Cross-border trade to accelerate expansion opportunities forFilipino SMEs

MANILA, Philippines – A growing cross-border e-marketplace in Asia Pacific is a signal for Filipino SMEs to consider taking their products and services abroad, according to PayPal.

The global leader in digital payments and Ipsos recently released the 2018 PayPal Cross-Border Consumer Research, which investigates the online shopping habits of approximately 34,000 consumers in 31 countries ¹— including the Philippines. It reveals a growing cross-border e-commerce scene, with the US and China being the biggest markets in terms of online spend.

According to the study, there is a healthy appetite for e-commerce in APAC, with 48 percent of consumers shopping cross-border in the last 12 months. “This is a huge opportunity for local entrepreneurs to expand their businesses beyond the Philippines. China, in particular, shows significant promise as the Philippines improves its bilateral relations with the world’s second largest economy,” said Abhinav Kumar, Head of Strategic Partnerships for PayPal in Southeast Asia.

China, the largest market for online purchases in the world, spent an estimated total of RMB 3.9 trillion for online transactions in 2017. This is projected to increase to RMB 5.4 trillion in 2018. Cross-border trade (buying from a website not in their own country) is increasing with 43 percent of Chinese consumers shopping cross-border in the last 12 months compared to 26 percent the previous year.

APAC countries like Australia, India and Japan are likewise growing fast. For 2018, the PayPal study projects Japan to increase its total online spend by 26 percent, India by 53 percent, and Australia by 19 percent.

Cross-border opportunities for Filipino merchants

The digital upheaval brought about by social media and increased smartphone penetration translate to increased opportunities for cross-border trade, as seen by the projected growth in online spending. The world has become much smaller as platforms like PayPal enable merchants to take advantage of opportunities by connecting them with global consumers, allowing SMEs and micro enterprises more opportunities to thrive.

According to the study, the top few reasons for the growth in cross-border shopping can be attributed to the novelty of accessing items that are not available in their own country (49 percent) or to discover new and interesting products (34 percent). Over 30 percent of consumers from China and Australia who shop online cite finding items that are hard to find locally as a reason for making them more likely to shop cross-border.

“The demand for unique products is there, and this is an opportunity for Filipino businesses to showcase products not available elsewhere. The Philippines produces many unique products thanks to its rich culture, and with e-commerce, local merchants can now bring uniquely Filipino products to the world,” said Kumar.

Cosmetics on the rise for APAC consumers

As more and more Asian nations become more open to cross-border trade, Filipino businesses should be mindful of what consumers are buying to be able to take full advantage.

Globally, fashion, such as clothing, footwear and accessories, remain the top category for online shopping, with 68 percent of cross-border online shoppers having spent on these items in the past 12 months.

While APAC shoppers are forecasted to be spending more online in 2018, buying behaviors are also changing. Survey results showed that Chinese consumers are turning their attention to spending on things for health and beauty as well as their children, with online spending on cosmetics and baby supplies predicted to increase by 21 and 31 percent, respectively, in 2018. In India, online spending on the same categories are forecasted to increase by 40 and 37 percent, respectively. Consumer electronics is also another growth category in APAC, with online spending in the category expected to grow by 40 percent in India, 20 percent in China, and 13 percent in Australia.

Security a key driver of cross-border trade

Despite the increasing popularity of international online shopping among consumers across the globe, challenges to cross-border shopping remain. Barriers vary from region to region. Over a third (38 percent) of all online shoppers say that having a more secure way to pay would make them more likely to shop internationally.

In order for Filipino merchants to take full advantage of the expected increase in online spend, they need to address these barriers to encourage overseas purchases. With PayPal, they can connect to international consumers via a secure, seamless, and hassle-free network.

“At PayPal, we understand that while more and more people shop online, the hassle of online payments can be a barrier. PayPal addresses those concerns through a more convenient and more secure online payment facility for consumers to buy the things they need and love. As Filipino businesses take their cross-border sales online, we are proud to empower people and businesses to join and thrive in the global economy,” added Kumar.

PayPal endeavours to bring a sense of security to online shoppers with Refunded Returns (terms and limitations apply). In addition to Refunded Returns, PayPal offers Buyer Protection for eligible transactions to help provide a greater peace of mind for online shoppers. This protection goes both ways as merchants can be protected against eligible fraudulent transactions with Seller Protection.