Your biggest competitors could be located half a world away.

According to a survey released today by Atlanta-based UPS, most U.S. online shoppers no longer consider geography a barrier to a purchase. They’re shopping worldwide to find bargains and unique products “with more choice, control, and convenience.”

Global Competition for Online Shoppers

The 2017 UPS Pulse of the Online Shopper study paints a sobering picture of the ever-expanding retail landscape — and suggests better brand experiences are business imperatives.

Retailers are competing across the globe. They need to “distinguish themselves by providing value through personalized experiences,” said Alan Gershenhorn, chief commercial officer for UPS.

“We’re witnessing a glimpse of the future when retailers and their customers will be defined less by geographic location and more by how they connect with each other,” Gershenhorn noted in a statement.

More U.S. consumers are purchasing online from international retailers. (Source: UPS)

More U.S. consumers are purchasing online from international retailers. (Source: UPS)

Nearly half of the most frequent U.S. online shoppers (47 percent) purchased items from international retailers. They are expanding their searches worldwide to find lower prices and items not available domestically, the survey found.

According to eMarketer, total retail sales across the globe will grow from $22.049 trillion in 2016 to more than $27 trillion in 2020.

Total Retail Sales Worldwide (Source: eMarketer)

Total Retail Sales Worldwide (Source: eMarketer)

Online Shoppers: Mobile, Sophisticated

The UPS Pulse of the Online Shopper Study evaluates consumer shopping habits from pre-purchase to post-delivery. This year, UPS hired comScore to survey more than 5,000 U.S. online shoppers.

The survey reaffirmed mobile is the wave of the future, with shopping on smartphones growing year-over-year. Almost half of those surveyed (48 percent) used their smartphone to make purchases, up 4 points from the 2016 survey.

More online shoppers use mobile devices. (Source: UPS)

More online shoppers use mobile devices. (Source: UPS)

In addition, almost all frequent U.S. online shoppers (97 percent) buy from marketplaces, up 12 points from 2016.

An online marketplace is like a virtual mall. The website or app enables customers to shop from many sources.

The operator of the marketplace does not own any inventory. Rather, it presents other people’s inventory to customers with the goal of enabling purchases. As an example, consider eBay, a global marketplace that sells everything.

Purchases Are Price Driven

More than eight in 10 shoppers surveyed cited price as the most important factor when searching for and selecting products online.

You may also like:  Digital Marketing in the Energy Industry

Free shipping remains the top driver for making a purchase online — and customers will spend more to qualify for free shipping.

Online shoppers still look for free shipping. (Source: UPS)

Online shoppers still look for free shipping. (Source: UPS)

But Experience Is Important

How people shop. (Source: UPS)

How people shop. (Source: UPS)

Online shopping is clearly disrupting traditional retailers. However, smart retailers can also capitalize on new opportunities.

While the overall percentage of purchases made in physical stores is declining, the survey said stores retain an important role in the shopping experience. Specifically:

  1. Many online shoppers find stores important to touch and feel products (59 percent), solve immediate problems (54 percent), receive superior customer service (52 percent), and take part in rewards/loyalty programs (52 percent).
  2. Half of the shoppers (50 percent) have used ship-to-store this year, of whom 44 percent made more purchases in store, and 41 percent plan to use ship-to-store more often in the next year.

Personalized Experiences Are Essential

Retailers on- and off-line should embrace personalized experiences and connect with their customers on more holistic, empathetic levels, the survey suggests.

That includes adopting new technologies, such as chatbots and virtual reality, which can provide convenience and more engaging experiences.

“Providing personalized service begins with meeting your customers where they are and providing an excellent experience regardless of the channel. Peer reviews on social media, knowledgeable sales associates that go above and beyond, and new technologies such as chatbots are just a few ways consumers seamlessly interact with retailers,” the survey found.

What Retailers Should Do

U.S. retailers can proactively counteract pricing pressures from international retailers by “providing a more meaningful customer experience.”

This includes apps and mobile-ready websites that offer online shoppers “experiences they desire the most.” The options: store inventory visibility, high-quality product photos, rewards/loyalty programs, mobile coupons, ship-to-store options, and superior customer service.

To win more international customers, retailers should offer a native language experience. They should also offer detailed price information that clearly states duties, taxes, and fees.

Online retailers should also explore virtual reality. It helps online shoppers visualize furniture and home décor (42 percent). It also brings products to life (40 percent), and simulates browsing through a store (39 percent).

“Pure play online retailers are expanding with physical stores and multichannel retailers are using their local storefronts as ecommerce fulfillment centers,” said Gershenhorn.

Noreen Seebacher is the content evangelist at Arke, where she researches, writes and continues her long career in news reporting as a brand journalist. Noreen lives in Beaufort, South Carolina with her husband, her dog and four formerly homeless cats.