Free or cheap shipping appears to be critical factors for shoppers to pick their favorite online retailers, according to AlphaWise, the research arm of Morgan Stanley.
The team conducted the study last year by surveying 8,000 respondents from eight countries. In China, more than 1,000 online consumers from 14 tier-one and tier-two cities with above average income and education participated in the study.
The survey was published in January as part of Morgan Stanley’s bluepaper titled: eCommerce Disruption: A global theme transforming traditional retail. The study stated that 73% of Chinese online shoppers indicated they would buy more online if retailers offer free shipping. 74% of them indicated the same if they could return/exchange goods without having to pay for shipping.
Shipping cost matters
Despite the ubiquitous free shipping services among US ecommerce retailers, many do not provide international delivery or accept payment without a US-issued credit card.
Demand for cost-effective shipping services from Asia online shoppers is driving the emergence of third-party logistics providers. Act as a “digital shopping concierge,” Singapore-based comGateway aims to facilitate international shipment for Asia online shoppers buying from US online stores.
“Realizing that the world’s largest marketplace cater primarily to US customers and was not accessible to the world’s shoppers came as a shock to me and clearly exposed a gap in the market,” said CEO Danny Lim. “I saw the opportunity and the need for a digital shopping concierge in the market.”
This service allows Asia online shoppers to access products from US online stores that do not deliver internationally by providing a US address, which is comGateway’s warehouse facility in Portland Oregon. Lim noted that Oregon is one of the few states that are sales-tax free, allowing shoppers to exempt sales tax in their purchases. For online stores that accept only US issued credit cards, comGateway would also pay on behalf of the shoppers using a local credit card.
In addition, shoppers can save shipment cost by consolidating their purchases from multiple online stores at comGateway’s facility before repackaging them for a single international delivery. Lim said that shipment cost with comGateway from the US to Singapore starts at US$11, but many US online stores charge at a much higher cost.
“The more packages you ship with us, the more you save,” said Lim. “Some of our biggest customers pay up to five to ten times less on shipping by using our service.”
Since launching in 2005, comGateway has half a million registered customers in the region. With a focus to provide shipment services from the US to Asia, Lim said that their major shipment destinations includes Australia, New Zealand, Singapore, Malaysia, Hong Kong, Taiwan and Japan. The variety of product item also range from fashion apparel, accessories to consumer electronics and children’s clothing and toys.
“We are increasingly seeing a greater diversity in the type of goods our customers buy,” he said. “We have even had to ship a surfboard to a customer once!”
Other Asia logistics providers
Apart from comGateway, other providers in the region are also offering similar logistic fulfillment services for online shoppers. Hong Kong-based Dimbuy.com is one of them. With a warehouse based in Dongguan, Dimbuy.com provides consolidated shipment services for online shoppers in Hong Kong and Macau.
Shoppers buying from Chinese online retailers, particularly Taoboa and Buy.QQ, can use Dimbuy.com’s warehouse as a local delivery address before repackaging and sending them overseas. Shoppers can choose to pick up their shipment at convenient stores, Dimbuy.com’s logistics centers, or have their purchased delivered to a dedicated address.
Product selection and price matter
Although the more popular US brands are developing local or regional online stores, Lim said digital shopping concierge service remains significant for shoppers to access a wider selection of products. The study from AlphaWise indicated that in addition to a lower product and shipment cost, another driver for online retailing is a wider product selection.
Since most regional or local stores do not carry all the product items, shoppers can access a wider selection of products through the US online stores.
“Our customers still choose to buy from the US [online] stores due to the price differentiations,” said Lim. “In many cases, the US stores also offer a wider product selection.”
Despite more global online retail store like Net-a-porte and ASOS.com are starting to provide low cost or free shipping service, Lim noted its service remain relevant. “Merchants aren’t able to create free shipping out of thing,” he added. “If a merchant offers free international shipping, they’ve usually built it into the price of the product.”
Lim noted the availability of pricing information through the Internet and smartphone allows shoppers to easily compare product prices. Shoppers become smarter and more price-sensitive buyers. “In the end, it is up to the consumer to choose the most cost-effective method for him or her,” Lim concluded.