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Indian shoppers turn to overseas e-commerce
BI Intelligence
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Despite the growing success of domestic e-commerce platforms, a new PayPal and Ipsos study finds that Indian shoppers are also spending heavily through overseas e-commerce sites, Quartz reports.
In fact, Indian shoppers spent more than $8.7 billion on international e-commerce sites in 2016, a 6.7% increase compared with 2015, the report found.
That amount is still less than the $31 billion domestic e-commerce market, but it shows that Indian shoppers are regularly turning to overseas sites for certain shopping needs.
The report, which was based on a survey of 800 Indian e-commerce shoppers, found that Indian shoppers looked to overseas e-commerce sites to find international brands and products that aren’t available on domestic sites. These shoppers also tend to favor sites that offer free shipping and can take transactions in Indian rupees.
US e-commerce sites received nearly half of the overseas e-commerce sales coming from India in 2016, with $3.9 billion in purchases from Indian shoppers, the report found. Chinese and UK e-commerce platforms saw $991 million and $850 million in sales, respectively. Additionally, 14% of the survey’s respondents said they shop on US e-commerce sites, compared with only 6% who shop on UK sites, and 5% on Chinese ones.
The report’s findings also hint that domestic e-commerce sites could capture some of these sales by offering the brands and goods that Indian shoppers turn to overseas sites for. More than 50% of the respondents said they have abandoned overseas e-commerce purchases during the checkout process, citing issues such as expensive customs duties, long delivery times, and the high cost of returns.
Although some sites, including Amazon, offer global shipping, Indian customers still have to pay an import fee and duties on those purchases. Indian e-commerce sites could potentially increase their sales by providing some of the same brands and products overseas e-tailers do without those import costs.
BI Intelligence, Business Insider's premium research service, has compiled a detailed report on new e-commerce strategies that looks at some of the top trends affecting retailers at each stage of the purchase funnel and how they're responding to those shifts.
Here are some of the key takeaways:
Within digital, consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets. Paid search, affiliate marketing, and email all increased their share of e-commerce referrals last year, according to Custora.
Paid search especially stood out as a major source of spending by retailers. Search ad spending grew 18% YoY in Q4 2015, according to IgnitionOne.
Mobile continues to drive the most sales growth for retailers, but sales still aren't keeping up with retail traffic. IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.
Retailers only have themselves to blame for underperformance on mobile, as many still aren't using best practices for mobile websites and apps. Only 60% of the top 100 global retailers currently have a dedicated mobile website, according to The Search Agency.
The increase in online shopping has put stress on the shipping and logistics industry. The number of UPS ground packages delivered on time during the holidays fell from 97% in 2014 to 91% in 2015, according to ShipMatrix.
Retailers are beginning to explore alternative shipping options. Earlier this year Gilt Groupe switched its primary ground shipper from UPS to Newgistics.
Retailers that can't afford to invest in alternative shipping options are offering consumers more fulfillment options using what many of them do have — brick-and-mortar stores. Buying online and picking up in-store, also called click and collect, made up about 30% of e-commerce sales at Sam's Club in 2015.
In full, the report:
Looks at how retailers are shifting their ad spending and marketing efforts to keep up with online retail behavior
Identifies which channels are top performers for referral traffic and new opportunities for reaching consumers
Analyzes how retailers are responding to the rise of mobile purchasing and where they're falling short
Examines the evolving delivery landscape and the aggressive moves retailers are making to become their own shipping carriers
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