Shipwire Report Reveals Uptick in Small Business Overseas Growth
Marketwire, May 3, 2010
Palo Alto, CA— May 3, 2010 Shipwire™, a leading provider of outsourced product fulfillment, today unveiled results from a study focused on small business (SMB) online retailer trends as they expand into global markets. The results of the study, culled from Shipwire customers based in the United States and abroad, point to an increase in SMBs” overseas growth. Results also revealed additional trends in shipping and e-commerce.
Shipwire analyzed aggregate customer shipping data for a two-year period (2008 vs. 2009) to uncover trends around export and shipping. Key findings from the report are revealed below.
Shipwire Index Findings
International Orders Grew 11% from 2008 to 2009 To Reach 20% of Total Orders
Nine percent of total orders were international in 2008; 20 percent were international in 2009. These numbers represent shipments to non-US addresses and include international shipping methods for US warehouses and non-US carriers overseas.
Historically, overseas shipping and logistics costs have been a barrier to international growth for SMBs. However, the increase noted in this report (2009 over 2008) seems due to at least two factors: a need to tap into international markets brought on by the global recession as well as new services that are allowing SMBs to compete effectively overseas. (For more information, please see Shipwire’s “Export Vision 2010: A Plan for Overseas Growth.”)
International Merchants Show More Aggressive Cross Border Growth Compared to U.S. Merchants
75% of international merchants were in markets outside of their home country versus 13% of US merchants. Results from a smaller statistical sample of top Shipwire merchants (see “Methodology” section) revealed that non-U.S. SMB merchants are showing marked international growth as compared with U.S. merchants.
- For these top merchants, 18% were actively exporting products to a warehouse outside of their home country (example U.S. going to Canada or the U.K.) and a total of 15% of their 2009 total orders shipped from a facility outside of the merchant’s home country.
- Of the U.S. merchants in this smaller sample,13% were conducting business in one of Shipwire’s international fulfillment warehouses in Canada or the UK.
- Of the International merchants in this sample, 75% were doing business in the Shipwire U.S. facility and 25% were doing business in one of Shipwire’s overseas fulfillment warehouses (non-US warehouses in the U.S. and Canada).
This data tells us that while U.S. SMBs are increasingly exporting, non-U.S.-based SMBs are more prone to export products out of their home country and enter the U.S. consumer goods market. The United States has historically offered small businesses the largest consumer market in the word, a fact increasingly challenged by the global recession. “It appears that U.S.-based merchants are not tapping into overseas opportunities as readily as are internationally-based customers. However, we expect that this gap will slowly begin to close as U.S. merchants search for growth markets overseas in greater numbers,” stated Damon Schechter, CEO and Founder of Shipwire. In an effort to accelerate this trend, Shipwire has released new guides to help merchants enter the Canadian and Western European markets and grow global sales. http://www.shipwire.com/GlobalGrowth
UK E-Commerce Market Growing Faster Than Canada
As a percentage of total unit sales (note, there can be more than one unit in an order) UK volume grew 1316% between 2008 and 2009 while Canada unit volume grew 300% between 2008 and 2009.
In 2009, UK unit volume represented 11% of total unit shipments, up from 2% in 2008. The Shipwire UK warehouse was launched mid-year 2008.
In 2009 Canada warehouse unit volume represented 7% of total unit shipping volume, up from 4.5% in 2008. The Shipwire Canada warehouse was launched in November 2007.
There are likely two reasons for this trend. First, Canada represents a smaller e-commerce market than the U.K when one includes Western Europe. Second, many Canadian orders are still fulfilled using slow and costly cross-border international parcel shipping or consolidated shipping methods. Buyers in Western Europe are much more likely to buy locally, than ask for a shipment from the U.S. According to Forrester Research, e-commerce in Western Europe is expected to grow at an 11% CAGR from $93 billion in 2009 to $156 billion in 2014. For merchants seeking growth beyond the U.S. consumer, Western Europe appears to represent a bastion of consumer growth. However, Canada’s resilience to the global recession and currency volatility, combined with an increasingly tech savvy consumer based, supports a smaller but growing opportunity for U.S. exports into the local Canadian market.
Increase in Business-to-Business (B2B) and Wholesale Shipping
While most online retailers are focused on direct-to-consumer (B2C) shipping, B2B and wholesale shipping is showing a marked increase as well. The quantity of B2B units shipped via freight as a percentage of total units shipped grew from almost 5 percent in 2008 to just over 11 percent in 2009. This increase was likely generated by Shipwire adding additional freight shipping options and additional warehouses for merchants to transition inventory between; however, outbound freight shipments also indicate merchants resupplying distributors and retailers –domestically and abroad. Subsequently, as SMBs prove their mettle in B2B sales, the competitive landscape is expected to change in order to compete with larger players.
2009 Holiday E-Commerce Order Volume was Up; But, With Smaller Average Order Amounts
The Shipwire survey reinforces a general growth in e-commerce, as indicated by holiday season shipping trends. Between the 2008 and 2009 holiday seasons, the average order volume per merchant grew 44 percent; however, the average number of units shipped by merchants for the holiday season increased by 26 percent. So, while merchants shipped more product, they sold a lesser amount to each buyer (the average unit size decreased while the total shipments increased).
“This shows that while merchants did ship 26% more product, they shipped it in more orders; this seems to indicate that there were more online shoppers; but, the average customer bought slightly less product per order in 2009 over 2008,” stated Mr. Schechter. “It appears that there is a growing comfort with making impulse purchases online. This is a trend I would expect to continue with a global recession butting heads with the pricing efficiency and convenience of online and mobile commerce.”
Shipwire culled results from two separate data samples. Data sample 1 included order data analysis for Shipwire aggregate order volume in 2008 and 2009. Data sample 2 represented a 1 time sample of high volume merchants for 2009 based on identified “home” country. All Shipwire merchants include an array of SMBs representing a variety of industries. The holiday season is defined as the day after Thanksgiving to the end of the year and was 27 days in 2008 and 28 days in 2009.
 Of the merchants sampled 62% (47 merchants) were based in the United States and 38% (28 merchants) were non-US based merchants.
About Shipwire (http://www.shipwire.com)
Shipwire, the leader in e-commerce order fulfillment services, effectively eliminates the hassle of storage and shipping for growing merchants with a global warehouse network and its innovative Store-Sell-Ship™ platform. Shipwire’s warehouses — in Los Angeles, Reno, Chicago, Toronto, Vancouver and London — are conveniently located close to buyers, drastically reducing merchants” shipping costs. Shipwire is the only warehouse logistics service that instantly integrates with shopping carts and inventory management systems. Shipwire is developer- and partner-friendly; learn more about our shipping affiliate partner program or get our how to outsource order fulfillment guide at http://www.shipwire.com/partner. Stay up to date with our shipping fulfillment distribution blog. Print online USPS postage. For a free trial or more information, contact 1-888-SHIPWIRE or visit http://www.shipwire.com/trial.