Without Alternative Payment Methods, international retailers face losing traction
Amid economic headwinds, international expansion has been a key strategy for achieving sustainable business growth for merchants. We’ve seen that broadening market reach can yield great success for businesses, with 87% of US companies in agreement that international expansion is necessary to deliver long-term business growth. Our own market research shows that there is significant demand in the US for international products, including cosmetics and consumer tech. It also highlighted that American shoppers want to be able to use alternative payment methods (APMs). These findings reinforce the need for international retailers to adapt to changing payment preferences or risk a lack of traction in the US market – one of the largest in the world. Succeeding in such an extensive market offers unparalleled opportunities for increased sales and subsequently higher business revenues.
Opportunities for international merchants
Despite growing concerns around the long-term impact of the current recession on the US economy, the survey found that almost half (48%) of Americans who shopped online from retailers based outside the US in 2022 did so at least once a month. Furthermore, only 30% of those who have not shopped online from international retailers said this was because they could get everything they need from US-based retailers, demonstrating that for the majority, one country alone cannot fully meet the needs of the modern consumer. This suggests that while consumer spend has declined throughout the world owing to economic uncertainty, opportunity remains for international retailers looking to tap into the US market via online sales channels.
There are multiple sides to the coin when we consider why people may shop internationally. There are people who buy from other countries because they are looking for the most cost-effective deal on a product. Even with higher shipping costs and the price of customs, consumers can still find that they can save money with the right e-commerce retailer. There may also be a positive association with the particular items and the country they are from. For example, Italian leather handbags made in Milan, or Scottish tartan scarves woven in the Highlands.
There may also be an element of brand loyalty associated with people shopping from abroad. 77% of US consumers have remained loyal to the same brand for 10 years or more. With being faithful to a particular brand being so prevalent amongst consumers, it is more than likely that many would buy from international retailers if this was the only way they could access products from a given brand.
Understanding the market
Digitalisation during the Covid-19 pandemic changed the ecommerce landscape and has driven more shoppers in the US to purchase products from abroad online. Fashion items such as clothing, shoes, and accessories are the most popular types of products to purchase from international retailers, followed by consumer electronics. Of the survey participants, 31% have bought or considered buying fashion, shoes and bags from abroad in the last 12 months, followed by electronics (29%), books (26%), and toys & hobby and DIY supplies (25%). This clearly demonstrates the significant interest in international products and the opportunity this presents for merchants worldwide. For these merchants to be successfully capitalise on this interest, they must offer alternative payment methods.
The need to offer alternative payment methods
With new fintech and payment offerings in the US, consumers have different preferences when it comes to where and how they make payments. Offering products that are not available from domestic US sellers is not enough; merchants must partner with payment service providers (PSPs) that account for local payment preferences and offer simplicity and security. Failing to offer a variety of payment methods will only inhibit future success and business growth.
For example, Buy Now, Pay Later (BNPL) is the least popular payment method in the US, bucking the global trend, with only one in 10 Americans who had bought from an international seller in the last 12 months using this option. The much higher demand in other markets for BNPL payment options demonstrates the importance of recognising how preferred payment methods differ and catering their offerings accordingly. Our research has shown that 55% of Americans would look elsewhere, or not make the purchase at all, if their preferred payment method was not available. Familiarity with a payment method increases popularity. Almost three quarters (73%) of respondents noted that they felt safer making purchases online – whether from a domestic or international retailer – if they recognised the PSP, with 36% of those surveyed saying that their knowledge of the Payment Service Provider actively influences their purchase decision.
Amid economic headwinds, international expansion has been a key strategy for achieving sustainable business growth for merchants. We’ve seen that broadening market reach can yield great success for businesses, with 87% of US companies in agreement that international expansion is necessary to deliver long-term business growth. Our own market research shows that there is significant demand in the US for international products, including cosmetics and consumer tech. It also highlighted that American shoppers want to be able to use alternative payment methods (APMs). These findings reinforce the need for international retailers to adapt to changing payment preferences or risk a lack of traction in the US market – one of the largest in the world. Succeeding in such an extensive market offers unparalleled opportunities for increased sales and subsequently higher business revenues.
Opportunities for international merchants
Despite growing concerns around the long-term impact of the current recession on the US economy, the survey found that almost half (48%) of Americans who shopped online from retailers based outside the US in 2022 did so at least once a month. Furthermore, only 30% of those who have not shopped online from international retailers said this was because they could get everything they need from US-based retailers, demonstrating that for the majority, one country alone cannot fully meet the needs of the modern consumer. This suggests that while consumer spend has declined throughout the world owing to economic uncertainty, opportunity remains for international retailers looking to tap into the US market via online sales channels.
There are multiple sides to the coin when we consider why people may shop internationally. There are people who buy from other countries because they are looking for the most cost-effective deal on a product. Even with higher shipping costs and the price of customs, consumers can still find that they can save money with the right e-commerce retailer. There may also be a positive association with the particular items and the country they are from. For example, Italian leather handbags made in Milan, or Scottish tartan scarves woven in the Highlands.
There may also be an element of brand loyalty associated with people shopping from abroad. 77% of US consumers have remained loyal to the same brand for 10 years or more. With being faithful to a particular brand being so prevalent amongst consumers, it is more than likely that many would buy from international retailers if this was the only way they could access products from a given brand.
Understanding the market
Digitalisation during the Covid-19 pandemic changed the ecommerce landscape and has driven more shoppers in the US to purchase products from abroad online. Fashion items such as clothing, shoes, and accessories are the most popular types of products to purchase from international retailers, followed by consumer electronics. Of the survey participants, 31% have bought or considered buying fashion, shoes and bags from abroad in the last 12 months, followed by electronics (29%), books (26%), and toys & hobby and DIY supplies (25%). This clearly demonstrates the significant interest in international products and the opportunity this presents for merchants worldwide. For these merchants to be successfully capitalise on this interest, they must offer alternative payment methods.
The need to offer alternative payment methods
With new fintech and payment offerings in the US, consumers have different preferences when it comes to where and how they make payments. Offering products that are not available from domestic US sellers is not enough; merchants must partner with payment service providers (PSPs) that account for local payment preferences and offer simplicity and security. Failing to offer a variety of payment methods will only inhibit future success and business growth.
For example, Buy Now, Pay Later (BNPL) is the least popular payment method in the US, bucking the global trend, with only one in 10 Americans who had bought from an international seller in the last 12 months using this option. The much higher demand in other markets for BNPL payment options demonstrates the importance of recognising how preferred payment methods differ and catering their offerings accordingly. Our research has shown that 55% of Americans would look elsewhere, or not make the purchase at all, if their preferred payment method was not available. Familiarity with a payment method increases popularity. Almost three quarters (73%) of respondents noted that they felt safer making purchases online – whether from a domestic or international retailer – if they recognised the PSP, with 36% of those surveyed saying that their knowledge of the Payment Service Provider actively influences their purchase decision.
The need for APMs will continue alongside the demand for international products
People feeling less confident when making online purchases is only set to increase as disposable income declines in real terms during the global recession. We expect people to be taking more care with how they spend their money and looking to make the most cost-effective purchases, which may include buying from international over domestic sellers. In order to capitalise on this opportunity, international e-commerce merchants must ensure they are offering the localised payment methods known and trusted in the US.
Although there is demand for international products, this alone is not enough to ensure success for merchants looking to expand into the US. Failure to adapt to regional payment preferences could inhibit online retailers’ success – an unjustifiable risk in the current economic climate.
People feeling less confident when making online purchases is only set to increase as disposable income declines in real terms during the global recession. We expect people to be taking more care with how they spend their money and looking to make the most cost-effective purchases, which may include buying from international over domestic sellers. In order to capitalise on this opportunity, international e-commerce merchants must ensure they are offering the localised payment methods known and trusted in the US.
Although there is demand for international products, this alone is not enough to ensure success for merchants looking to expand into the US. Failure to adapt to regional payment preferences could inhibit online retailers’ success – an unjustifiable risk in the current economic climate.
