Listen to the article

If you like stories like this, be sure to sign up for SUMO Heavy Insights, our monthly roundup of tech and retail news. Sign up here.

Under the umbrella of global eCommerce lies cross-border commerce, borderless business, and international online retail. Harvard Business Review wrote, “Business leaders are scrambling to adjust to a world few imagined possible just a year ago. The myth of a borderless world has been shattered. Traditional pillars of open markets—the United States and the UK—are wobbling, and China is positioning itself as globalization’s staunchest defender.” And it’s true. Rising volumes in global eCommerce due to the pandemic and other shifting consumer habits put pressure on cross-border shipping and logistics. 

What’s the current state of borderless shipping? 

McKinsey and Company predict that borderless eCommerce could grow to a $1-$2 trillion (with a capital T) market by 2030, depending on several factors. 

Their research points out that Cross-border eCommerce parcels can travel by three different channels:

  • The postal channel, regulated by the Universal Postal Union (UPU) exchange system, is the most commonly used shipping option today. 
  • International express shipments are responsible for routing around two-thirds of all lightweight, international parcels and express shipments, which take up 5 to 10 percent of the total volume. So far, that channel has boasted excellent delivery times and overall dependability.
  • Commercial-parcel operators take on the brunt of all other shipments. These operators capitalize on the need of shoppers and shippers for reasonably priced but reliably quick and quality shipping– anything to keep up with Amazon. They offer tracking visibility that sets it apart from other methods.

Each of these shipping methods has different variables in upcoming trends that could impact revenues. For example, in 2020, just before the pandemic, there were 9.3 billion cross-border orders, and 60 percent of them were intercontinental. After tackling limited air cargo capacity issues, international deliveries are quickly outpacing domestic ones. Additionally, in 2020, the pandemic affected the patterns in the flow of goods: intraregional flows in North America and Europe heightened due to supply chain disruptions and a shortage of transport capacity. 

Customers were then cautious about buying products from Asia. On the flip side, the unavailability of certain Western-made products in Asian countries catalyzed significant growth in parcel deliveries in trade lanes from the European Union to China and from the United States to China. 

Zonos points out several trends that analysts are projecting. 

One of the main themes in cross-border shipping for the upcoming year is ethics surrounding the data collected in these transactions. Consumers have become more discerning about where they share their data, and things could get messy regarding international data laws. While some data tracking metrics and sharing will continue more transparently, retailers will still need to find new, more ethical methods to engage and understand consumers properly. 

Business owners could be on the other side of the world compared to their target consumers. Advertising can vary depending on the country, so without data tracking, there is no way to tell who’s interested in what. Brands must develop new tactics to know who to advertise to and how. Access to customer data has become and will continue to be based on the consumer’s trust.

Another trend to look out for in cross-border shipping is personalization. Research from Epsilon indicates that over 80% of consumers are more likely to make a purchase when the business offers personalized experiences. How does this relate to borderless shipping? 

Zonos’ research found that while local businesses may be more convenient locationally, they may be lacking in the effort to personalize the shopping experience for their customers. These businesses are missing out on potential customers and revenue because their customers would instead buy from a cross-border company that has created a personalized shopping experience. Data backs up the reality that customers highly value a customized shopping experience. If retailers are willing to integrate personalization into their business, they’re legitimizing themselves as competition in the marketplace. 

Businesses can personalize consumers’ cross-border experience by making sure to offer language plugins and additional tax costs from country to country. 

Finally, another forecasted trend for cross-border shipping has much to do with the looming recession that’s about to affect the global economy. Over the last 12-month period, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 7.9%, which is the most significant increase since 1982; and it shows no signs of stopping anytime soon.

Prices for certain goods are at record highs, and inflation has not been this disruptive in decades. Inflation causes more consumers to shop cross-border to find lower prices. Shopping online allows consumers price match options, which increases the number of people making cross-border purchases. Cutting costs is crucial when preparing for such an economic crisis. In the past, eCommerce has not been affected by inflation because retailers have been more hesitant to raise prices online than in stores, but it looks like price hikes are imminent, and consumers will find the best deals, no matter what. Therefore, cross-border shipping is about to gain even more interest. 

2023 will see many changes and advancements regarding cross-border shipping, and a recession on the horizon will be the catalyst that sparks many long-overdue changes for the sector.

Photo by Paul Teysenon Unsplash

More on Shipping and Logistics:

Amazon Extends Prime Delivery to Independent eCommerce Merchants

The Supply Chain Crisis Explained

Was Shopify in Over Their Heads?