Cross-border commerce is a driving force in the global marketplace today.
Efi Dahan, regional director for sub-Saharan Africa and Israel at PayPal, says between 2013 and 2018 cross-border trade is expected to triple, according to research from PayPal. Dahan was speaking on the first day of the eCommerce Africa Confex at the CTICC in Cape Town.
While key destinations for cross-border transactions include western Europe and America, cross-border commerce in emerging markets is also on the increase. More than half of the people who are shopping online (56%) are now shopping across borders and the customers who are doing this tend to spend roughly double the amount of money their domestic-only counterparts do.
The research found fashion and consumer electronics were the most popular goods being purchased across borders. Other favourites included cosmetics and toys.
Some of the main drivers motivating customers to make cross-border purchases include free shipping, ease of payment, lower unit costs and availability of items not found locally, said Dahan. Safety and convenience were also outlined as reasons for undertaking cross-border transactions.
According to Dahan, businesses looking to become successful cross-border online merchants must ensure that their service is easy to use, safe and reliable.
PayPal in SA and Africa
With 157 million active accounts in 203 markets around the world, PayPal is one the largest global payments companies in the world, and transactions using PayPal currently account for 17% of all global online transactions.
With its presence well established in so many economies around the globe, PayPal is keen to establish a firm footing across Africa, said Dahan, speaking to ITWeb on the side lines of the e-commerce event.
Having partnered with First National Bank four years ago, and with a little over one million PayPal accounts already active in SA, Dahan described SA as a major market for the online payment system. "The idea is for PayPal to help merchants and consumers make payments and get paid without sharing their sensitive financial information. By facilitating cross-border payments, PayPal will connect merchants and customers to the global e-commerce marketplace," he said.
According to Dahan, PayPal hopes to be a part of the evolution of the e-commerce market in SA and he believes that increased demand for cross-border trade will be a driver of this changing online marketplace.
"Africa is still a very fragmented market due to strict regulations, poor access to technology and general consumer behaviour," he said, stressing the importance of educating both consumers and merchants about the possibilities of e-commerce and highlighting that merchants need to be patient when trying to introduce consumers to online offerings.
While PayPal is already available in 40 countries across Africa, the plan is to expand further into the continent through partnerships with leading financial institutions, he said.
As a developing market, there is so much space to grow businesses in Africa, Dahan concluded, adding online merchants must service the customers where they are and provide them with the opportunities and solutions to foster future growth.
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