Based on the results of a survey among the following groups: merchants n=1,503 in Belgium, Denmark, Ireland, Netherlands, Sweden (minimum of 300 merchants per country); consumers n=4048 in France, Germany, Netherlands and the UK (minimum of 1000 consumers per country). The survey was conducted between July and August 2024 by IDC.
To read the latest report on cross-border commerce trends, visit https://bit.ly/4iISUg6