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21st century spice route

E-commerce · 5 min read

21st century spice route

From the ancient Spice Routes and Silk Road to today’s Alibaba and Amazon, there is huge appetite for cross-border trading. E-commerce has helped establish global trade habits, with a huge growth opportunity.

Here’s a question for you: what’s completely man-made, over 5,000 years old, and growing at around 25% each year? Believe it or not, the global import-export e-commerce business has been around for millennia, yet it is experiencing a rebirth powered by an explosion in online retail. But how can you, the small business owner, make sure you get a slice of this lucrative pie?

International trade is, of course, nothing new. The bustling Spice Road founded by the ancients helped establish major trade routes that still exist today. Thousands of years ago it would have taken nearly two years to travel from Italian to Chinese markets and back again. So, would an 8th-century merchant recognize today's global trade markets, dominated by super-fast air freight, cavernous cargo ships and near-frictionless cross-border trading?

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They certainly wouldn’t recognize the products: iPhones? Not much use for that in the 8th century during the two years it would take to travel from Italy to China along the ancient trading route, the Silk Road (although you could while away the time with a few games of Crossy Road). Fidget spinners? Even less useful.

But those ancient traders would surely spot one thing, the same thing they realized when they began trading in highly-sought-after spices and other luxuries: an incredible opportunity for growth.

The size of the prize

By 2020, cross-border e-commerce will be worth US$9bn, tripling from US$3bn in 2015. To put this growth into perspective, cross-border e-commerce is growing at double the rate of domestic trade – yes, double.

You probably don’t need a reminder that the internet really has changed the way we shop, breaking down international borders. In fact, every seventh online delivery is the result of a cross-border transaction.

The new spice trade

Today’s e-commerce habits are effectively the new spice trade routes. Those ancient trading pioneers crossed hazardous terrain, mile after treacherous mile. These original trailblazers brought new and exotic items from Asia, India and Africa to the pre-Roman and Roman markets.

In the same way, but on a much grander scale, e-commerce is also changing commercial behaviors and rewriting the international trade playbook. Consumers are looking abroad for their purchases, in search of trusted brands, improved availability, and, perhaps most of all, attractive offers.

You’d be forgiven for thinking that much of this new era of global trading is in low-value items, but even that myth has been debunked: 20% of cross-border transactions have a basket value of US$200 or more. What’s more, both manufacturers and retailers are feeling optimistic about the state of international e-commerce.

More than two-thirds of retailers expect their share of cross-border revenues to grow in the future, while three-quarters of manufacturers also expect their revenues to grow. This is an important point: manufacturers now find it much easier to sell direct to the consumer, an idea borne out by real-world performance: manufacturers are growing their cross-border e-commerce sales 30% faster than retailers.

The logistics of international trade

What makes consumers hesitate over the ‘checkout’ button and abandon a purchase? Our own survey tells us that four factors are involved: trust, logistics, price, and customer experience. Trust is essential, as we all need to see some evidence that a supplier is legitimate. Social proof (customer reviews), trusted payment platforms, and well-known delivery service providers help instill confidence in the consumer.

You also need a logistics provider with the global express delivery coverage and time-definite services that your customers demand. Yes, sub-standard delivery can ruin the entire customer experience, but great delivery can also act as a competitive differentiator. In fact, 22% of retailers say guaranteed time-definite delivery helps set them apart from the crowd, while 17% of retailers say track-and-trace services help them stand out.

Price is self-explanatory: you need to offer competitive prices, as consumers often perceive overseas purchases to be dearer than buying locally. Finally, customer experience is the combination of all of the above, plus responsive communication channels and the all-important returns policy, a worry for nearly a quarter (24%) of consumers.

 

 

A duty to deliver

You’d be forgiven for thinking that premium international logistics services are beyond your business’s reach. Nearly three-quarters, 74%, of e-tailers believe shipping costs are too high to make it worthwhile, and 67% describe them as too complex. These are very real concerns for both shoppers and retailers new to international trade who fear the potential for duties and customs charges to be applied unexpectedly.

Thankfully, specialist services like Global-e and Borderlinx ensure your customers are quoted a fully landed cost, inclusive of VAT, duties, and shipping rates. Delivery Duty Paid (DDP) options let retailers pay all these associated costs on behalf of the consumer, making the whole purchase process smoother, faster and more like the seamless purchasing experience consumers are accustomed to at home.

The Silk Road to success

Look at any modern successful online retailer and you’ll see one common thread: a wide range of great delivery options. Even next-day delivery is available for same-continent orders, while most transactions can be delivered anywhere in the world within two or three days.

The modern logistics landscape is very different to even 10 or 15 years ago: high-speed, time-definite international options are now a gold standard that consumers value and expect, and the logistics industry provides these services, day in, day out. These premium services are also a signifier of trust, one of the crucial components of capturing international sales.

Grab the opportunity: Start trading overseas

Planes, trains and freighters have solved our trading problems. In fact, they’ve opened up new opportunities for traders across the world. 71% of retailers expect their cross-border revenues to grow in the future – a trend driven by the explosion in internet retailing. Offering an international trade option immediately boosts a company’s sales by 10%. The internet has become the world’s global shop window.

The ancients risked life and limb to bring valuable spices and other goods across mountain ranges, rivers and deserts – modern logistics have transformed those landscapes into short hops on aircraft, trains or container ships. There’s no reason to avoid taking a step into the growing international e-commerce market. Every journey begins with a single step, so why not start yours today?

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