US E-Commerce Brands Need to Localize to Maximize Overseas Opportunities
International ecommerce sales are skyrocketing, but selling abroad means taking on the challenge of catering to consumers with localized preferences. A recent global ecommerce report by payments infrastructure provider PPRO shows many brands are not currently up to the task.
I checked in with Claire Gates, CCO at PPRO, to find out about how ecommerce brands can support their global ambitions through localization.
PPRO investigated US opportunities for global e-commerce. What did your findings reveal about the main challenges for brands hoping to sell abroad?
One of the most common problems that merchants and other players in the e-commerce ecosystem face when expanding overseas is a limited understanding of local market conditions and economies. This includes understanding the region’s culture, language, shopping preferences, and local payment methods. According to PPRO’s research, up to 80% of consumers will abandon a purchase if they reach the checkout and cannot find the payment method they know and trust. Therefore, for e-commerce merchants expanding globally, localized strategies need to be a top priority if they want to succeed.
In addition to an understanding of local market conditions, merchants may also be challenged with the complexity of today’s payments ecosystem and face difficulty in implementing local payment methods. Ensuring security and functionality across various payment methods is technical and complex, and merchants need to enable seamless checkout abilities without disrupting the overall shopping experience. To create this, having the proper technology infrastructure and integrations is key for the merchant.
How does localization empower brands/retailers to sell abroad?
Localization not only empowers brands to create more personal relationships with customers but is also the best way to capitalize on opportunities in different regions. Between now and 2026, the value of e-commerce sales made across borders is forecasted to reach more than US $2.2 trillion, and when global consumers were asked where they bought their last cross-border purchase, 50% of Mexican shoppers, 47% of South Koreans, 29% of Japanese, 28% of Australians and Indians, and 20% of Brits all said it was from the United States — showcasing the growing value of American brands in these markets.
Even as e-commerce has opened new doors for brands, many US-based retailers lack the recognition of local market conditions or are unable to handle local payment methods. Depending on the region, many consumers prefer to pay with local payment methods, which include a variety of options depending on the market, such as digital wallets and bank-transfers. By recognizing these differences and the cultural preferences of each market, brands can feel empowered to make deeper connections with these customers. In today’s inundated e-commerce landscape, having the ability to standout with localized connections to consumers could be the difference for US brands.
What do the challenges and opportunities of global e-commerce have to do with payments?
The challenges and opportunities for brands to sell on the global e-commerce stage wouldn’t be possible without a sound payments strategy. Not only does a majority of global consumers rely on digital payments to purchase goods online, but an increasing number of US consumers are using these methods as well, such as Buy Now, Pay Later (BNPL), PayPal, or Apple Pay. Without having the digital infrastructure to enable online transactions that match consumer preferences, merchants could see consumers abandoning their carts and taking their business elsewhere.
What in the global e-commerce report findings surprised you?
We were surprised to see a lack of appreciation around local payment methods across the board, potentially causing more harm than good. Currently, 70% of Americans have a credit card, but globally only 18% do. So why are so many merchants still mainly offering credit card payment options in international markets? What made this so surprising was that US retailers aren’t adapting to the way the rest of the world pays. Not only does this hinder global sales but it deters Americans from using other payment methods. Failing to provide a payment method that customers know and trust hurts conversion rates. Instead, merchants should support local payment methods and educate themselves on what each market prefers.
What are the barriers to localized payment adoption?
There are several cultural and logistical barriers that retailers and the payment industry must consider when it comes to localized payment adoption. One barrier merchants face is the recent regulations which may mean authentication is required for certain transactions, ultimately leading to customer frustration since the payment no longer feels ‘seamless.’ That said, what makes a transaction feel seamless to the customer is ensuring their local payment method is available. If merchants don’t research which payment methods are popular in that market, the consumer will most likely drop the transaction if they don’t see an option they know or trust.