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© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. PayPal Cross-Border Research 2014 GLOBAL SNAPSHOT PayPal Project Sponsor: Melissa O’Malley PayPal Market Research Contact: Daniel Jenkinson Ipsos MORI Contacts: Eleanor Pettit & Peter Attwell CONFIDENTIAL
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. 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 minute questionnaire Respondents recruited from online panels Own and/or use an Internet-enabled device* Nationally representative of online population Aged 18+ FieldworkSample, 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 markets Sample of c.800 per market.
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. 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
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Summary of findings: Cross border (CB) global study 4 1.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.
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Cross border commerce is a driving force in today’s global marketplace 5 North America Western Europe Nordics Central, Eastern Europe Middle East Latin America Asia Pacific 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
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Expect continued cross border growth and penetration, especially from ‘emerging’ markets 6 North America Western Europe Nordics Central, Eastern Europe Middle East Latin America Asia Pacific % 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
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. US and China are most popular cross border destinations. W. Europe a key region. 7 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% LATAM USA 39% China 26% W. Europe Germany 28% USA 18% UK 17% China 13% CEE China 24% USA 16% Germany 13% UK 11% Nordics USA 31% UK 30% Germany 19% China 15% APAC USA 31% UK 20% Hong Kong 17% China 15% Popular online destinations for cross border shoppers* ME USA 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 %
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Clothing, footwear and accessories and consumer electronics are top cross border categories purchased 8 Top 10 CB categories purchased* (%)Top CB categories purchased by region 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% LATAM Clothing/footwear 47% Consumer electr. 38% Toys/hobbies 24% Entertainment/ (digital) 23% Cosmetics/beauty products 22% W. Europe Clothing/footwear 33% Consumer electr. 24% Entertainment/ (phys) 21% Travel/transport 20% Toys/hobbies 17% CEE Clothing/footwear 50% Consumer electr. 35% Toys/hobbies 30% Cosmetics/beauty products 24% Nordics Clothing/footwear 36% Travel/transport 21% Entertainment/ (phys) 21% Consumer electr. 21% Toys & hobbies 17% APAC Clothing/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. ME Clothing/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)
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Cross border shoppers are valuable consumers They spend more online, see the benefits of shopping online and are more mobile oriented. 9 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 % 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 Domestic Only Shoppers Cross-Border Shoppers* Domestic Only Shoppers Cross-Border Shoppers* * 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 Multi-country average.
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. However, CB shoppers still face hurdles… 10 % 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]? 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
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. There are ways to drive cross border online shopping 11 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? 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
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Free return shipping is a ‘must have’ 12 PayPal’s initiatives are well-aligned with cross border shopper needs Free shipping / free delivery For domestic shopping For cross-border shopping Express delivery For domestic shopping For cross-border shopping Flexible delivery times For domestic shopping For cross-border shopping Free shipping / postage for returns For domestic shopping For cross-border shopping % Nice to Have % Must Have Importance of Shipping Options when Shopping Domestically or Cross-Border Base: Online adults. N= 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.
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. PayPal usage for CB ahead of competition in majority of markets 13 North America Western Europe Nordics Central, Eastern Europe Middle East Latin America Asia Pacific % 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.
© 2014 PayPal Inc. All rights reserved. Confidential and proprietary. Safety, protection, convenience key to cross border payment method preference 14 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? 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
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