Trade without borders

Internationalization, booming e-commerce and multichannels – trade is going through a phase of extreme transformation. In a recent analysis, McKinsey predicts that cross-border online trading worldwide will presumably amount to US$1 trillion by 2020. What is known as the “cross-border e-commerce” industry will then account for one-fifth of global online sales. That’s why the consultancy company interviewed around 1,800 dealers and manufacturers located in Germany, the UK, the USA, China, Singapore, and Brazil.
According to McKinsey, the market for cross-border e-commerce is currently growing at an annual rate of 25 percent. Online retailers have already generated significant sales with their international business: The analysis specifies that large online retailers make up 15 percent of the share, with multichannel retailers and small and medium-sized online retailers accounting for an average of 10 percent. Cross-border international trade is influenced mainly by the shipment of fashion, cosmetics and electronic articles. “Providers of household goods, office supplies or food also benefit considerably from online shopping abroad,” says Thomas Netzer, an expert in postal services and logistics at McKinsey.

Manufacturers and online retailers open up new markets

Approximately seven out of ten online retailers expect to generate even more sales in the future by selling goods or services abroad. The analysis of the market indicates that consumers in Germany tend to order from abroad when the price is lower, a better product is available or the selection is larger. Manufacturers also report a strong increase in demand from other countries in their web shops. McKinsey states that their international share of sales is growing 30 percent faster than that of retailers. “Cross-border online sales allow manufacturers to market their brand-name products directly to consumers around the world from just one production location, without having to rely on local intermediaries,” Netzer says.

In addition to the traditional parcel services market, the market for express deliveries is also profiting from cross-border e-commerce. McKinsey reports that more than 120 million international express deliveries – in other words, shipments with guaranteed delivery the next day – are internationally shipped to private individuals located overseas on an annual basis. The potential for growth is enormous. Not only large e-commerce players such as Amazon or Alibaba, but also smaller newcomers have multiplied their sales within just a few years.

Rising demands on quality and service expectations

The shift from B2B to B2C is bringing massive market change, in addition, start-ups increasingly compete with large logistics companies. The consultants believe that express service providers must adapt shipment sizes, prices, sales and contracts to the new online retailers and manufacturers. “The e-commerce business requires express service providers to carry out a balancing act,” Netzer notes. “On the one hand, they must be able to deal with considerable price pressure compared to the traditional B2B business. On the other hand, the consumers are the ones driving the costs – especially with lower delivery coverage in rural areas, as well as increasing demands on quality and service expectations,” he continues. Today’s customers expect deliveries to be made within timeframes they can select, 24-hour customer service and easy return options.

Text by Claudius Semmann
Photo: Fotolia