© 2014 paypal inc. all rights reserved. confidential and proprietary. paypal cross-border research...

© 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


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.


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


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.


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


6

Expect continued cross border growth and penetration, especially from ‘emerging’ markets

North America

Western 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

%

8© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

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)


9

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.


10

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


11

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


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


Flexible delivery timesFor domestic shopping


Free shipping / postage for returnsFor domestic 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.


13

PayPal usage for CB ahead of competition in majority of markets

North America

Western 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.


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

© 2014 paypal inc. all rights reserved. confidential and proprietary. paypal cross-border research...

Documents

cb shoppers

cb consumers

growth of online cb

cb purchases

cb hotspots

cb categories

online shoppers

paypal crossborder research