Mumbai: PayPal and IPSOS today released the Global Cross Border Consumer Research 2015. The research maps the evolution of cross border online commerce to identify why consumers shop online across borders and how do they pay for these transactions. The research also shares insights on the growth prospects for the Indian ecommerce sectors in 2017.
Key Highlights of the report
Leading categories for which Indians shop online across the border include clothing/apparel, footwear, accessories (bought by 53% of cross border shoppers ), consumer electronics (51%) and digital entertainment and, education items (44%).
Top three countries where Indians shop: USA (27% of online shoppers have shopped in USA in past 12 months) , China (11%) and United Kingdom (10%)
Key drivers making online shoppers more likely to shop cross border include Free shipping (selected by 54% of online shoppers), safe way to pay (54%), proof of product authenticity (51%) , possibility of payments in local currency (48%) along with faster delivery (47%)
Top 3 Countries for cross-border P2P transactions: USA (54% of those who have sent money to friends and families to another country said they sent money to USA), UK (22%) and Singapore (15%)
By 2017 mobile spend (including smartphones and tablets) for all online shopping within India and cross border is predicted to reach Rs.3,18,600 crore by 2017 from the current estimated Rs.1,26,500 crore in 2015
The research evaluates the online and cross-border shopping habits of over 23,000 internet users across 29 countries including 808 interviews in India. .
“Cross border spends by Indians is estimated to grow at 78.5% from 2015 to 2016. PayPal is used as a cross-border payment option by 84% of the cross border shoppers. PayPal’s unique offerings like Buyer Protection and Refunded Returns have helped address some of the barriers like safety and security and return shipping faced by shoppers while transacting cross border, said Vikram Narayan, Country Manager and Managing Director, PayPal India.
He further added, “The Indian e-commerce space is experiencing an exciting time where innovation is the key. Our research reveals that the advent of technology is slowly diminishing borders for online shopping. With the number of online shoppers set to grow exponentially, it will lead to increase in the numbers shoppers who shop from global retailers with online presence.”
The research further highlights that desktops account for the highest proportion (53%) of purchases made by cross border shoppers from websites in another country in the last 12 months, however the future belongs to mobile for cross border shopping: 41% of the purchases made by cross border shoppers from websites in another country in the last 12 months were made using a smartphone (30%) or tablet (11%).
Although cross border trade is forecasted to grow in India by 78.5% from 2015 to 2016, high customs duty and high delivery shipping costs are key deterrents: 52% of online shoppers who have not shopped cross border state delivery shipping costs as preventing them from shopping cross-border, and 43% say having to pay customs/fees and or taxes is a barrier. Other key barriers also include difficult process for returning products (selected by 48% of online shoppers who don’t shop cross-border), having to make payments in foreign currency (44%), return shipping costs (41%) and concerns about identity theft and fraud (41%).
‘Cart abandonment’ is also a key issue on cross border shopping, where consumers abandon their online shopping carts after having chosen their products for purchase. Reasons for cart abandonment –include amongst others preferred payment option not available (selected by 30% of online shoppers who have abandoned an online purchase from a
website in another country) , lack of clarity about how much duty, tax, or custom fees would have to be paid (27% ) and concerns about website security (25%) .
PayPal has emerged as the most popular payment method for making cross-border transactions by the Indian cross-border shoppers, with 84% of cross border shoppers claiming to have used PayPal for a cross border purchase in the past 12 months followed by Visa Debit (used by 58%) and Visa credit card (42%). Cross border shoppers who prefer to use PayPal as a cross border payment method select quick processing of payment (selected by 56%), safer way to pay (54%) and well known/trusted brand (50%) as reasons for preferring to use PayPal.
Online spends on the rise
The research estimates overall online spends inclusive of cross border shopping to touch Rs.7,02,900 crore by 2017
Consumer electronics and entertainment are estimated to be the highest growth categories for online spends in 2016
Total online spend in the consumer electronics category is forecast to grow 48% by 2016 while the total online spend in groceries, food and alcohol category is forecast to grow by 43% in 2016. Health & Beauty (41% growth predicted) as well as travel & transport (40% growth predicted) are also expected to be high growth categories for overall online sales,
Average online spends among Indians
Average spend on cross-border transactions by the estimated 3.8 million cross border shoppers was estimated to be ~Rs.1.42 lakh per cross-border shopper in 2015.
More on Global Cross Border Consumer Research 2015 by PayPal and IPSOS
In addition to these India findings, more focused data is available for all 29 countries included in the research in addition to the global data.
On Behalf of PayPal, Ipsos interviewed a representative quota sample** of c.800 (23,354 in total) adults (aged 18 or over) who own and/or use an internet enabled device* in each of 29 countries (UK, Ireland, France, Germany, Austria, Switzerland, Italy, Spain, Netherlands, Sweden, Poland, Turkey, Russia, Israel, UAE, USA, Canada, Brazil, Mexico, Argentina, India,China, Japan, South Korea, Singapore, Australia, South Africa, Nigeria, Egypt). Interviews were conducted online between 17th September and 28th October 2015. India fieldwork was conducted 17th Sept – 6th October, among a sample of 800.
Data was weighted to known incidence of online shoppers in all countries, and to demographic profile of internet users in 4 countries (SK, SG, EG & UAE).
*Desktop computer/Laptop/ notebook computer/Tablet /Smartphone/Some other type of mobile phone/Electronic organizer / PDA with wireless voice and data features/Games console with Internet connectivity (e.g. Wii)
** Age, gender and region representative of online population (Age and gender representative in Switzerland). Quotas were not set for Nigeria, as online profile not available in this country.
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