© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
PayPal Cross-Border Research 2014GLOBAL SNAPSHOT
PayPal Project Sponsor: Melissa O’MalleyPayPal Market Research Contact: Daniel JenkinsonIpsos MORI Contacts: Eleanor Pettit & Peter Attwell
CONFIDENTIAL
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Research Methodology
2
Screening
Transaction & Spend: Past 12 Months &
Next 12 Months
E-commerce Behaviour and
Attitudes
Cross-Border Commerce
Mobile Commerce
Online survey
Global Fieldwork conducted Sept-Oct 2014
20 minute questionnaire
Respondents recruited from online panels
Own and/or use an Internet-enabled device* Nationally
representative of online population Aged 18+
Fieldwork Sample, per market
Questionnaire
*Desktop computer/Laptop/ notebook computer/Tablet /Smartphone/Some other type of mobile phone/Electronic organizer / PDA with wireless voice and data features/Games console with Internet connectivity (e.g. Wii)
This research was carried out to the international quality standard for market research, ISO 20252:2012
Data weighted to adjust for known population incidence and demographic profile
This study was conducted across 22 markets and 17,500+ consumers globally.
22 marketsSample of c.800 per market.
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
GLOBAL SNAPSHOT
3
UK, France, Germany, Austria, Switzerland, Italy, Spain, Netherlands, Sweden, Norway, Denmark, Poland, Turkey, Russia, Israel, UAE, USA, Canada, Brazil, Mexico, China, Australia
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
4
Summary of findings: Cross border (CB) global study1. Market penetration: CB is a driving force in the global marketplace with ~50% online shoppers saying they buy
from other countries around the world (country average, not weighted for market size).
2. Market opportunity: Growth of online CB expected, especially from emerging markets.
3. CB hotspots: Western Europe (esp. UK, DE), North America (esp. US) and APAC (esp.CN) are the three key CB destinations (i.e. most CB consumers buy from these three regions). Significant intra-EU trade is evident.
4. What’s bought: Clothing/footwear/accessories and consumer electronics (incl tablets, mobiles, peripherals) are the most sought after CB categories.
5. CB shoppers are valuable consumers: their total online spend (domestic and CB) is around 2x that of domestic only shoppers. They also get the benefits of online shopping.
6. CB shoppers are more mobile oriented than domestic only shoppers.
7. Top pain points: delivery shipping costs, duties/taxes/fees and concern about not receiving item.
8. Top drivers: free shipping, having a safe way to pay, access to items, lower cost of items, free return shipping.
9. Free return shipping is considered a ‘must-have’ by around half of shoppers, a similar proportion to free shipping.
10. PayPal is a dominant payment method for cross border: In a majority of markets, PayPal has a relatively high penetration of usage for CB purchases compared to other payment methods. This also correlates with markets where eBay is strong domestically or has a good share of CB.
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5
Cross border commerce is a driving force in today’s global marketplace
North America
Western Europe
Nordics Central, Eastern Europe
Middle East
Latin America
Asia Pacific
US CA UK DE FR IT ES NL CH AT SE NO DK PL RU IL TR UA BR MX AU CN2 8 4 3 7 6 7 4 8 5 6 9 9 5 6 10 6 11 4 7 15
3
28
66
38 3743
57 5640
6277
5163
53
31
52
72
31
4946
5561
23
69
26
58 6050
38 3756
2917
4327
38
6442
18
64
4050
3825
74
Domestic only Cross border and domestic Cross border only
56%
A significant proportion of online shoppers claim to make cross border purchases, and almost all cross border shoppers also shop domestically.
Base: Online shoppers. N=12,349. Q. Thinking about shopping online, from which of the following country or geographies’ websites have you purchased in the past 12 months? Please include your home country if applicable.
%
Multi-
country
average*
for CB
* Multi-country average not weighted by market size
Self-stated domestic and cross border purchasing in past 12 months
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6
Expect continued cross border growth and penetration, especially from ‘emerging’ markets
North America
Western Europe
Nordics Central, Eastern Europe
Middle East
Latin America
Asia Pacific
US CA UK DE FR IT ES NL CH AT SE NO DK PL RU IL TR UA BR MX AU CN
4 4 3 5 714
8 4 4 5 6 7 513
206
20 15 18 206
1715 16 18 17
19
2726
15 18 1622
28
17
27
34
39
26 3233
39
24
35
Will shop CB more often Will start shopping CB
%
Consumers are generally positive about shopping cross border more often.
Base: Online adults. N=12,878. Q36f. In the next 12 months, how do you think your online shopping habits will change, if at all, in terms of how often you purchase from online stores in your country or from another country?
CBT shopping intent RU TR BR CN
10% online adults to start shopping cross border*
25% online adults to shop cross border more often*
* Multi-country average not weighted by market size
7© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
US and China are most popular cross border destinations. W. Europe a key region.
USA
China
UK / GB
Germany
Hong Kong
France
Japan
CanadaSin-
gapore
Spain
Italy
26
18
17
16
8
5
4
3
3
3
3
What are the popular online destinations for cross border shoppers within a particular region (including intra-region international purchasing)?
North America USA 32%China 15%UK 10%
LATAMUSA 39%China 26%
W. EuropeGermany 28%USA 18%UK 17%China 13%
CEEChina 24%USA 16%Germany 13%UK 11%
NordicsUSA 31%UK 30%Germany 19%China 15%
APACUSA 31%UK 20%Hong Kong 17%China 15%
Popular online destinations for
cross border shoppers*
MEUSA 36%China 29%UK 17%Hong Kong 11%
Base: Online shoppers. N=12,349. Note: China and HK asked separately. Includes intra-region purchasing. Q. Thinking about shopping online, from which of the following country or geographies’ websites have you purchased in the past 12 months? Please include your home country if applicable.
Note on interpretation: North American shoppers buy from these countries
*22 country average (not weighted by market size)
Region definition (countries surveyed): Western Europe: UK, Germany, Austria, Switzerland, France, Italy, Spain, Netherlands; Central and Eastern Europe: Poland, Russia; Nordics: Denmark, Sweden, Norway; North America: USA, Canada; Latin America: Mexico, Brazil; Middle East: Turkey, Israel, UAE; Asia Pacific China, Australia
Note on interpretation: figures are % of global* online shoppers buying internationally from these countries
%
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Clothing, footwear and accessories and consumer electronics are top cross border categories purchased
Top 10 CB categories purchased* (%) Top CB categories purchased by region
39
26
20
20
20
18
17
16
12
11
Clothing/apparel, footwear and accessories
Consumer electronics,
Toys and hobbies
Travel and transportation
Entertainment/education (physical items)
Cosmetics/beauty products
Jewellery/watches
Entertainment/education (digital)
Sports/outdoors
Household appliances, household goods and furniture
North America Clothing/footwear 33%Entertainment/ (phys) 24%Travel/transport 17%Toys/hobbies 17%Consumer electr. 16%
LATAMClothing/footwear 47%Consumer electr. 38%Toys/hobbies 24%Entertainment/ (digital) 23%Cosmetics/beauty products 22%
W. EuropeClothing/footwear 33%Consumer electr. 24%Entertainment/ (phys) 21%Travel/transport 20%Toys/hobbies 17%
CEEClothing/footwear 50%Consumer electr. 35%Toys/hobbies 30%Cosmetics/beauty products 24%
NordicsClothing/footwear 36%Travel/transport 21%Entertainment/ (phys) 21%Consumer electr. 21%Toys & hobbies 17%
APACClothing/footwear 43%Cosmetics/beauty products 26%Consumer electr. 25%Entertainment/ (phys) 23%Jewelry/watches22%
i.e. people in NA like to buy ‘xyz’ from other countries
Base: Online cross border shoppers. N=6,899. Q. In the past 12 months, what kinds of products have you purchased from websites from other countries? Please select all that apply.
MEClothing/footwear 47%Consumer electr. 34%Travel/transport 28%Toys/hobbies 27%
Region definition (countries surveyed): Western Europe: UK, Germany, Austria, Switzerland, France, Italy, Spain, Netherlands; Central and Eastern Europe: Poland, Russia; Nordics: Denmark, Sweden, Norway; North America: USA, Canada; Latin America: Mexico, Brazil; Middle East: Turkey, Israel, UAE; Asia Pacific China, Australia
*22 country average (not weighted by market size)
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
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Cross border shoppers are valuable consumersThey spend more online, see the benefits of shopping online and are more mobile oriented.
Online spend Online shopping attitudes Share of online spend on mobile
(self-stated)
2x…the
amount that cross-
border shoppers
spend online vs
domestic only
shoppers**
CB shoppers expect +6ppt share of spend from mobile vs domestic only shoppers
78
76
72
73
74
69
61
43
87
86
84
83
83
77
68
52
% Somewhat/Strongly Agree
Enables me to shop anytime, anywhere
Helps me locate info. about retail stores (e.g. opening hours, locations)
I like that I can make purchases from the comfort of my home
Gives me more product choice
Helps me research and choose items I plan to purchase in store
Gives me back time
Makes my life easier around the holiday season
Enhances my experience of shopping in store
Past 12 Months
Next 12 Months
Past 12 Months
Next 12 Months
87% 82% 83% 76%
9% 13% 10% 16%
4% 5% 7% 8%
Tablet
Smartphone
Desktop / Lap-top / Notebook
Domestic Only Shoppers
Cross-Border Shoppers*
Domestic OnlyShoppers
Cross-BorderShoppers*
* Those who spend >10% of their online expenditure cross-border
* * self-stated. N=5448 domestic; n=3936 cross border* shoppers
N=5448 domestic; n=3936 cross border* shoppers N=5448 domestic; n=3936 cross border* shoppers
Multi-country average.
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However, CB shoppers still face hurdles…
51
45
43
41
40
39
38
38
38
35
45
40
42
37
34
38
38
39
36
39
% of those who shop cross-border
% of those who do not shop cross-border
Barriers to Cross-Border Shopping
Delivery shipping costs
Concern about customs duties/fees /taxes
Concern that I may not receive the item
Concern item would not be as described
Delivery time not fast enough
Difficult process for returning products
Concerns about counterfeit goods
May not receive sufficient help if problems
Return shipping costs
Concern about identity theft / fraud
Base: N=5448 domestic; n=6899 cross border shoppers. Multi-country average. Q. Which of the following reasons prevent you from making purchases from websites from another country? /[ …more often]?
35
33
33
30
28
28
26
24
36
36
30
33
28
27
31
30
Lack of buyer protection or insurance in case of problems
Concern about security of my financial or personal details
Preferred payment method not always offered
Unsure of the return policy for shipments
Currency conversion rate not favourable
Lack of tracking and notification
Different language of websites, product descriptions and customer support
Payment is in foreign currency
Top 10 barriers
Top pain points are delivery shipping costs, duties/taxes and concern about not receiving the item.
Other barriers
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There are ways to drive cross border online shopping
29
27
26
26
26
25
24
23
22
21
21
15
13
Favorable returns policy
Favorable buyer protection
Faster delivery
Lower transaction fees
Offers my preferred way to pay
Shipping costs, if any, shown before checkout
Coupons/promotions/discounts
Offer delivery tracking/notifications
Wider product selection
Visible, trusted payment logo
Favorable currency conversion rate
If I needed to send a gift to someone living in that country
Flexible delivery dates
Base: Online shoppers. N=12,349. Multi-country average. Q. Which, if any, of the following would make you more likely to buy from a website from another country?
47
45
39
38
37
33
31
31
30
29
Drivers for Cross-Border Shopping (%)
Free shipping
Safe way to pay
Can find items which are hard-to-find locally
Lower overall cost to buy items from another country
Free return shipping
Customer support in my language
Website available in my language or translation available
Lower shipping costs
Costs shown/payment possible in your local currency
Proof of product authenticity
Top 10 drivers
Q. Which, if any, of the following would make you more likely to buy from a website from another country?
Key drivers are free shipping, safe way to pay, access to items, low cost, free return shipping.
Other drivers
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12
Free return shipping is a ‘must have’PayPal’s initiatives are well-aligned with cross border shopper needs
Free shipping / free deliveryFor domestic shopping
For cross-border shopping
Express deliveryFor domestic shopping
For cross-border shopping
Flexible delivery timesFor domestic shopping
For cross-border shopping
Free shipping / postage for returnsFor domestic shopping
For cross-border shopping
52
46
34
27
34
28
57
51
36
35
41
39
39
38
30
30
% Nice to Have
% Must Have
Importance of Shipping Options when Shopping Domestically or Cross-Border
Base: Online adults. N=17519. Multi-country average. Q. Listed below are some options for delivery/returns that could be offered by online retailers. For each option, please indicate how important it would be to you for an online retailer to offer this if you were considering making a purchase from them. Please think about both domestic websites (retailers based in your country) and websites from another country, and select one answer for each option.
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PayPal usage for CB ahead of competition in majority of markets
North America
Western Europe
Nordics Central, Eastern Europe
Middle East
Latin America
Asia Pacific
US CA UK DE FR IT ES NL CH AT SE NO DK PL RU IL TR UA BR MX AU CN
65 6574 74
67
8086
49 51 5259
69
5864
50
77
66
4146
7383
353945
37
22
4336
55
4452
41
53
74
54
41
61
28
5762 60
53
34
62
PayPal Main competitor
%
Payment method used for cross-border purchases (%)
Base: Online cross border shoppers. Q. Which payment cards / methods have you used for online transactions / purchases from websites from another country in the past 12 months?
PayPal usage correlates with markets where eBay provides a good foundation.
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14
Safety, protection, convenience key to cross border payment method preference
Base: Cross border shoppers who have used more than one payment method in the past. N=4,670. Multi country average. Q. For what reasons is this your preferred payment method for online transactions/purchases from websites from another country?
54
49
44
31
28
28
24
24
13
11
11
10
Reasons for cross border payment method preference (%)
Safer way to pay
Purchase protection
More convenient way to pay
Payment is processed quickly
Accepted by most retailers
Don’t have to share my personal / financial details with seller
Well-known, trusted brand
Faster checkout
Not charged commission/transaction fee on overseas purchases
Habit
Better currency conversion rate
Receive rewards/cashback