The Covid-19 pandemic accelerated the consumer shift towards ecommerce at such a rapid rate that data from IBM’s U.S. Retail Index shows digital retail has advanced by roughly half a decade in under a year. 

As unwelcome as the pandemic was on a personal and social level, across all online retail sectors the quick shift to ecommerce has done wonders for omnichannel brands. Amazon’s US online retailers sold a staggering 3.4 billion products in the year to May 2020, the time period encompassing the start and peak of the pandemic in many regions. That’s a rise of 26% from the year before. During that same period, Amazon reported that its sellers reached an average of $160,000 in annual sales, a substantial jump from the $100,000 average reported in the year before.

The continued growth and global shift towards ecommerce in the wake of the Covid-19 pandemic is evidenced by retail ecommerce sales worldwide reaching $4.2 trillion in 2020, a rise of 20% from 2019. By 2023, it’s estimated that global ecommerce will be worth a staggering $6.5 trillion, up 22% from 2022.

During 2020, ecommerce’s share of retail trade rose from 14% in 2019 to 17%. Latin America’s online marketplace Mercado Libre sold twice as many items per day in the second quarter of 2020 compared with the same period the previous year. In Africa, ecommerce platform Jumia experienced a 50% leap in transactions during the first half of 2020. Meanwhile, in China, the online share of retail sales increased from 19.4% to 24.6% between August 2019 and August 2020.

Ecommerce Volumes Will Stay Strong During the Recovery

Every indicator shows that the uptake of ecommerce seen in 2020 will be sustained during the recovery from the pandemic, even as many regions come out of lockdown and consumers ease back into in-store shopping experiences. Others point to the relative strength of international ecommerce in the post-Covid world, with McKinsey reporting that cross-border payments flows in 2019 totaled $130 trillion, generating payments revenues of $224 billion (up 4% from the previous year). In the first half of 2020, further rapid growth was recorded as initial logistics and delivery challenges were resolved. UPS and PayPal, for example, reported double-digit growth on cross-border shipment volumes and value of merchandise sold.

The convenience of online buying combined with a widening choice in payment methods has persuaded many more consumers of the benefits of ecommerce. For cross-border retailers, previous barriers to trading globally, like currency conversion challenges, are falling away. Retailers can now sell their wares to customers thousands of miles away, in markets that were out of reach just a few years ago.

The ecommerce marketplace is only going to become more crowded, with competition becoming increasingly intense. The challenge for retailers now is differentiating themselves. It’s no longer about providing the widest range of products, but in the level and quality of service retailers give to their customers. Particularly for consumers who were unfamiliar with ecommerce before the pandemic, it’s important for retailers to make their customers feel at home online and as comfortable as they would be in-store.

Even though cross-border ecommerce presents a wealth of opportunities, retailers need to be mindful of the risks. Online payment barriers such as high ratios of declined transactions and false declines can lead to lost sales, and transaction disputes can cause long-lasting reputational damage. Balancing fraud prevention with frictionless customer payment experiences can be difficult to achieve, particularly when selling to international customers.

The Payment Experience is Just as Important as Price

Consumers want convenient and frictionless online payment experiences, and the reassurance that if any transaction disputes arise, the retailer will take quick, proactive, and informed steps to ensure rapid resolution.

If a retailer’s payment page is unclear, in a foreign language, and with vague information about foreign exchange fees, consumers are far less likely to complete the transaction. That means higher cart abandonment rates for the retailer, and a steeper uphill task of optimizing the payment process to improve conversion rates. It’s estimated that as many as 70% of customers will abandon their carts at the checkout stage. To counteract this, retailers need to thoroughly localize their content and personalize the checkout experience.

Consumers will be price-driven in their search for buying goods online, but it’s equally as important for retailers to give them a positive experience that will encourage them to return. It’s imperative that retailers place themselves in their customer’s shoes, and look at the online buying experience from their customer’s perspective. Is your website easy to navigate and do your products have clear descriptions and identifiable buttons and icons? Have you optimized your payment page in line with ecommerce best practices, like clearly signposted steps?

Retailers can undertake the work of payment optimization themselves. But at a time when online retailers are so in demand and short on time, there are myriad considerations they need to evaluate which they may not be best placed to do. For instance:

• Is the retailer selling in a market where Strong Customer Authentication mandates are in place?
• What payment methods do consumers prefer in each local market? How does the retailer make these available on their website?
• Is the retailer knowledgeable about the importance of UX and design on their payment page?
• How can optimization be integrated into ecommerce platforms like Magento, Salesforce and others?

Many retailers just don’t have the time to work on payment optimization when they’re trying to focus on serving their customers. But retailers don’t have to do this work alone. By partnering with insightful and experienced global payments specialists, who can guide retailers and seamlessly implement the elements needed for payment optimization, retailers can tap into the rich opportunities that cross-border ecommerce will provide for them.