Home >opinion >online-views >Cross-border online shopping gains traction

New Delhi-based senior executive with a cafe chain does not enjoy shopping at malls in the capital. She buys her clothes, bags and footwear only from international fashion websites such as asos and Neiman Marcus.

Another executive working with an e-commerce website buys stuff for herself and her son from international online shops.

These women are part of a growing tribe of millennials (ages 18 to 34) who are cross-border online shoppers.

Shipments to India from large global retailers with an online presence or from niche e-commerce websites, especially in the West, are on the rise as an increasing number of Indian consumers surf the web for better deals and the latest products.

According to American online payments firm PayPal’s estimates, Indians spent close to 54,700 crore on cross-border shopping in 2015. This figure is estimated to grow by 78.5% in 2016, based on future intentions of cross-border shoppers, and online shoppers who have not done so yet, said Vikram Narayan, country manager and managing director, PayPal India.

The estimates also pegged the average spends by 3.8 million cross-border shoppers on buying goods from other countries at 1.42 lakh in 2015.

Some of the broader trends in overseas online shopping have been captured by PayPal Cross-border 2015, Millennials Reporting, a study conducted by research firm Ipsos on behalf of PayPal.

Although the global study was conducted in 29 markets with approximately 23,000 consumers to examine how people shop online and across borders, there are India-specific findings based on a sample size of more than 800 respondents that deep-dive into the shopping behaviour of the millennials in this market.

According to the PayPal-Ipsos study, 82% of the millennials said they bought something online in the past 12 months compared to 78% of the general population (all people aged above 18 years). The online survey for this study was conducted in India between September and October 2015 and the firm has just shared the results.

Of the total respondents surveyed in India, barely 2% said that they shop only from foreign websites and Indian sites were not on their list. However, as many as 37% millennials shop both from overseas portals as well as Indian websites. Still, a majority of millennials—nearly 61%—shop only from domestic websites. The report compares the millennials’ habits with those of the general population. While there are some differences, the trends in shopping behaviour of the two are similar.

Millennials are open to adopting new technologies that enable online shopping. They have a strong focus on quality and variety and hence cross-border shopping is prevalent among them, according to Narayan.

The biggest categories for cross-border online shopping are clothing/apparel, footwear and accessories. Fifty-nine per cent of millennials buy products from these categories from abroad, while only 53% of those surveyed among the general buyers said that they purchased these products from foreign websites.

The next big category is consumer electronics for which the millennials shop more than the others. Even in the watches and jewellery segment, millennials do more cross-border purchases.

Interestingly, what the millennials also shop for are events tickets. These could include tickets for sporting events such as cricket, Formula One or tennis. Or even tickets for international rock shows. Obviously, more millennials buy these tickets than buyers in other age groups.

The top 10 countries in cross-border shopping include the US, China and the UK among the top three. Twenty-seven per cent of the online consumers shop from the US, followed by China at 11% and UK at 10%. Singapore is also popular for online shopping. New markets such as Germany and Canada have also showed up in the study.

Among devices, shopping via smartphones has gained traction. Almost a third of both domestic and cross-border transactions are made on smartphones. However, a majority of shoppers still uses desktops and laptops to shop online.

The study highlighted several reasons why millennials buy from foreign websites. To be sure, younger shoppers feel that the product quality is better, the products are interesting, have better prices and more variety. That is not all. Indian consumers also have more faith in the reputation of online stores abroad, trust in their product authenticity and find their return policies more generous. Coupons, promotions and discounts available on these sites are a strong driver for millennials. What they also feel is that the modes of payment to these overseas sites are safer.

But there are barriers too. Sometimes, the shipping costs are high and there is little clarity on duties and customs fees that need to be paid. Payment in foreign currency is also a stumbling block. Some are even concerned about either not receiving the item or about identity theft and fraud.

However, millennials are smarter than other consumers in being able to return products bought overseas. They return the product either if it does not match the description on the website or if they have to unexpectedly pay more to get it delivered.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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