People Q+A: Adriana Bello, Head of Cross-Border Trade, PayPal

As head of cross-border trade at PayPal, Adriana Bello led development of the company’s fourth annual global cross-border commerce report, which surveyed more than 34,000 consumers from 31 countries about their shopping habits.

Here, Bello responds to Transaction Trends about the study, the potential impact of tariffs on consumers’ appetite for international shopping, and what it means for U.S. merchants that rely on international online sales.

Transaction Trends: Overall, how much of an impact could a trade war have on U.S. merchants selling internationally?

AB: Even if U.S. merchants must pass along the costs of tariffs to their shoppers, international consumers will likely still look to them when they shop online. The key reason is that many are purchasing from U.S. sites not because of price, but for other reasons. For example, the majority (54 percent) of Chinese shoppers come to U.S. e-commerce sites for “higher product quality.” Similarly, the majority (56 percent) of Canadian shoppers look for “access to items not available” in their country when purchasing from the U.S.

…Overall, cross-border shoppers will still look to U.S. merchants—in fact, one fifth (21 percent) of international shoppers surveyed rank the U.S. as their top destination for cross-border online shopping, making it the second most popular market.

We’ve heard a lot about China, but your data indicates merchants selling to customers in Mexico or parts of the E.U. could be harder hit—why?

Shoppers from Mexico and some EU countries cite price as their top consideration (59 percent in Mexico, 52 percent in France, and 49 percent in Italy) when making purchases from U.S. websites. Since these consumers are more price sensitive compared to other regions impacted by tariffs, their shopping behaviors are more likely to change if tariffs increase the price of buying goods from the U.S.

Which merchant segments are/could be affected?

With tariffs on steel and aluminum already in place, everyday items like home appliances, or grocery products like beer or soup cans, may already be feeling the impact. Our report found that consumers who shop online internationally are most likely to purchase clothing/apparel (68 percent) and consumer electronics (53 percent). Should additional proposed tariffs kick in, these two categories could feel the repercussions.

If China devalues its currency to retaliate, could we see U.S. merchants losing out to Chinese competitors?

The rising trade war escalations could mean merchants in both countries lose should consumers become increasingly weary of making purchases. However, Chinese shoppers are largely motivated to purchase from the U.S. for factors other than price—higher product quality, access to items not available in their country, and trust in product authenticity.

What can payments professionals do to help their merchant clients as this plays out?

Have the right insights about [their] international customer base so [they] can effectively tailor and target [their] marketing dollars. For example, social media marketing is worth the investment in China, as 45 percent of Chinese consumers who shop cross-border say they typically navigate to international websites to make a purchase after seeing a call-to-action on social media. Further, offering a secure, convenient payment method is a must, as “security” and “convenience” of cross-border trade payment methods [are] top consumer [priorities] across countries.

Tariff conversation aside, what types of goods are most popular for cross-border purchases?

Clothing, footwear, and accessories make up the most popular cross-border purchase category, with 68 percent of online shoppers surveyed saying they’ve made an international purchase from this category. Tied for second are consumer electronics and toys, which 53 percent of online shoppers surveyed have purchased cross-border. Buyers are likely purchasing cross-border for these items because of better prices and/or because the items are not available in their home country, which are the two main drivers of cross-border shopping globally.

Which regions are emerging markets for global shoppers?

After China and the U.S., Western European markets, such as the U.K. and Germany, are the most popular cross-border destinations for global shoppers, followed by Japan.

Any other trends or global behaviors worth noting?

Yes. Mobile and tablet online purchasing is growing and approaching nearly half of all purchase volume in some of the world’s most populated countries. According to our report, in China, 53 percent of purchases are made on a mobile or tablet, 48 percent in India, and 45 percent in the U.S. With the exception of Eastern Europe, purchases on mobile and tablet devices make up 30 percent or more of total payment volume across the world.

Attitudes [toward] cross-border shopping also vary across regions, with North Americans one of the most likely to be loyal to global or home websites. Saving money, free shipping, and a secure way to pay continue to drive international purchases among cross-border shoppers surveyed, while shipping costs and concerns around speed and quality of delivery are the most cited deterrents for global shoppers.

From Transaction Trends Editor Josephine Rossi.