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Report on cross border trade: January – February 2016

The general rise in the importance of cross-border trade is a long-term trend observed all around the world. This is supported by changing habits of customers who now have a wide range of payment solutions and new shipping options to choose from that make the shopping experience more and more frictionless, even on mobile devices.

Webinterpret is constantly observing and measuring the trends on international online markets and we would like to share with you all the unique data that we have prepared for you in this report. The report was prepared on the basis of a research group comprising 10 000 international retailers who are British, German and American Webinterpret customers running their business on eBay and Amazon.

The main trends on international online markets:

  1. Rising tendency of international trade in British, German and American markets.
  2. British sellers find the highest demand on international markets for their items in Germany.
  3. German sellers find the highest demand on international markets for their items in the United Kingdom and France.
  4. American sellers find the highest demand on international markets for their items in the United Kingdom.
  5. Among the most popular categories sold internationally we can find: Clothes, Shoes & Accessories; Vehicle Parts & Accessories; Mobile Phones & Communication

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International sales at the beginning of 2016

The first two months of 2016 brought a stabilization of international sales for Europe-based sellers near record high levels, while the revenue share generated from cross-border trade by those located in the US decreased from 28% in January to 24% in February 2016 (Chart 1). As you can see on Chart 1, the demand from outside the United Kingdom observed by British sellers was responsible for more than one in every four pounds of their revenue generated in January and February (26%).

Chart 1.

Calculation method: (international sales generated by the sellers from a given country in a given month) / (international sales + domestic sales generated by the sellers from the given country in the same given month) = % of international sales

Last year, UK based sellers saw respectively 20% and 18% contribution of international sales to their total online sales. The share of international revenue of British sellers reached the highest level since we began tracking this data. The cross-border trade contribution to the revenue of the German sellers is the least volatile of the three analyzed markets. It held steady between 16% and 17% throughout 2015 and moved slightly upwards outside of this range in the first two months of 2016.

International revenue and currency impact

The pickup in international online shopping activity in Europe was to a large part driven by the high purchasing power of buyers earning in U.S. Dollars, euros and other currencies that gained in value against the British pound. American shoppers benefited from a continuation of the trend we saw on financial markets in the first months of 2016.

Their strong currency combined with huge discounts after the peak season in most ecommerce niches made online shopping outside the United States even more tempting than usual. The US dollar held close to all time highs against the euro. The euro-dollar exchange rate stood between 1.08-1,1 EUR. That means that in January 2016 one U.S. Dollar bought 0.93 EUR (vs. 0.87 EUR month earlier).

Chart 2.

Calculation method: (international sales generated by British sellers in a given country during a given month) / (international sales generated by British sellers overall in the same month) = Percentage of total international revenue generated by British sellers in a given month in a given market

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The same factor was even more supportive for British sellers. In February 2016, the exchange rate between the British pound and the U.S. Dollar was the lowest for three decades (pound value expressed in dollars fell below 1.38 USD). In other words, one U.S. Dollar bought 0.72 pounds, which is an increase of almost 13% compared to 0.64 pounds a year earlier. This significant increase in purchasing power of U.S. consumers is visible when we break down all the international sales by the buyers’ location.

The share of sales from UK sellers to US consumers increased to 15% of total international revenue in January and 17% in February. Last year the orders from the United States were responsible for only 4.8% and 5.9% of British sellers’ revenues from international customers.

Chart 3.

Calculation method: (international sales generated by German sellers in a given country during a given month) / (international sales generated by German sellers overall in the same month) = Percentage of total international revenue generated by German sellers in a given month in a given market

Unfortunately, the strong U.S. Dollar and a record weak pound also means that shoppers earning and paying with pounds had the weakest incentives to shop in the United States since the origination of online commerce.

The euro-pound exchange rate was also extremely favorable to customers from the euro zone (and all other paying in euro). In November 2015 one euro bought 0.7 pounds while just four months later the value of the euro increased by 13% to 0.79 pounds. This explains the jump in the share of orders from German and French buyers in the total British sellers’ international sales.

Both in January and February they accounted for 42% in Germany and above 18% in France of all cross-border sales at UK-based stores. However, it’s worth noting that in peak ecommerce season, in December 2015, German and French shoppers generated more than half of international orders for UK sellers.

Chart 4.

Calculation method: (international sales generated by American sellers in a given country during a given month) / (international sales generated by American sellers overall in the same month) = Percentage of total international revenue generated by American sellers in a given month in a given market

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What British items are loved

The most popular categories of products sold by British online stores among buyers abroad are “Watches and Jewellery” and “Mobile Phones and Communication”, where international sales generate almost half of the revenue in the analysed period (45% and 43% respectively).

On the other hand, sellers from the “Home, Furniture & DIY” category counted mostly on local demand (only 12% of sales came from the outside of the United Kingdom), which is related to the high international shipping costs for large or heavy items. On the chart below you can see the other top 10 categories with the highest international demand sold by British sellers.

Webinterpret has decided to optimise translation processes in the Car Parts item category. Now we offer our customers the opportunity to list all their items from this category – not only car parts with the highest potential as we used to. Webinterpret also has invested in increasing the quality of terms translations by using human translation instead of machine for the most popular terms.

Chart 5.

Calculation method: (international sales of the top 10 categories sold internationally by British sellers are presented in percentages and were calculated by: (international sales of a given category in the time frame January – February 2016)/(international  sales + domestic sales of the same given category in the same time frame) = % of international sales

Popular German items

Our analysis from December 2015 shows sellers in DE are generating the highest international revenue in the categories Clothes, Shoes & Accessories; Vehicle Parts & Accessories and Mobile Phones & Communication. When looking at the amount of overall transactions, German sellers are selling the most items internationally in categories such as Mobile Phones & Communication and Jewellery & Watches.

Chart 6.

Calculation method: (international sales of the top 10 categories sold internationally by German sellers are presented in percentages and were calculated by: (international sales of a given category in the time frame January – February 2016)/(international  sales + domestic sales of the same given category in the same time frame) = % of international sales

American stuff that the world can’t live without

Sellers in the US are generating the highest international revenue in the categories Clothes, Shoes & Accessories, Jewellery & Watches and eBay Motors. When looking at the amount of overall transactions, US sellers are selling the most items internationally in categories such as Vehicle Parts & Accessories and Clothes, Shoes & Accessories.

Chart 7.

Calculation method: (international sales of the top 10 categories sold internationally by American sellers are presented in percentages and were calculated by: (international sales of a given category in the time frame January – February 2016)/(international  sales + domestic sales of the same given category in the same time frame) = % of international sales

The coming months

Large upfront investments that deterred many sellers from international expansion are becoming less relevant thanks to new cost-efficient tools, online marketplaces with millions of active shoppers and technological innovations that simplify the process of serving customers from foreign markets.

All these factors are the ingredients of international success and all of them are being constantly developed by the biggest players in the ecommerce industry. We are keeping our hand on the e commerce pulse and will be informing you monthly on latest developments and how they may affect your business.