U.S. merchants are too bound by borders to scale globally

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The worldwide economic landscape is changing: Across the globe, the middle class has steadily and rapidly grown over the past decade. More global consumers now have more discretionary income than ever at their disposal, and the growing global middle class is hungry for consumer goods. American brands — particularly those thatsell online — should take advantage of this opportunity.

Many U.S.-based merchants seem to only be looking to sell to customers within the U.S. Currently, only 36% of U.S. merchants sell cross-border. This number should be significantly higher — Billions of dollars are being left on the table. PPRO’s data shows that only 11% of U.S. e-commerce sales are made cross-border, while in Europe and China, this jumps to 16% and 20%, respectively. From a global marketplace perspective, U.S. merchants are falling behind on taking full advantage of cross-border sales opportunity.

A new report from PPRO Group, in partnership with Edgar, Dunn & Co., reveals there is significant global demand for American goods and U.S.-based e-commerce merchants need to sell cross-border in order to tap into new markets and meet the demands of the global marketplace.

Case in point: As we have recently seen, emerging global trends like international shopping holiday Singles Day emphasize the growing global spending power. What started out as an anti-Valentine’s Day celebration, Singles Day is filled with lots of shopping. According to The Verge, Singles Day shoppers in 2018 racked up an astounding $30.8 billion in purchases.

This was a 27% increase from 2017 and dwarfed the latest Amazon Prime Day, Black Friday and Cyber Monday at $4 billion, $14.05 billion and $6.59 billion in sales respectively. The Singles Day celebration has spread to the entire APAC region, and showcases the massive opportunity for American merchants to expand sales outside of the U.S.

U.S. companies have a leg up on international competition. Yet, many retailers are opting to focus on domestic customer bases. While merchants should look to expand sales cross-border, we do see that their experience selling in saturated U.S. markets can help prepare them for the global marketplace.

American merchants face stiffer competition inside U.S. borders than if they looked to sell overseas. Filling the sales funnel is becoming more difficult each day as companies are having to fight tooth and nail for a share of market voice and advertising space. The digital advertising market by revenue in the U.S. is almost twice as big as China’s, despite its vast disparity in population. So, American merchants are fighting harder for less market space, while missing out on the rising global spending power we discussed earlier.

U.S. e-commerce merchants conduct business in one of the most competitive marketing environments in the world. After scrapping for market share and every click-through, U.S. merchants are at an advantage when they enter the global marketplace. A less saturated advertising space and a rising spending power awaits and it is now a matter of tapping into this new opportunity before competitors — both domestic and international.

Despite regional and global competition, American brands continue stand out in global markets. Coca-Cola is the most popular soft drink in China, despite competing with over 1,000 domestic rivals. Brands offering glimpses into American life have widespread appeal.

A report by J. Walter Thompson found that between 78% and 93% of people surveyed in six major global markets had a positive opinion of American brands. The two words most commonly associated with American brands were “quality” and “innovative.” It’s clear that global consumers have a true affinity for American brands, and this translates to the advantage of U.S. merchants. The diffusion of American culture to global regions via advances in and the spread of community technology has only bolstered this sentiment. U.S. merchants can leverage this sentiment, along with the marketing expertise gained in competitive U.S. markets, to penetrate global markets.

Steve Villegas

Steve Villegas

Steve Villegas is vice president of partner management for PPRO’s U.S. headquarters.

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