What is cross-border EC? Explore the size of the worldwide market and its potential 

EC Column

Introduction

Hello. My name is Saito, and I am a consultant.
In the 21st century, we live in the age of electronic commerce ( e-commerce). Various products and services can now be easily purchased from anywhere on the planet. This is due in large part to the proliferation of the Internet and smart devices. Of particular note is the "cross-border e-commerce" that takes place between different countries and regions.
Cross-border e-commercerefers to online commerce between different countries and regions. Cross-border e-commerceallows companies to do business not only in their home markets, but also in foreign markets.
However, many people may have heard something about it, but may not have a clear understanding of how large the market actually is and what advantages and disadvantages it has. This article details the size of the worldwide market for cross-border e-commerceand its potential.

Global EC market size


As of 2023, the growth in the size of the worldwide E-commerce market is unstoppable and gaining momentum. This wave of growth is the result of technological advancements that have helped create an environment where people can shop anytime, anywhere, without being tied to a physical location. this digitalization has revolutionized the way we shop, greatly easing the constraints of time and place. This advancement has been a key factor driving the remarkable growth in the size of the E-commerce market.
In addition, the increase in home time due to the new coronavirus has further highlighted the convenience and security of E-commerce and provided a major impetus for online purchasing to become more common. The rise of the middle class in emerging economies and increasing internet connectivity are also driving the expansion of the E-commerce market.
According to a METI study, the global BtoC- e-commercemarket is estimated to be worth a whopping US$4.92 trillion in 2021, with a e-commerceconversion rate of 19.6%. The pandemic of new coronavirus infections has spurred demand for e-commerceand led to a rapid increase in market size and e-commerceconversion rates. This trend is expected to continue, and by 2025, the market size is projected to rise to US$7.39 trillion and the e-commerceconversion rate to 24.5%.
Thus, the worldwide E-commerce market continues to grow briskly, and more and more companies are developing their businesses through E-commerce.

Size of the global cross-border EC market

And of this huge EC market, cross-border EC is attracting particular attention.
The global cross-border e-commercemarket size was estimated at US$780 billion in 2019, and its value is projected to grow to US$4,820 billion by 2026. With a compound annual growth rate of about 30% during that period, the size of the cross-border e-commercemarket is expected to expand faster than the global BtoC- e-commercemarket size.

From the consumer's perspective, the reasons behind this expected market growth are the growing awareness of cross-border E-commerce, the desire for products that are not available in their home country, the ability to obtain products at lower prices than in their home country, and trust in the products and manufacturers.
Cross-border EC also offers great opportunities from the perspective of businesses. the most important point is that it is possible to expand the target consumers not only in their own countries but also on a global scale. This positive attitude of businesses is driving the spread of cross-border EC.
Furthermore, advances in the level of logistics are another facilitating factor for cross-border E-commerce. advances in logistics, such as faster delivery speeds and easier cross-border delivery, have contributed significantly to the spread of cross-border EC.

Cross-border EC market by country

Let's look at the findings of eMarketer and Statista regarding each country's total retail e-commercepurchases, cross-border e-commercepurchases, and cross-border e-commerceas a percentage of total purchases in 2020.

For example, the U.S. EC market is worth approximately $795 billion, of which $270.1 billion is from cross-border EC purchases, accounting for 34% of total purchases. This indicates that the U.S. market has great potential from a cross-border EC perspective.
On the other hand, China's EC market is overwhelmingly large compared to other countries at approximately $2.297 trillion, but cross-border EC purchases amount to only $34 billion. (note, however, that data on Chinese consumer behavior is difficult to obtain and often unreliable.)
Also shown below is a table showing the total amount of cross-border EC purchases in each country and the percentage of each country's top two purchase sources. This shows that the percentage of purchases from China exceeds 30% in all countries.
Unfortunately, China is the only country in the top two for purchases from Japan, in other words, there is still much room for Japanese companies to expand their cross-border EC activities.

Furthermore, when considering cross-border EC in the future, it is worth looking at frontier (emerging) markets. These countries have growing economies and rapidly growing new consumer segments. In particular, the use of E-commerce in these markets is expected to increase further in the future due to the proliferation of mobile and internet connectivity.

Summary

Through this article, we have explored in detail the growth and potential of cross-border e-commerce, one part of the 21st century, which is truly the age of e-commerce ( e-commerce).
While cross-border e-commerceis expanding around the world, Japanese companies have yet to take advantage of cross-border e-commerce, and the future cross-border e-commercemarket has tremendous potential. e-commerceWe recommend that companies that are developing their business using the cross-border e-commerceto further utilize cross-border and consider expanding into frontier markets. These moves will allow companies to expand their business more broadly and create new growth opportunities for them.

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