Global Insights: The Borderfree Blog

The Value of a Dollar: U.S. Currency Boom Impacts Global Ecommerce

Beyond the holiday shopping headlines, there’s another economic story that retailers are following: the increasing strength of the U.S. dollar.

Currently on an upswing that began in the summer of 2013, the dollar shows no signs of losing momentum, delivering a windfall to American consumers, but potentially hurting cross-border sales for U.S. retailers in key markets like Europe and Canada. So will the booming dollar lead to a bust for international ecommerce?

The answer is: Not necessarily. Although a rapidly strengthening U.S. dollar does make prices at American retailers appear more expensive and may initially soften sales to individual consumers in affected countries, the good news is that the burgeoning number of international shoppers going online will likely continue to buoy sales. And by paying attention to key trends as they evolve, retailers can keep their marketing plans aligned towards optimized growth.

The reasons for the dollar’s rise are many. Here are two dynamics to watch in the coming months:

Interest rates on the rise

There is much speculation about whether the Federal Reserve will raise the benchmark interest rates sometime around their June 2015 meeting, to offset inflation risk as unemployment rates come down. Generally, interest rate increases in a country will tend to drive a corresponding increase in the value of that country’s currency.  The strong dollar – and the resulting reduction in export growth that follows – has factored into the Fed’s restraint when it comes to raising rates. A rate increase could further bolster the dollar, creating more downward pressure on global demand for U.S. goods. Pay attention to the Fed’s actions at their upcoming meetings to stay apprised of this dynamic, and you’ll be better able to forecast your international growth and make adjustments as needed.

Prices at the pump

The retracting price of oil signals declining economic growth and geopolitical risk in certain parts of the world. Although falling oil prices could positively impact discretionary spending here at home, it can negatively impact international demand for discretionary goods – which drive global ecommerce sales for U.S. retailers – in certain markets where oil is a major export, like Canada and Russia. Chances are, if you’re happy when filling up at the pump, you may be less with your international sales numbers to these countries.

Smart retailers will heed these trends and adjust their international strategy accordingly. Here are some of our recommendations:

Invest in dollar-driven growth

Markets tied to the U.S. dollar will see less volatility in currency and prices than those markets affected by the exchange rate fluctuations. These markets continue to show strong growth in demand and ecommerce sales from American retailers. Retailers would do well to amp up marketing and promotional efforts in these markets in the short term, to support overall growth.

Stay the course when markets soften

The best bet for online retailers is to stay the course when it comes to selling abroad. Despite some near-term turbulence in markets affected by the recent exchange rate changes, global ecommerce as a trend is not going away – we believe retailers should commit to the longer view and ride out these interim currency and pricing trends and continue to develop these markets as a long term strategy.

The dollar may be a moving target, but the good news is that efforts to build brand awareness and market share now will pay off in the years that follow. By tying pricing offers to the changing dynamics in individual markets, retailers can encourage consumers to spend and keep international growth on course.

From Bricks to Clicks: How Physical Stores Can Boost International Sales

The benefits of digital experiences are known to drive in-store sales—but do physical stores actually help drive international ecommerce sales?

The answer is yes—especially when it comes to reaching worldwide audiences, and converting global brand awareness to sales.

Making it Personal

A store experience can help build critical brand associations for buyers, especially international buyers who might be otherwise unfamiliar with U.S. brands. A tactile association with merchandise – particularly apparel and accessories – and the way one experiences a store environment can build connections unattainable by clicking one’s way through an online store.

In a recent Borderfree survey of a major retailer’s international online customers, the majority (63%) of the 1,500 respondents had been to a store, primarily in the United States. And those who had visited had a positive experience, with 83 percent giving it a favorable score.

What’s more, an in-store visit significantly impacted online spending, with higher average order value and total customer spend among the major retailer’s store visitors.

Discounts Drive Loyalty

Once customers become aware of a brand through an in-store experience, they’re more likely to seek out that brand when searching online for items unavailable in their local market. The majority of respondents in the Borderfree survey reported that brand availability was the primary reason cross-border customers shopped online.

However, once customers place online orders, promotions like discounts and free shipping keep them coming back for more. In the Borderfree survey, item discounts, free shipping and promo codes were the top three reasons international customers returned to the site.

The International Omnichannel Opportunity

To attract and retain loyal international online customers, retailers with physical locations should focus efforts on delivering a robust in-store tourism strategy.

Especially through stores in major U.S. cities that see high volumes of tourist traffic, retailers can encourage repeat purchases when a tourist returns to their home country through promotions or discounts on their next online purchase.

Additionally, retailers need to put their best customer service foot forward, ensuring that international customers have a positive customer experience. Especially with international visitors, missed service opportunities can sour the positive associations store visitors take home, and negatively impact their likelihood to make future international online purchases.

Despite the rapid growth of ecommerce, physical stores remain relevant – and even beneficial – to retailers as part of an international omnichannel marketing strategy. By seizing promotional and customer service opportunities, retailers can capture and sustain the loyalty of international customers long after their store visits.

Tips for an In-Store Tourism Strategy

Here are steps that can turn “bricks” purchases to international ecommerce “clicks” purchases:

  • Identify who’s international. As part of your sales strategy, encourage representatives to identify shoppers from around the world.
  • Keep it personal.  Capture international consumer brand preferences through past purchases or future surveys, and promote them in campaigns to spur repeat shopping.
  • Stay in touch. Collect international shoppers’ email addresses at the point of sale in order to target them with those personalized messages later.
  • Make an offer. Provide discount codes for international customers to use online once they return home. Free shipping and discount codes to overcome duties are highly attractive to international online shoppers.

International Ecommerce Fashion: What’s Trending Online?

Ecommerce is blurring borders, bringing top U.S. fashion brands to every corner of the globe.

And when it comes to how merchandise is moving, Borderfree’s platform gives a unique glimpse into what international consumers want most. So what are the online sales trends we’ve seen from Abu Dhabi to Zurich?

Canada is King: Given its proximity to America and familiarity with American brands, Canada often leads the pack in terms of international sales for U.S. brands. When deciding where to focus, American retailers would be smart to look to shoppers in Toronto, which ranks #1 among other global cities.

Big Spenders in Saudi Arabia: With a stable economy and a large expat population, Saudi Arabia makes for a very attractive market for retailers. Retailers that sell to online shoppers in this Middle Eastern country will benefit from some of the highest AOVs in the world, and its capital city Riyadh is #7 among the top 10 cities for overall sales.

Asia Soars to New Heights: Hong Kong, Singapore and Japan all hold a spot in the top 10 countries for sales, at #4, #6 and #7, respectively. And at $315, Hong Kong is a close second to Saudi Arabia in terms of average order value.

American Luxury Brands Lead

International sales of U.S.-based retailers show a strong demand for American brands. American designer Michael Kors wins top honors as the most in-demand brand, while other U.S.-based brands, such as Marc Jacobs, Tory Burch, Kate Spade and Vince, all made the top 10 in international sales.

Luxury Shoe Aficionados

Women, no matter where in the world they’re located, love their shoes, and the category is one of the top sellers across the Borderfree network. But not every country is loyal to the same brands. For example, in Qatar, Manolos are the designer shoe brand of choice; Hong Kong shoppers prefer Christian Louboutin; while Jimmy Choo takes the lead in Saudi Arabia.

Handbag Habits Vary

The tote is the bag of choice in Hong Kong, and Russian customers also love larger bags, favoring the satchel. Canadians may have less to carry, opting instead for wristlets.

Size Matters

Fashionable plus-size clothing is in demand around the world, and American retailers are well-positioned to benefit from shoppers looking for high-quality plus-size clothing at attractive pricing. In fact, retailers are seeing an increase in plus-size sales in Canada, where you’ll find the top buyers of size 12 and up; in Bermuda, where nearly three quarters of the population is obese; in Kuwait, with the world’s highest BMI rates; and in the U.K., where women’s average dress size is 16.

Download our full International Fashion Flash Report here.

Ecommerce Holiday Promotion Banners (Free Download)

Download these promotional banners for Black Friday, Cyber Monday, and Christmas sales

Here’s an early holiday gift that will save you time and resources as you meet your holiday sales goals: a set of cyber holiday banners you can use in online or email promotions. Download the free ecommerce holiday banners now.

With an anticipated 15% rise in digital holiday sales anticipated once again this year – and 61.8 billion retail ecommerce dollars up for grabs (eMarketer) – you need to make sure you’re rising above the holiday din and capturing customers’ attention. Our eye-catching banners provide holiday delivery countdowns to Christmas and promotions for Black Friday and Cyber Monday. They’ll also help you promote your free shipping and duty free campaigns – critical elements of any successful holiday marketing plan, especially one that includes international ecommerce.

So as you gear up to put your holiday marketing plan to use this month, check “banners” off your holiday check list by downloading our complimentary holiday banners. Click here for our handy list of ecommerce banners available.

Download the free ecommerce holiday banners now.