2018 GlobalEcommerce Study
Summary ReportTABLE OF CONTENTS

US domestic ecommerce // 3-28
Cross-Border ecommerce // 29-43

Pitney Bowes | 20182

Scope of Global Ecommerce Study
Consumer Surveys

Retailer Surveys

13,022 consumers in655 retailers inAustralia
CanadaChina & Hong Kong
FranceGermanyIndia
JapanMexico
South Korea
United Kingdom
United States

United States
United Kingdom
Australia

Pitney Bowes | 20183

US DOMESTIC ECOMMERCE

Opportunity &battleground:brand-driven postpurchase experiences

Pitney Bowes | 20184

We’ve reached peak ecommerce adoption.
Now US consumers are buying more frequently.

% Shopping online daily/weekly, by segment

Change, last 2 years
100%

50%

46%

90%
80%

47%

Ever shop online

40%

+0pp

36%

70%

Total population

60%

28%

50%

30%

25%

23%

40%

18%

20%

30%
20%
10%

10%

Shop online daily/weekly

+10pp

0%

2016
Pitney Bowes | 2018

0%

2018

Children in No Children in
HouseholdHousehold

Me n

Women

Millennials

Gen X

Boomers
5Where are consumers making purchases?
Marketplaces are the market, no matter who’s shopping% of shopping with online marketplace% of shopping with online retailer/brand

100%

59%

60%

61%

61%

60%

60%

61%

College graduate

Northeast

60%

HS graduate

Boomers

61%No children in HH

Gen X

62%

Children in HH

Millennials

60%>$100kWomen

58%$75-100k62%$50-75k60%$35-50k

62%

<$35k

61%

West

59%

South

62%

Midwest

60%

Men

60%

Total

80%

40%
20%
0%

GenderPitney Bowes | 2018

Generation

US region

Household income

ChildrenEducation
6

How do consumers decide where to buy?
Brand conscious shopping

Brand agnostic shopping

I know what brand I want
61% of online purchases

I don’t know what brand I want
39% of online purchases

46%

15%

23%

16%I know thebrand andproduct I want

I know thebrand, but notthe productI know theproduct, but notthe brandI don’t knowwhat I want tobuy

Ex: Acme Elite Plus in Charcoal Grey

Ex: Acme footwear

Ex: Grey sneakers

Ex: Just browsing

SCENARIOMINDSETWe divided shopping behaviors into two “mindsets” and four “scenarios”

Pitney Bowes | 20187

Where consumers buy based on mindset

Brand conscious shopping offer retailers & brands at minimum a level playing fieldBrand conscious

Brand agnostic

Know brandAND product

Know brand
NOT product

Know product
NOT brand

Don’t knowwhat to buy

26%

8%

7%

6%

20%

7%

15%

11%

Purchase fromonline retailers& brands
Purchasefrom online
marketplaces
Pitney Bowes | 20188When consumers know what brand they’re shopping for…
A clear opportunity arises for retailers & brands.
Brand conscious

Brand agnostic

34%

13%

Purchase fromonline retailers& brands

Value
brand-driven
experiencesmore than price.
Value price andconvenience
above all else.

Purchasefrom online
marketplaces
27%Pitney Bowes | 2018

Remarkable
post-purchaseexperiences:

Want to learn more
about the brandbefore purchase.

The opportunity &battleground forretailers & brands tocombine brand-driven
experiences with
post-purchaseconvenience

Value comparison
shopping, priceand convenience.

26%

9

US DOMESTIC ECOMMERCE

Shipping, delivery,& capitalizing on brand-driven
post-purchase experiences

Pitney Bowes | 201810

56% of US consumers feel let down during the holidays
Due to issues in the post-purchase experience. A 20pp increase YoY.

Shipment arrived late, 15%

Shipping too expensive, 12%
I didn’t face anychallenges, 44%Experienced anissue, 56%

Wrong address/lost in the mail, 7%
Shipping tracking inaccurate, 6%
The wrong item shipped, 6%
Return policies not clear, 4%
Gift item poorly packaged, 4%
Other, 2%

S10 (2016/2017)/S14 (2018): What is the top challenge you faced last year when purchasing items online during your most recent holiday season? (Base = Ever shop online domestically)

Pitney Bowes | 201811It only takes one bad experience to lose a customer
36% of consumers shop somewhere else after one poor experienceRetailers & brands are more impacted than marketplaces

25%
Purchase fromonline retailers& brands
Purchasefrom online
marketplaces

never purchase fromthat site again

14%purchase less often
from that site

18%
never purchase fromthat site again

16%purchase less often
from that site

Pitney Bowes | 2018

12

The network effects of one poor experience
60% of millennials share their bad post-purchase experience with others
0%

10%

20%

30%

40%

32%

9%

Millennials

30%

12%

Gen X

30%

Total

Write a complaint
Pitney Bowes | 2018

9%

8%

6%

Tell friends

Leave negative review

60%

70%

4%

11%

8%

36%

Boomers

50%

7%

4%

7%

2%

Post on social media
13Use the post-purchase brand promise to attract customers
Free shipping is the #1 criteria when consumers are deciding where to shop.
Men

Women

Millennials

Gen X

Boomers

Total

100%
90%

80%

80%

66%

70%
60%

49%
50%

43%
38%

40%

37%
32%

30%

22%

22%

20%

7%

10%
0%

Free s hipping

Fast shipping

Free e asy r eturns

Be tter tra cking ofdeliv eries

Confidence inac curac y of deliv erydate

Be tter over all
ex pe rience afte rpur chase

Fast re fund on
re tur ns

Post purc ha se pricema tch guara nte e

Highe r quality
product pack aging

Free gift wra pping

Below is a list of reasons why you may choose WHERE to shop online. Please select up to 5 REASONS that are MOST important to you.

Pitney Bowes | 201814

Consumers still prefer free over fast

If they had to chose. But that’s slowly changing with younger shoppers.
100%
90%
80%

91%

86%
79%

70%

76%

81%

60%

84%

80%

79%

83%

66%

65%

50%
40%
30%
20%
10%
0%

2017 Total

2018 TotalMenWomenMillennials

Gen X

Free shipping with slower delivery
Pitney Bowes | 2018

Boo mers

Children in HH

No Ch ild ren in Shop m ostly on
HHmarketplaces

Shop m ostly
withretailers/brand s

Faster delivery at a cost15

91% of consumers leave

When shipping isn’t free or fast enough. Nearly half (43%) go to marketplaces.

43%
Purchase fromonline retailers& brands

purchase froma marketplace

34%
purchasefrom anotherretailer

14%choose notto purchase

Purchasefrom online
marketplaces

Pitney Bowes | 201816

What does “fast and free” mean, anyway?

2-day free shipping is now the prime option—while 3- and 4-day is acceptable
100%

Fast
80%

Opportunity tolower the cost of“free” shipping
while 3-4d is stilllargely acceptable

60%

40%

Slow

20%

Acceptable
0%Same Day

1 Day

2 Days

3-4 Days

5+ Days

Please select whether you consider the following delivery timeframes fast, acceptable, or slow when shipping is free for your online purchase
Pitney Bowes | 201817

The sweet spot in speed vs cost of free shipping
Most popular free shipping options offered by high-growth vs low-growth retailers
80%

MOST POPULAR60%

40%

20%

0%
Same Day

1 Day

2-3 Day

4-5 Day

6-7 Day>7 Day

Which of the following delivery window options do you offer to your customers?
Pitney Bowes | 201818

Shipping doesn’t always have to be free

66% of consumers expect to spend at least $25 to qualify for free shipping
US millennials and parents are more reasonable about the cost of ”free”
Total

Millennials

Gen X

Boomers

Children in HH

No Children in HH
0%

No minimum

20%

40%

60%

80%

100%
To qualify for free shipping, what is the minimum you expect to spend on an order (i.e., minimum purchase)?
Pitney Bowes | 201819

US DOMESTIC ECOMMERCE

Returns &the post-purchase experience

Pitney Bowes | 201820

Consumers hate scheduling pickups for returns
For online purchases. Only 9% call a carrier to arrange pickup.
••

Consumers prefer having returns labels included in the box
Postal returns are as popular as in-store returns

Returnlabelling/packaging

Returnpickup/drop off

Use a shipping label included in theshipment

30%

Use original packaging for return26%

Use a shipping label you have to print athome25%

Drop off the package at a post mailbox orpost office23%

Return the item at the store

23%
19%

Drop off the package at a carrier location

9%

Call a carrier and scheduled a pickup
0%

5%

10%

15%

20%

25%

30%

35%

When you have returned unwanted online purchases, how do you prefer to return them?

Pitney Bowes | 201821

Consumers expect fast refunds
Most, except Millennials, willing to wait up to 4 days

≤1 day
50%

40%

30%

Total

20%

10%

Millennials≥5 days0%

2 daysGen X
Boomers

When you return an online purchase, what is the acceptable time frame for a refund to be credited back to you?

Pitney Bowes | 2018

3-4 days22

Executives believe returns challenges are greater
Than those closest to operations (except on the topic of cycle time)
VP or above

Tracking of returns

Below VP
Recovery of inventory
Time it takes to bring returns back into inventory
Time to credit
3rd party cost too highSending exchange of products
0%
Pitney Bowes | 2018

5%

10%

15%

20%

25%
23

US DOMESTIC ECOMMERCE

Subscription box services:
A customer acquisition opportunity

Pitney Bowes | 201824

A silver lining among brand agnostic shoppers?
A unique opportunity for brand discovery among certain consumers
Brand conscious

Brand agnostic
Know product
NOT brand

Don’t knowwhat to buy

8%

6%

15%

10%

Purchase fromonline retailers& brands
Purchasefrom online
marketplaces
Pitney Bowes | 201825

More consumers are turning to subscription box services
When they don’t know what brand or product they want. 11% YoY growth. 51% of millennials now enrolled.
Subscription growth is increasing expectations around quality of packaging.
60%

Packaging quality is a top reason when choosing where to shop

Enrolled in at least one subscription box service

50%

51%
47%

40%
30%
20%

31%
27%

24%

22%

19%

10%

9%
0%

Total

Millennials

Gen XBoomers

MenWomenChildrenin HH

No Childrenin HH

In the past year, have you subscribed to subscription-box services where you get regular shipments of products sent to you?
Below is a list of reasons why you may choose where to shop online. Please select up to 5 reasons that are MOST important to you.

Pitney Bowes | 2018

2226

DOMESTIC ECOMMERCE

Summary

Pitney Bowes | 201827

What high growth (>25% YoY) retailers focus onMore than their low-growth (<10% YoY) counterparts

Cater tohigh-value*customers(57% vs 26%)

Offering day-definite
guaranteeddelivery(65% vs 40%)

Offeringsubscription
services

Addingfulfillment
locations(65% vs 25%)

(89% vs 60%)

*Average domesticorder value >$300

Pitney Bowes | 201828

Building the post-purchase moat
Versus marketplace competition

Infuse your brand into every
step of the purchase-topurchase journey

Meet the expectations
marketplaces have set for
consumers

Fulfillment

Invest in higher-quality, more personalizedpackaging

Move inventory closer to customers

DeliveryUse delivery tracking as a platform for brandcommunications

Offer 2-day free shipping (with minimumpurchase) and sitewide 3-5 day guaranteed freeshippingReturns

Make returns integral to the experience, not anexception. Act as if a return will happen withevery purchase.

Offer at-home pickup (without scheduling), labelsin the box, and refunds in 3 days or lessCustomeracquisition

Build or participate in subscription box services

Pitney Bowes | 201829

CROSS-BORDER ECOMMERCE

Rising expectations & FX:
Post-purchaseoptimizations cut throughthe headwinds

Pitney Bowes | 201830

Cross-border consumers are FX-savvy

As the USD strengthens, fewer non-US consumers buy cross-border—while more US consumers shop globally
Key currencies relative to USD

Cross-border ecommerce adoption, YoY
100%

1.40
1.30

2017

0.80
0.70

90%-2%-6%-2%-4%+1%-2%-6%

80%
0%

EUR

50%+3%

40%

CAN

30%
20%

AUD

10%

0.60
orea
S.
Kan
Japia
Indhina
CKUustralia
Aye

GermanFrancexicoM

anadaS
CU(from FOREX)

0%tal

2018 Q4 ForecastTo2017 Q4

Pitney Bowes | 201870%
60%+2%

1.00
0.90-7%-9%

GBP

1.20
1.10201831

And yet, because economies are improving…
Consumers who do shop cross-border are generally shopping more often* Exceptions due to government regulation (AUS, IN) and FX (CA).
+8%+6%+4%+2%0%
Total

United StatesCanadaMexico

FranceGermany

UK

Australia

ChinaIndia

Japan

S. Kor ea-2%-4%

Pitney Bowes | 201832

Top reasons for cross-border cart abandonment

Shipping cost/speed are top concerns. Except in Germany, where fraud ranks high.
Country callouts

High shipping cost
Slow delivery§

Canadians prefer DDP and DDU
options (and are particularlysensitive to shipping cost)§

Mexicans don’t see enoughlocalized payment methods§

Germans rate
“suspicious/fraudulent checkout”
as top concern§

Australians are generally only
concerned with shipping cost (andnot speed)§

Indians don’t see prices in local
currency often enough§

Koreans are most concerned withslow delivery

Suspicious checkout
DDU only option available
Complex returns
Payment method not avail.
Currency not localized
Duties/taxes inaccurate
Unrecognized shipping carrierHigh returns cost
No mobile siteTotal

Pitney Bowes | 2018

USCanada Mexico

France Germany

UK

Australia China

India

Japan S. Korea

33

CROSS-BORDER ECOMMERCE

Optimization strategies:Logistics & fraud management

Pitney Bowes | 201834

New in 2018: Fraud rises to top of retailer concerns
Optimizations (logistics, payment, etc.) also rise as customer acquisition strategies fall in importance
GeneratingdemandMarketplace
integration

Site/mar keting Logistics/carrier
localization
management

Payment
processing

Calculatingshipping cost

Calculating
duties & taxes

Fraud
prevention &management

Processing
returns

Customer car e& delivery
tracking

123Rank

4567820182017910Which of the following most concern you when entering a new market? Please rank up to three areas, with 1 being your greatest concern.

Pitney Bowes | 201835

Cross-border orders rejected due to (suspected) fraud
Significantly higher than domestic average of 2.6%
Total

36%

US Retailers

37%

UK Retailers

AUS Retailers

23%

24%33%

22%

38%

<5%

20%

18%

25%

22%

6%-10%

11%-15%16%-20%20%21%-25%

14%

5% 3%

14%

4% 3%

13%

7% 1%

18%

1%

>25%

Source: PB Global Retailer Study, 2018; domestic fraud: Merchant Risk Council Global Fraud Survey, 2017
Pitney Bowes | 201836

Logistics: high growth retailers use multiple cross-border carriers
83% of high-growth retailers use 3+ carriers versus 53% of low-growth% of Retailers using 3+ Carriers

Number of Carriers Used

90%
80%

11-20

83%

70%

3%
12%
11%

5-1020%60%
50%52%

40%

10%

418%
27%

330%

30%

31%

220%
10%

10%

High Growth

11%
17%
6%

Low Growth

Low GrowthHigh Growth

How many carrier services do you use for your cross-border shipping network (including global and in-country/last mile carriers)?

Pitney Bowes | 2018

37

CROSS-BORDER ECOMMERCE

Spotlight on China

Pitney Bowes | 201838

Marketplaces dominate cross-border

Even (slightly) more than with domestic purchases (except China & Japan)
Cross-border marketplace

Domestic marketplace

80%
70%
60%
50%
40%
30%
20%
10%
0%
TotalUSCanadaMe xico

FranceGermanyUK

Australia

ChinaIndia

JapanS. Korea

Over the last 12 months, approximately how much of your international online purchases have been made via online marketplaces?
Pitney Bowes | 201839

Chinese cross-border .com shoppers looking for different products
Than their marketplace shopping counterparts. But apparel & accessories tops the ranked list for both groups.
.com Shoppers
Clothing, footwear & accessories
Sporting goods
Beauty & cosmetics
Home décor & furnishings
Nutritional supplements
Electronics
Books, music & media
ToysJewelry
Small appliancesBaby supplies
Pitney Bowes | 2018

Marketplace Shoppers
Clothing, footwear & accessories
Beauty & cosmetics
Electronics
Nutritional supplements
Sporting goods
Books, music & media
Baby supplies
Small appliancesHome décor & furnishings
Jewelry
Toys40Chinese .com shoppers value unique products more than price or selection
Top reasons .com and marketplace shoppers buy cross-border.com Shoppers

Unique products

Better quality

Direct relationship w/ brandMarketplace Shoppers

Better quality

Brand not available in-country

Unique products

Brand not available in-country

Better prices than domestic

Better prices than domestic

Direct relationship w/ brand

Better selection

Product authenticity
Pitney Bowes | 2018

Better selection

Product authenticity
41

CROSS-BORDER ECOMMERCE

Summary

Pitney Bowes | 201842

What high growth (>25% YoY) cross-border retailers focus onMore than their low-growth (<10% YoY) counterparts

Diversifying
the carrier
network

Leveraging vendors’
Outsourcing
turnkey marketing
fraud management
programs
services(83% vs 52%)

(83% vs 50%)

(41% vs 30%)

Processingpayments
locally*(80% vs 69%)
* in the customer’s country

Source: PB Global Retailer Study, 2018
Pitney Bowes | 201843

Growing despite global headwinds
Focus on optimizing thepost-purchase experience

Outsource scale-intensivefunctions to focus on USP

Cater to the needs of your most valuable
customers in each market (localizedoffers & assortment curation)

Leverage your vendor’s marketing
capabilities and loyalty programs (if theyexist!)

Payments &Fraud

Accept more regional payment methods

Reduce ‘false-positive’ fraud-flagged
orders and process payments locally in
top countries using a payments specialist

Logistics

Offer more choice in shipping (express,deferred) and D&T options (DDU, DDP) atcheckout

Diversify your carrier base by working
with a partner who specializes in global &local networks

Customeracquisition

Pitney Bowes | 201844

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For additional information visit Pitney Bowes, the Craftsmen of Commerce,at www.pitneybowes.com/ecommerce© 2018 Pitney Bowes, Inc.

Pitney Bowes | 201845