FADO Go is operating in the rapidly evolving social e-commerce industry, and in the explosive-growing cross-border shopping sector in particular. Cross-border e-commerce is international online trade that involves purchasing and selling products through online shops across international as well as national borders. Following the advent of the Internet, consumers can shop online products and services that may be unavailable or prohibitively expensive in their home countries from shopping sites overseas and from multinational merchants in international marketplaces. This phenomenon is significantly growing as advancing technologies help reduce problems associated with international payments, long shipping times, and language barriers - making it possible to shop online everywhere by digital devices. The number of digital buyers also keeps climbing every year as internet access and adoption are substantially increasing worldwide.
Over 2 billion people purchased goods or services online in 2020, and during the same year, retail e-commerce sales worldwide surpassed $4.2 trillion US dollars in 2020 (Statista, 2020). The global e-commerce market is expected to total $4.89 trillion US dollars (19.5% of total retail sales) in 2021, and it will continue to rise year after year and take up more retail market share reaching 21.8% by 2024 (eMarketer, 2021). The growth gains momentum, showing that borderless e-commerce is becoming a profitable option for online retailers.
Cross-border e-commerce representing 20% of global e-commerce is the new normal. As per Accenture’s 2019 report, the cross-border shopping growth is 2x the rate of domestic eCommerce with 29% CAGR, but the ability to control market share declines. New technology-driven start-ups, competitive pricing, advanced logistics, and innovative supply chains are stealing a march on traditional players’ competitive edge. Customers expect cross-border delivery to meet domestic services: fast, free, trackable, easy returns, and quick refunds. Therefore, new business models and capabilities are required for global e-commerce companies to compete in the cross-border delivery race.
B2B (business-to-business) e-commerce is grabbing the attention of buyers, sellers, and investors all over the world. In 2019, the global B2B e-commerce market valuing $12.2 trillion US dollars is over 6 times that of the B2C (business-to-consumer) market (Statista, 2019). Companies operating in the B2B e-commerce space either set up their own platforms and sell directly to the buyers or build a marketplace where many companies sell their products alongside their competitors. They try to be nimble and mimic the B2C shopping experience, so they are now integrating their systems and platforms to establish an omnichannel relationship with their customers. It is of primary importance to focus on this highly potential market for cross-border shopping platforms and marketplaces.
Asia Pacific is dominating online retail sales with approximately $2.45 trillion US dollars due to China’s impact in the overall segment. The incremental trade volume in the Asia Pacific region accounted for 42.3% of retails sales worldwide, almost half of the global incremental trade volume. Clearly, the Asia Pacific shows a huge potential for cross-border e-commerce. Second-ranked North America captures 22.9% and Western Europe makes up 16.2%.
China leads the world e-commerce market with total online sales of $2.3 trillion US dollars responsible for 52.1% of all e-commerce sales worldwide and generates 21% year-over-year growth. It even surpasses the US and out-ranks nine countries in the top ten largest e-commerce markets. After China and the US, the country with the third-largest e-commerce market size is the United Kingdom. And two other Asian countries, Japan and South Korea wrap up the top five-largest e-commerce markets. As it stands, three out of the five biggest e-commerce markets in Asia, again reflecting the region’s e-commerce potential. Besides, cross-border online purchasing is gaining popularity in emerging markets, where consumers find it hard to buy affordable imported products in local stores.
The growing cross-border e-commerce market should come as no surprise, given the global nature of search and discovery of new brands and online retailers, the increased accessibility and affordability of internet and mobile devices, and the mass e-commerce adoption. Mobile penetration also has an impact helping to drive cross-border purchases. With over 3 billion smartphone users worldwide, more and more global consumers have access to social media platforms and are shopping via mobile phones. Digital buyer penetration is expected to surpass 65% of internet users worldwide in 2021 (Statista, 2020), and the global e-commerce industry is set to evolve and expand.
The COVID-19 outbreak has a significant impact on consumer behavior. Consumer demand experiences a surge like never before due to the forced lockdowns and the general recommendation to stay at home. Many consumers worldwide are likely to continue purchasing online, shifting in-store shopping to online for some product categories. There are more e-commerce tractions across all of the product categories since consumers avoid physical stores and limit their budgets in the form of entertainment and travel. Brands and retailers selling across multiple markets also see an overall positive trend in online demand and increases in their overall international sales throughout the crisis (Global-e, 2020). This is also not short-term growth. Most shoppers who shifted online amid the pandemic are expected to stay even after normality returns, making e-commerce likely to become the dominant shopping type for many products. And according to many projections, a growing percentage of that will be cross-border.
Since the last decade, social media platforms have served as an entry point for establishing connections, content sharing, and social interactions for many users. Social networking has rapidly transformed into social e-commerce where people are letting social media guide their purchasing decisions, and for brands, it is an ideal place to boost sales and bring brand awareness. Moreover, online social retail emerged as a breakthrough retail mode during the COVID-19 pandemic. Integration of e-commerce with social media has become a powerful marketing tool enabling consumers to explore products they generally would not see on an e-commerce platform. Shifts in consumer behavior are also expected to transcend across social media channels.
(Source: Statista 2021)
The global social commerce market size was valued at USD 474.76 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 28.4% from 2021 to 2028 (Statista, 2021). The Asia Pacific market accounts for the highest market share as the region has the widespread reach of social media platforms such as Facebook, Twitter, and Instagram. Also, countries such as India and China are witnessing rapid growth in terms of the number of smartphones and social media users which in turn will boost the market growth in this region.
As a part of social commerce, live shopping, the natural evolution on the internet of home shopping, and using livestream broadcast to sell products to viewers, is increasing its market size. Estimates put the market size of live e-commerce at USD 423 billion (2022-2025), with China being the biggest market and the rest of Southeast Asia not far behind. It's important to note that live streaming will extend to more sectors than just e-commerce sales, but will include other industries from finance to engineering to government procedures where their products and services are able to be offered via live video and/or social media.
This growth in social e-commerce is ascribed to a surge in average time spent on social media during pandemic coupled with greater convenience for online purchases. The market is gaining traction thanks to the growing ease of shopping, product browsing, and payment options when buying online. Customers can order products from the comfort of their homes without any effort. Several brands are offering discounts, cashback, one-day deliveries, equated monthly installment (EMI) options, and other services that make online shopping easier and more lucrative. Companies are investing in technologies such as Artificial Intelligence (AI), chatbots, Machine Learning (ML), and Augmented Reality (AR) to improve customer experience. Innovating an adequately socially integrated customer-centric shopping platform is a prominent factor driving the market growth over the forecast period.
In general, e-commerce marketplaces have spurred intense competition, lower prices, faster delivery, and more variety. Consumers and businesses have progressively used social media and cross-border e-commerce as fast becoming the platform to access global markets. The expansion of social cross-border online sales has created a trade environment where almost everybody can be a global seller and/or a global buyer. Social cross-border e-commerce also provides a way for Micro, Small and Medium Enterprises (MSME) to grow internationally by reaching customers across the world and offering online services to connect global shoppers to suppliers, facilitating orders, accepting international payments, and coordinating physical logistics and delivery of goods across borders.