Global Insights: The Borderfree Blog

Ecommerce in South Korea: Borderfree Country Report

South Korea is a top 10 cross-border market, scoring 4 out of 5 carts on the Borderfree Index (BFI).

With three-quarters of Koreans owning smartphones, a dynamic mobile marketing and commerce strategy will help retailers compete. Around 60% of Borderfree’s Korea sales and 20% of its population are based in Seoul, meaning significant benefits for geo-targeting your ads.

Koreans are highly responsive to online sales; they have money to spend and are swayed by bargains—meaning deals posted in online communities can go viral fast. The percentage of discount-priced SKUs purchased by Koreans is the highest across the Borderfree network.

South Koreans frequently visit and study in the U.S., exposing them to U.S. brands and highlighting the dramatic cost-savings available from buying abroad. However, language is still a significant barrier to comfort and conversion—and translated content is strongly encouraged.

Consumer behavior is shifting as savvy shoppers learn to buy goods abroad. An increasing number of Koreans shop overseas retailers to find lower prices, leverage parcel-forwarding to save on shipping costs and join online communities to resell imported items they don’t want.

The South Korean won (KRW) hit a six-year high in April 2014. With its strong currency, demonstrated zeal for shopping online, broad access to credit cards for online payments and world leadership in broadband speed and penetration, South Korea is expected to be a top growth channel for ecommerce.

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Ecommerce in India: Borderfree Country Report

India scores 1 out of 5 possible carts on the BFI index. While India is a story of tremendous e-commerce opportunity (2nd largest global population at 1.2 billion; 3rd largest online user base with just 13% penetration), the country is still facing major challenges urbanizing 70% of its population and has significant work to do in updating restrictive foreign direct investment policies to stimulate trade.

Mom and pop and kirana stores still dominate the Indian market (organized retail represents just 5% of the country’s total versus 85% in the U.S. and 20% in China) and online sales represent less than 1% of total retail (versus China’s 6%), amounting of $16.3 billion in 2013. Today’s Indian internet user is young (75% are under 35 years old), predominantly male (61%), and more occupied with social media than shopping. Time spent on retail sites is the lowest of the BRIC countries –1/6th of China and 1/3 of worldwide averages.  According to Google India research, the top shopping categories are:  apparel & accessories, electronics, beauty & personal care, books and household products.

Cross-border purchasing is limited by low disposable income levels ($6,460 per household in 2012), a preference for cash on delivery payments (only 25% of households possess credit or debit cards), and extremely complex tax measures owing to lack of a uniform GST. Internet access is still elusive and slow outside of Tier 1 cities, with fixed broadband access available to only 4% of households and smartphone penetration standing at just 3.5%.  Lastly, extremely underdeveloped physical delivery infrastructure coupled with low population density makes logistics costs among the highest globally.

For global retailers we believe the Indian market is a low priority from a cross-border online shopping perspective and recommend they invest resources elsewhere until the market further matures.

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Ecommerce in Russia: Borderfree Country Report

Russia scores 4 out of 5 possible carts on the BFI index, and is an essential component of any global ecommerce strategy. In 2013, Russia was Borderfree’s 5th largest cross-border market and leading emerging market. Its 71 million online users, just 50% of the population, represent the largest internet base in Europe. B2C ecommerce sales of $14.5 billion are expected to grow dramatically over the next few years; today they comprise just 2.2% of total retail sales. 

Russian online consumers are highly educated and technologically savvy; their social media engagement rates exceed global averages. Personal consumption levels lead the BRIC countries, with 60% of pre-tax income spent on shopping (the highest in Europe) – with disposable income levels supported by low housing payments, socialized healthcare and a flat personal income tax of 13%. Top selling online categories are consumer electronics, apparel & accessories, and auto parts.

Cross-border sales account for an estimated 10-15% of total ecommerce sales in Russia, as many consumers find the product selection and prices to be better abroad. Additionally, a history of fraud by domestic sellers gives recognized and reliable foreign brands a leg up in capturing consumer trust and wallet. Import tax and duty de minimus thresholds of 1,000 EUR per private individual per month are globally competitive (but highly regulated and currently under government review). 

Several logistical challenges persist in selling into Russia. English proficiency is very low; only 5% of Russians speak English. Payments and marketing have a local flavor, with nearly 70% of online purchases being paid for via cash upon delivery, and search results on Yandex favoring local companies and translated websites. Lastly, 9 time zones, 6.6 million square miles and a notoriously unreliable and slow postal service means use of courier services are a must! 

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