World's largest online retail markets to double in size in the next three years

July 08, 2015 | PRESS RELEASE

Research unveiled today by OC&C, PayPal and Google.


•       New study by OC&C Strategy Consultants, PayPal and Google predicts that US, China, UK and Germany’s online retail markets will collectively grow by £320bn, doubling to £645bn by 2018

•       This presents a huge opportunity for UK retailers as US, German and Chinese shoppers see them as a key retail destination and consistently outspend domestic shoppers online

•       But many UK retailers are only doing the basics to capitalise on their popularity abroad, and have the potential to treble their international customer base online

The world’s largest ecommerce markets – the US, China, the UK and Germany – are expected to double in size by 2018 to £645 billion, adding £320 billion to the ecommerce economy. This is according to research unveiled today by OC&C Strategy Consultants, PayPal and Google, which will be presented at the British Retail Consortium’s Annual International Conference on 11th June.

The study, Cracking the World’s Largest ecommerce Markets, analyses search and transaction data from Google and PayPal and the online shopping habits of consumers in what will be the four largest online retail markets by 2018.

It shows that, with online retail showing no sign of slowing, there is a huge opportunity for UK retailers abroad as Britain is revealed as the most popular online overseas destination for German shoppers, and the second most popular in both China and the US. What’s more, when shopping for UK goods online, Chinese and German shoppers are more valuable than their British counterparts, spending on average 2.7 and 1.7 times more in each transaction. In fact, Chinese shoppers purchase from UK retailers online almost as frequently as domestic shoppers do.

Despite their popularity, many UK online retailers only do the basics to localise their offer and access lucrative consumers from overseas. The research shows that they could be earning up to 60% more by going deeper - building trust with local consumers, responding actively to local payment preferences and putting in place the infrastructure to match local competitors on speed. Even in well-established markets like the US, UK retailers could treble their international customer base.

Anita Balchandani, Partner and Head of UK Retail at OC&C Strategy Consultants, said:

“The study has shown that UK retailers are some of the world’s most popular and are in a strong position to seize more opportunities abroad. But at the moment, the majority are only doing the basics to adequately serve foreign markets, for example, by offering international delivery on their UK website and working with partners to provide local returns addresses.

“Those retailers that are going deeper are already reaping the rewards. For example, ASOS has adopted zonal pricing and invested in local warehouses to support returns in foreign markets. As a result, searches for ASOS from overseas have grown faster than any other UK retailer. Or take the case of Boden, which has taken a quintessentially British brand with a local warehouse in the US to get speed to market as well as accepting Paypal to support US growth; while in Germany they have adapted to open invoicing, a feature that German consumers prize.”

The research has revealed that the biggest pull factor for international customers when choosing ‘Made in UK’ is the ability to buy unique products they cannot find in their own country (40%), while one third mentioned pricing, and 29% said trust around quality was the most important driver for purchasing from UK brands.

The research not only identifies the pull factors for shopping overseas, but also the biggest barriers. For customers who already shop cross-border, data security, trust in the retailer and ease of returns are particularly important.

Martijn Bertisen, Sales Director at Google UK said:

"The number of people with internet access is growing fast, with many new consumers skipping the desktop phase entirely and only experiencing the web through a smartphone. Our study shows that this is increasingly translating into mobile transactions and that a mobile-first or even mobile-only strategy is now imperative to international success in retail. UK retailers should be well positioned to lead this growth internationally, as UK consumers are already amongst the most mobile of all. PayPal data used in this study suggests that in fashion, for example, 59% of online transactions are already being made via mobile in the UK, compared with 45% and 24% in the US and Germany respectively.”

- ENDS -

For further information please contact:

Lucy Hopkins, Lucy Butterfield or Kathryn Harnett at oc&c@bluerubicon.com

0207 260 2700

Notes to Editors

METHODOLOGY

OC&C analysed data on the number of searches performed on Google for different search terms in different countries, as well as the transaction volumes seen by PayPal, in order to understand patterns and behaviours in cross-border ecommerce.

Additionally, OC&C ran a consumer survey in conjunction with Toluna, to understand the attitudes and behaviours of online shoppers in China, Germany and the US.

NB: No customer-identifiable or retailer-specific data was used at any point in the research.

ABOUT OC&C

Founded in 1987, OC&C is a leading global strategy consulting firm that brings clear thinking to the most complex issues facing today's management teams. OC&C's client roster includes some of the world's most respected companies throughout the business services, retail, consumer goods, media and private equity sectors.

For more information about OC&C Strategy Consultants, please visit http://www.occstrategy.com