“In 2021, cross-border eCommerce has been impacted by world-altering events. They lead to scarce airline cargo capacity and soaring logistics prices. As the industry is changing fast, we need to keep an eye on the current situations and stay one step ahead for future planning. Selling on international markets allows retailers to plan and balance the sales across markets, thus spreading the risks and shifting to a market where profitability is met. The cross-border eCommerce consumer behavior is different depending on each stage of the pandemic in each market. The outbreak stage in each region has impacted logistics, either a slowdown in cross-border imports/exports or an increase compared to other periods.”

Key Messages

• Retail eCommerce market global sales will reach 6.5 trillion dollars in 2023
• Today 73% of millennials are engaged in the B2B buying process
• Sellers need to create sustainable practices for their international strategy
• The 7th edition of the HS (Harmonized System) will be implemented by World Customs on January 1, 2022. It is introducing major modifications to how worldwide exporters and importers calculate and assign HS codes for all of their products
• Global payment flows are forecasted to reach 156 trillion dollars in 2022
• New booming markets to watch in 2022: Turkey and Greece

Insight #1. eCommerce statistics. The eCommerce boom is due to a growing number of online marketplaces, buying opportunities, and cross-border eCommerce purchases.

• Retail eCommerce market global sales will reach 6.5 trillion dollars in 2023, a stunning increase of +85% compared to 2019 when sales reached 3.5 trillion dollars. Online global sales are forecasted to reach 22% of all retail sales in 2023, compared to just 14% in 2019.
• According to Grand View Research, the global B2B eCommerce market size is forecasted to reach almost 26 trillion dollars, expanding at a compound annual growth rate of 19% from 2021 to 2028.

Insight #2. The pandemic has impacted consumer behavior.

• Baby boomers and Generation X dominated the B2B market before 2020. Gradually altering this trend, companies target Generation Z and millennials. Today 73% of millennials are engaged in the B2B buying process
• 8 out of 10 consumers consider sustainability when making purchasing decisions, reports IBM’s study “Meet the 2020 consumers driving change”, 6 out of 10 consumers want to change their purchasing habits to reduce their CO2 footprint.  The results of the survey analysis revealed four separate customer categories, each representing a different priority area. Customers who appreciate good value, convenience and products/services that simplify life (41 percent of all consumers) are prepared to pay for such benefits. Purpose-driven customers (40%) look for items and brands that match their lifestyle and provide health and wellness advantages. Consumers who are brand-driven (13 percent) have a high level of faith in brands, being a crucial influence in their purchasing decisions. Consumers who are product-driven (6%) are concerned with the product’s functioning.

Chart 2. Type of consumers, divided in two groups: those who lead with their wallets, and those who consume with their values in mind. // Source: IBM Institute of Business Value, 2020

Insight #3. Consumers want to buy from green retailers and have items shipped by green providers.

• To gain customers loyalty from eco-conscious consumers needs a lot of creativity. Sellers need to create sustainable practices for their international strategy. It is either giving customers a green shipping option at check-out, using paper or recycled packing, choosing suitable packing according to the size of their order, or offering products from recycled materials.  Ideally, have IT systems in place that can detect multiple orders and consolidate orders into one package (when shipping from the same warehouse).

Insight #4. Watch out for HS2022 – the next challenge for cross-border eCommerce

• The 7th edition of the HS (Harmonized System) will be implemented by World Customs on January 1, 2022. It is introducing major modifications to how worldwide exporters and importers calculate and assign HS codes for all of their products. More than 370 new HS codes will be added in 2022, with 100 codes being eliminated, representing a wide range of items from various industries. In more than 200 nations around the world, this new approach serves as the foundation for customs duties and international trade data. These changes brought by Hs2022 will have customs clearance implications for all the parties involved (sellers, marketplaces, logistics providers) unless the data is complete and accurate.

Insight #5. IOSS (Import One Stop Shop) – watch out for possible changes for 2022.

• Since July 1st, 2021, new VAT eCommerce rules entered into force, making cross-border eCommerce easier. Introducing a single VAT ID registration number has greatly reduced procedures and helped foreign companies to expand into the EU Single Market.
• The main VAT changes covered the abolishment of low-value parcels of imported goods into the European Union or the unification of the VAT threshold for all European Union countries.
• Possible changes for selected European countries can be the adoption of e-invoicing or using English as the language for customs clearance, instead of the local language.

Insight #6. Global Cross-Border Payments

• The Cross-Border Payments and Ecommerce report 2021-2022 – How to Tap into the Fast-Growing Cross-Border eCommerce Market study reveals that predictions for cross-border B2C market over 2020-2027 forecast a 20% CAGR and revenue of almost 4 trillion dollars by 2027. On the other hand, B2B market is forecasted at almost 19 trillion dollars by 2026, CAGR of almost 20%. In today’s market, it is not acceptable to offer only single payments options via bank transfers, but consumers expect flexibility in the method of payment. Consumers expect a cross-border payment experience to be secure and transparent.
• Global payment flows are forecasted to reach 156 trillion dollars in 2022 (including C2C, C2B, B2C, B2B). The whole market is shaken by the entrance of incumbent banks and money transfer operators, which promise to solve long-standing pain points. The trends are clear: enabled money transfer operators and back-end networks are coming on the market in 2022.

Insight #7: Access to Big Data in Supply Chain Management.

• Access to data in the supply chain is of great importance and will continue to increase in 2022. Looking at eCommerce parcels, shippers expect transparency and a real-time locating opportunity. As part of our offer, heyworld offers tracking on a parcel level across the supply chain. We enable our partners to access data and make data-based decisions promptly.

Insight #8: New booming markets.

Turkey.

• Turkey’s eCommerce sector has reached new heights during the COVID-19 pandemic. In 2020, the eCommerce sales were 66% up YOY to almost 227 billion Turkish liras (24.5 billion US dollars). The ratio of eCommerce spending to GDP reached 4.1%, a staggering rise of 51.8% from a year back. In the first half of 2021, the growth rate of Turkey’s eCommerce is +75.6% compared to the same period of 2020.
• The eCommerce volumes in 2021 are expected to surpass 400 billion Turkish liras (approximately 49 billion dollars) and double again in 2022. All studies record a good ratio of eCommerce users to the total population, reaching 36.5% in 2020.

Greece.

• eCommerce sales in Greece have constantly grown and reached 539 million dollars in 2020.
• Cross-Border eCommerce in Greece, for Small and Medium Enterprises turnover account for 4% of the total retail sales, around 7.000 companies in Greece offer their products online. Online customers buy from the US, the UK, China, and Germany. In 2020, only 24% of Greek businesses sold cross-border and shipped their product to the USA, the UK, Germany, France, and Italy.

Chart 3. Share of individuals who made domestic and cross-border eCommerce purchases (EU and non-EU) in 2020. // Source: Statista, 2020

About heyworld.

heyworld GmbH was established in 2019, as a 100% subsidiary of Lufthansa Cargo, specialized in cross-border, eCommerce logistics. heyworld translates airfreight processes and standards into the eCommerce world (ex. conversion of chargeable weight into a parcel level-based pricing scheme). We combine airfreight, eCommerce, and logistics know-how, working with a modular service, from first mile, middle mile (air freight) to end mile. We are well Integrated into Lufthansa handling process, and connected to all service providers and process steps via API integration.

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