Spice of life led to flourishing trade on a global scale

With all the uncertainties of recent years around the themes of globalisation and international trade, one thing remains absolutely certain: We will all continue to trade across borders.

People have been engaged in international trade for more than 5,000 years. Some of the earliest records of civilisation show how trading posts were established in South Asia and the Middle East to support the exchange of goods.

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

In many fundamental ways, people haven’t 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 (but not too large) amount of time and effort to seek out what they want at the best price. And merchants are constantly looking for enterprising, creative ways of taking their goods to new markets and winning new customers. Which brings us to what I believe is 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: Cross-border e-commerce.

E-commerce is not a particularly new phenomenon. And neither, for that matter, is cross-border e-commerce. People have been able to order – particularly from major online retailers – around the world for years now, which helped the cross-border market grow to US$ 300 billion by 2015.

At the same time, I believe this business will flourish in the coming years. DHL Express has recently published research into cross-border e-commerce, conducted with the support of a leading global management consultancy, which has thrown up some fascinating insights.

First among them is that 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 twice the rate of domestic online retail (which itself is growing faster than traditional bricks-andmortar) in the period to 2020. The market will be three times bigger than it was in 2015 by 2020. Additionally, it attracts more spend from customers – 20% of cross-border purchases have a basket value of more than US$ 200.

The premium aspect of cross-border commerce is worth noting. According to our research, retailers who offer a premium service offering (including faster delivery) are growing 60% faster than the average. This is driven in part by the fact that fashion and technology still account for a substantial proportion of cross-border sales.

However, the premium opportunity is there for every product, both in terms of what the retailer offers and what the customer demands. To put it in terms of a burger: On the supply side, you have gourmet burgers that can sell at three times the rate of the fast-food version. And on the demand side, you have customers who’ll pay any amount of money to get that fastfood burger to their hotel room in the middle of the night.

This all makes for a compelling case for building an online offering (with a premium option) that is also open for business to overseas customers, whatever your product. Importantly, as we see within our own customer base at DHL Express, this is much, much easier than many people think.

The main barriers cited by customers to buying something from overseas are logistics, trust, price and customer experience. Today, with reliable global door-to-door logistics networks connecting businesses with customers and enabling easy returns anywhere in the world within days, and off-the-shelf solutions making website visits, price calculations and transactions possible in just about any language or currency, you can address the vast majority of these concerns.

There is a modern-day spice trade emerging, which I strongly encourage every retailer to take a serious look at. It requires a new skill-set, a new mind-set and new approaches to managing inventories, supply chains and even customer interactions. But it offers a ‘no-brainer’ growth opportunity for all retailers and manufacturers – customers surveyed for our research reported an average sales boost of 10% through simply having a crossborder option.

For those entrepreneurs and markets that can connect most effectively with the global market, it will deliver handsome rewards. Most importantly, it will highlight the most positive aspects of global trade, allowing everyone – wherever they are in the world – to exploit the very best of their unique culture, skills and creativity to trade with the world, grow and build prosperity.

Ken Allen is Chief Executive Officer of DHL Express.