Key considerations on global trade during the pandemic

Corinne Estève Diemunsch, CMO of Limonetik, provides an overview of the global ecommerce sector, arguing that the introduction of technological advances and new business models will help businesses adapt to the new standard

The coronavirus pandemic has undeniably had a profound, long-term, transformational effect on all businesses. To control the damage, many countries are imposing drastic measures to limit human interaction and contact. The situation is unprecedented in the history of globalised trade and economy. 

The ecommerce sector, driven by the extraordinary acceleration of an inevitable digital transformation, has so far remained unfazed by the series of disasters (business and trade closures, job losses, layoffs etc.). As a matter of survival, brands have had no choice but to commit to digital technology in a quest for greater exposure and new business models. 

The rebound of ecommerce 

A veritable canoe shooting the rapids, the digital transformation, constantly fuelled by technology and considered by some as mandatory, has cascaded down Niagara Falls over a few weeks’ time. No one can deny that digital technology has become today’s major challenge for all industries, whether private, public, educational, healthcare, B2C, or B2B. Only those organisations that can adapt and react quickly will survive and be able to prepare themselves for the future. 

A challenge to cross-border trade 

The number of online sales worldwide has skyrocketed largely due to changes in consumer purchasing behaviour, whether by necessity or choice. In the Netherlands, for instance, non-food expenses have reportedly risen by 56%. In France, pleasure buying has also increased dramatically in recent months. 

According to a study by Integral Ad Science (IAS), three quarters of European consumers claim they will do their Christmas shopping online. This study conducted in the UK, France, and Germany has also revealed a new battleground – advertising. 

As ecommerce has developed, borders have fallen, leading to the massive use of online comparison tools, thereby resulting in greater competitiveness and differentiation. Two-thirds of consumers (67%) consider online ads useful for locating products and promotional offers. Ads have become a key factor for success. This also means that customers, in the cosy comfort of their homes, will be looking for better deals and customer relations as they make their personal or professional purchases. 

The platform strategy 

Conforming to a new business model, marketplaces have recently carved out their territory and are taking the lead. In a study released in September 2020, Cross-Border Commerce Europe reported on the wave of marketplaces, and the giants – Amazon, eBay, AliExpress – are dominating the European market. This European market focus reveals that cross-border ecommerce represented a turnover of EUR 143 billion in 2019 (online), of which EUR 84 billion (59%) was generated by marketplaces. In the top 100 marketplaces, ecommerce platforms represent 36% of sales and whist auction sites make up 10%. The study predicts that marketplace share will reach 65% by 2025. As Cross-Border Commerce Europe points out, it is obvious that ‘the coronavirus pandemic is boosting cross-border online shopping on marketplaces’. 

According to a Gartner report, investments in digital channels and technologies will help mitigate revenue impacts, improve customer loyalty, and tailor product offerings to the post-pandemic world. In the same way, the introduction of new business models and technological advances will help organisations to recover and adapt to the new standard. Gartner predicts that by 2022 50% of large organisations that have failed to unify their engagement channels will have to deal with uneven and unsatisfactory customer experiences, whilst businesses that have spent over a year developing their marketplaces will see at least 10% increase in their revenues thanks to digital technology. 

Not all are equal when it comes to online sales 

The impact of COVID-19 on ecommerce has not been the same for industries in different countries. An analysis by Good Data and Emarsys reveals stark differences by country in the evolution of online transactions over a year. While Brazil and Russia showed an unprecedented drop in online purchases, including -49% for Chinese retailers in April 2020, Western countries benefited significantly from ecommerce, with France and Germany marking an increase of over 96%, and the US, 105%. This difference is apparently influenced by the maturity of the markets. 

There has also been a rift recently between so-called essential and non-essential goods. Mass-market retail, the main supplier of essential goods, has been the big winner in sales during the COVID-19 pandemic, with a 34.2% increase in online traffic. ContentSquare, an analytics platform, has recorded an unsurprising 17% rise for the parapharmaceutical industry. Whilst these trends vary significantly from country to country, some non-essential industries have also seen a significant increase due to new consumer lifestyles. For instance, keeping up physical activity during lockdown and practicing more widespread telework have given a fillip to the online sales of sports and technology equipment. 

Despite the ecommerce craze, a significant proportion of online sellers are not exactly overjoyed, as they are confronted with the problem of consumers spending less on so-called non-essential items. In April 2020, from a sampling of 200,000 Amazon third-party vendors in the US, 36% experienced no sales activity during that month, as opposed to 28% in February. It seems that sellers offering fewer than 1,500 products with an Amazon Standard Identification Number (ASIN) were particularly affected, unlike those carrying over 3,000 such items. 

The payment experience – more critical than ever 

Aware of the increased risk of fraud, yet careful to ensure a fluid customer experience, merchants must learn to control the dangers in a virtual world that has invaded the day-to-day real world. Key measures and performance indicators (KPIs) connected to payments, related costs, and litigation must be implemented and monitored. It is essential to sustain the continuity of operations in lockstep with changing customer expectations when it comes to payments. Businesses must continue to adapt payment systems in order to make transactions faster and more secure – and switch to contactless, mobile payments and QR code payments. Gartner claims that by 2024 the number of global mobile payment users will double to nearly USD 2 billion, from under USD 1 billion in 2019. 

In today’s highly complex, rapidly-changing market, the number of suppliers has grown exponentially; the value chain spans an ever wider geographic area and supports more alternative payment methods. Payment service providers must adapt their offerings to help merchants overcome the consequences of COVID-19, as no stakeholder is spared from the health crisis. Consumers, merchants, suppliers, and governments alike will have to work together in these turbulent times and maintain the most favourable and beneficial perspectives for everyone. 

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2020–2021, which assesses the change of pace that occurred in 2020 and provides a comprehensive overview of the major trends driving growth in this space, being the ultimate source of information for players interested in selling across borders. 

About Corinne Estève Diemunsch 

Corinne is CMO at Limonetik where she works closely with customers, partners, experts, and analysts. For more than 25 years in the fields of communications and marketing, Corinne has developed a strong leadership in innovative industries, technologies trends and new customer experience needs; she also holds a degree in Quality Management System, Environment and CSR. Before joining Limonetik, she has held various leadership positions in the ICT industry in consultancy structures, but also in OEMs company or software editor such as SEFAS - DOCAPOST, groupe La Poste, as Communications Director. 

About Limonetik 

Limonetik is a full-service payment aggregator that offers, via a unique API connection, acceptance of more than 285 international payment methods and advanced services – from collection and settlement management to reconciliation and account management – to enable new payment experiences (marketplaces, omnichannel model).