Selling goods online? Trust is key

MANILA, Philippines–Online shoppers in the Asia-Pacific region (Apac) are reluctant to buy directly from the websites of small and medium-sized enterprise (SME) online retailers, according to the results of a research study into global consumer behavior around cross-border e-commerce commissioned by FedEx Express.

Conducted by independent research firm Forrester Consulting, the study showed that 57 percent of Apac respondents ranked buying directly from SME online retailers as their least-preferred business type for cross-border shopping, ranking it below multi-brand online marketplaces, brand or manufacturer websites and bricks-and-mortar retailers.

Of the Apac respondents who expressed misgivings about buying direct from SME online retailers, 46 percent said their reluctance stemmed from the difficulty in verifying the seller’s reputation or trustworthiness-compared to a global average of just 21 percent who harbored this reservation.

The study completed in September 2014 is based on the responses of 9,006 global online shoppers in 17 countries and regions, including Australia, China, Hong Kong, Japan, Singapore and South Korea in Asia Pacific.

The results of the study complement other current data reflecting the e-commerce landscape in the Philippines, as growth in this sector has surged with 40.4 percent of Filipinos now accessing the Internet for their shopping needs.

However, Filipino shoppers remain cautious when purchasing online, with 89 percent citing security concerns, 88.5 percent for speed of transactions, and 88.5 percent for payment methods.

In addition, there is still a preference for local websites.

“In some respects, the study reveals a trust deficit among Apac consumers when it comes to buying goods from the websites of SME online retailers outside their home market,” said Dr. Karen Reddington, president, FedEx Express, Asia Pacific.  “They are more nervous than their counterparts in other regions about buying from retailers they may not be familiar with, or those based in distant markets.  Nevertheless, the study also reveals the considerable opportunity for SMEs in the online retail space, and suggests ways for them to win the trust that is so important to online shoppers in this region.”

The study suggests that doubts about using SME online retailers’ websites haven’t dampened Apac consumers’ appetites for all cross-border online purchases.

In fact, Apac consumers spend an average of almost $350 per year on such purchases, compared to a global average of $300.

Consumers in certain Apac markets spend even more: 26 percent of mainland China respondents reported spending more than $1,000 per year, for example.

Through its exhaustive analysis of global trends in online shopping behavior when purchasing goods from overseas, the study arrived at five key recommendations for SME online retailers. These are:

1. SMEs should pay attention to their international traffic and business.  A large number of merchants surveyed reported that their international business had started unintentionally, through overseas customers finding them through web searches and online advertisements.  Monitoring this traffic can help to inform future business strategy.

2. SMEs should research how other merchants successfully market their goods. Explore what has made other SME sites successful including their logistics offerings and how the purchase process works.

3. SMEs should decide whether to go broad or narrow.  Whether to attempt to serve many markets or focus on a few key ones is likely to be dictated by whether the products on sale have broad appeal and logistics considerations that may make it easier to serve some markets than others.  SMEs that decide to focus on a small number of key markets may decide to invest more in services such as website translations, web advertising and broader payment offerings.

4. SMEs should focus on limited geographies at first.  This enables them to “test the water” with less risk.  Each country will have its specific requirements and complexities.  Being able to meet customer expectations in the initial markets helps to ensure success as SMEs expand their reach.

5. SMEs should identify the right resources.  The company’s international strategy and type of business will determine what the company needs from its selling and logistics resources-with particular emphasis on services and offerings that will matter to customers in the company’s target markets.  For example, companies that offer return services to their customers need logistics providers that can handle international returns smoothly and efficiently.

“Access to overseas markets is no longer the preserve of large corporations – more and more SMEs are selling overseas,” said Dr. Reddington.  “Increasingly, promoting e-commerce is a way to promote the interests of SMEs, which are the driving force of many economies in the region. The study’s findings will help service providers like FedEx to tailor our service offerings so that they are an even better fit with what our SME customers need. In addition, national governments also have a role to play in ensuring a favorable environment for e-commerce to thrive. Ultimately, this benefits not only SMEs but consumers and national economies too.”