Cross-border e-commerce: the 21st century spice trade

Amidst recent uncertainties around the themes of globalization and international trade, one thing remains absolutely certain: cross-border trade is here to stay. People have been engaged in international trade for more than five millenniums. According to some of the earliest records of civilization, the exchange of goods was already supported by trading posts established in South Asia and Middle East.

One of the main commodities was spices, which were highly prized. Traders in the Middle East offered cinnamon and cassia, embellishing their sales pitches with tales about their mysterious origins and properties. And customers loved it: The spice trade flourished and continued through to modern times, on the back of demand for these high value commodities, and the ingenuity of those who worked to source and sell them around the world. It built bridges between different cultures and gave rise to major shipping routes between continents, many of which endure till this day.

Fundamentally, consumers have not changed over the last 5,000 years. As consumers, they still crave exclusive, high quality and exotic goods. They are willing to invest a certain amount of time and effort to seek out what they want at the best price. Merchants are constantly looking for enterprising, creative ways of taking their goods across borders to new markets. All these have set the stage for cross-border e-commerce – the new ‘spice trade’ phenomenon that will help to shape international trade, transform the world’s supply chains and build new shipping routes in the future.

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E-commerce is not a particularly new phenomenon. And neither is cross-border e-commerce. People have been able to order – particularly from major online retailers – around the world for years now, and this has helped the cross-border market grow to USD 300 billion up till 2015.

Research insights published recently by DHL Express – in partnership with a leading global management consultancy, has indicated that this business will continue to flourish for years to come. According to the report, this market offers superior growth rates to those available in just about any other retail segment today. Cross-border e-commerce is expected to grow, on average, at nearly twice the rate of domestic online retail by 2020. The market will be three times bigger than what it was in 2015 by then.

Outside of today’s biggest spice route supply markets—US, UK and China—new spice trade routes have emerged in Singapore, Hong Kong and India, spurred by rising consumer education and e-tailer awareness of opportunity. According to Google’s Consumer Barometer, consumers are motivated to purchase from abroad because of better product availability, more attractive offerings and trust in the brands. And consumers in Singapore (being ranked top alongside Japan, Germany and the UK) also cited better availability as a principal reason for cross-border online purchases.

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