Cross-border online consumer purchasing is increasing 28% a year and will reach $1 trillion by 2020, according to a report just released from consulting firm Accenture and AliResearch, the research arm of Chinese e-commerce giant Alibaba Group Holding Ltd. That’s nearly twice as fast as the 15% annual growth rate for consumer’s web purchasing as a whole, which will reach $3.4 trillion by 2020, the report says.
Much of the purchasing will come from web shoppers in the Asia-Pacific region, which will account for 48% of cross-border online purchases in 2020, the report says. The most popular shopping destination will be U.S. sites.
The report includes consumer purchases of travel as well as of merchandise. Consumers increasingly buy products from foreign websites that they can’t find in their home countries or that are too expensive locally, the researchers say.
Almost half of global online consumers will have purchased from overseas websites by 2020, and the number of global cross-border online consumers will grow to near 1 billion in 2020 compared with 309 million in 2014.
A big part of the purchasing from Asia-Pacific is coming from China. The report says there will more than 200 million cross-border online consumers in China in 2020, the most of any country. The strong demand from China’s growing middle class will boost cross-border online purchases to about $245 billion in five years, the report says.
The report also says:
- Western Europe and North America will rank Nos. 2 and 3 in 2020 in terms of cross-border purchasing and jointly account for more than 30% of consumer purchases at foreign websites.
- The United States is the leading destination for online shoppers buying across borders, as many consumers covet products with a “Made in U.S.” label.
- Latin America will grow the fastest in cross-border consumer online purchasing, with purchases increasing more than 40% annually from 2015 to 2020.
- Other fast-growing markets include Russia and the Middle East.
- Popular product categories today in cross-border e-commerce are clothing, electronics and beauty products. Future growth could come from sales of fresh food or travel products, such as online hotel reservations.
Researchers say one of the benefits of cross-border e-retail is to connect consumers and producers directly. To illustrate, the report cites the example of a U.S. woman who purchased a wig on AliExpress.com, Alibaba’s cross-border e-commerce site. After wearing the wig while swimming, she found the hairs on the wig fell off because the glue used was not waterproof. After receiving her complaints, the wig producer improved its product and designed a water-resistant version within a week. Today, 90% of wig buyers on AliExpress.com are U.S. consumers, the report says.
Alibaba has been touting cross-border e-commerce as a way for small businesses in the U.S. and Europe can sell directly to U.S. consumers. That was the measure Alibaba’s executive chairman, Jack Ma, delivered on recent trips to those two regions. He said Alibaba hopes to serve 2 billion consumers outside of China in the future.
Alibaba did not break out AliExpress.com’s sales in its recent financial reports, however, in September it reported that the cross-border site generated $4.5 billion in sales in the 12 months between June 2013, and June 2014.