Survey shows despite rise in shoppers, cross-border online transactions remain flat in 2016
Despite the number of Indian online shoppers making cross-border transactions growing 85 per cent, there was just a marginal growth of 1.6 per cent in total spend in 2016 over the previous year. The average spend by the customers drastically fell last year, according to the Annual Global Cross-Border Consumer Research 2016 done by PayPal and Ipsos.
In 2016 cross-border online shopping by Indians stood at Rs 58,370 crore against Rs 57,400 crore in 2015. However, the number of customers who made transactions grew from 3.8 million in 2015 to 13.8 million last year. The study found that a quarter or 25 per cent of the online shoppers in India claimed to have shopped from websites in other countries in the past 12 months. “The internet has truly democratized cross border trade. The freelance economy has grown in India and a considerable number of Indians shop in the global marketplace,” said Anupam Pahuja, Managing Director, PayPal India.
However, the average spend came down from Rs 142,786 in 2015 to Rs 42,416 in 2016. In the 2015 survey, PayPal had predicted a growth of 78.5 per cent for total spend in 2016. But as per the survey released recently, the transaction value has just grown 1.6 per cent.
According to the industry, some of the regulatory changes saw some turbulence in the global fintech sector. With the competition rising, several e-commerce players offered discounts and this brought down the average spends. Movement of currencies, especially rupee, made customers cautious about spending much on cross-border transaction. The e-commerce industry as such was reeling under pressure from shortage of funds from private equity funds and markdown in valuations.
Apparels and consumer electronics continued to be the leading categories and the US was the largest market for the Indian shoppers. Apparels, footwear and accessories accounted for 54 per cent of the total purchases. Consumer electronics, including computers, tablets, mobiles and peripherals, accounted for 43 per cent, while cosmetics and beauty products was the third largest category with a share of 42 per cent.
Almost 14 per cent of the cross-border online spend went in favour of US companies. UK and China had to be satisfied with six and five per cent share in the pie respectively. Christmas was the top occasion to make a purchase, followed by Diwali and seasonal sales. Valentine’s Day too made people make purchases from abroad.
According to the study, free shipping, facility to make payment in local currency and proof of product’s authenticity were the top three reasons behind cross-border shopping. No wonder, delivery shipping costs charged by some e-commerce players was the biggest barrier, followed by difficult return process and customs duties and taxes.
Cart abandonment was a key issue with cross-border transactions with 51 per cent of online shoppers claiming to have abandoned an online purchase from an overseas website. High shipping and postage charge was the main reason behind some customers abandoning the purchases. Longer delivery time and expensive returns too made them abandon the purchase.
sangeethag@mydigitalfc.com
In 2016 cross-border online shopping by Indians stood at Rs 58,370 crore against Rs 57,400 crore in 2015. However, the number of customers who made transactions grew from 3.8 million in 2015 to 13.8 million last year. The study found that a quarter or 25 per cent of the online shoppers in India claimed to have shopped from websites in other countries in the past 12 months. “The internet has truly democratized cross border trade. The freelance economy has grown in India and a considerable number of Indians shop in the global marketplace,” said Anupam Pahuja, Managing Director, PayPal India.
However, the average spend came down from Rs 142,786 in 2015 to Rs 42,416 in 2016. In the 2015 survey, PayPal had predicted a growth of 78.5 per cent for total spend in 2016. But as per the survey released recently, the transaction value has just grown 1.6 per cent.
According to the industry, some of the regulatory changes saw some turbulence in the global fintech sector. With the competition rising, several e-commerce players offered discounts and this brought down the average spends. Movement of currencies, especially rupee, made customers cautious about spending much on cross-border transaction. The e-commerce industry as such was reeling under pressure from shortage of funds from private equity funds and markdown in valuations.
Apparels and consumer electronics continued to be the leading categories and the US was the largest market for the Indian shoppers. Apparels, footwear and accessories accounted for 54 per cent of the total purchases. Consumer electronics, including computers, tablets, mobiles and peripherals, accounted for 43 per cent, while cosmetics and beauty products was the third largest category with a share of 42 per cent.
Almost 14 per cent of the cross-border online spend went in favour of US companies. UK and China had to be satisfied with six and five per cent share in the pie respectively. Christmas was the top occasion to make a purchase, followed by Diwali and seasonal sales. Valentine’s Day too made people make purchases from abroad.
According to the study, free shipping, facility to make payment in local currency and proof of product’s authenticity were the top three reasons behind cross-border shopping. No wonder, delivery shipping costs charged by some e-commerce players was the biggest barrier, followed by difficult return process and customs duties and taxes.
Cart abandonment was a key issue with cross-border transactions with 51 per cent of online shoppers claiming to have abandoned an online purchase from an overseas website. High shipping and postage charge was the main reason behind some customers abandoning the purchases. Longer delivery time and expensive returns too made them abandon the purchase.
sangeethag@mydigitalfc.com
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