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Our flagship series will propel you to the forefront of the global ecommerce revolution. From analyses of breaking current events to the intricacies of navigating cross-border sales and regulations, Business over Borders entertains and informs any audience who wants to learn more about how international ecommerce works.
Welcome to Business Over Borders. I'm your host, Leo Tucker. And today, we've got a mini series about consumer behavior. I'd like to introduce my guest, Matthew Steinbrecher. Matt, good to see you again.
Matthew Steinbrecher:Yeah. Likewise. Thanks for having me on.
Leo Tucker:So I wanna talk today about consumer behaviors. Now when customers buy things in different countries, whether that's the US, Canada, EU, Australia, they're accustomed to paying with certain payment methods. They're used to, you know, certain spending habits. So I wanna dial down in and talk about the US a bit today. Let's talk broadly about consumer buying behaviors for US consumers.
Matthew Steinbrecher:Yeah. So one of the things that I I think a lot of people are starting to forget because it's so common to us now is that Amazon really changed the world in consumer experience. And, obviously, being a US based company, it just kinda changed the game. You start with the simplest thing as Prime. Like, delivery with Prime, it's so fast.
Leo Tucker:Yeah. Delivery same day, next day, can't
Matthew Steinbrecher:go wrong. I mean, same day, like, that night, I got a 2 hour delivery window. It's it's pretty incredible. And and, obviously, there's huge cities around the world now too, everywhere from London to Hong Kong that now have that capability too, but it all kind of started with Amazon largely. And, you know, at this point now, it's almost a decade ago, and and as they built out more and more infrastructure to ramp up their ecommerce presence, we saw that Amazon in general just kind of, like, set the standard for consumer behavior.
Matthew Steinbrecher:And Bezos is obviously, like, very, very focused on consumer experience, making it easier for shoppers. That's why they dominate the way they do. That's how they've become such a behemoth.
Leo Tucker:Yep.
Matthew Steinbrecher:And now, obviously, they're playing at a different level than they were a decade ago. But when they were kind of on the up and up and still a a very big contender, I think one of the things that made them so unique was focusing on the shopper and trying to be in front of trends of consumer experience in the US in particular. And then, of course, now they just dominate globally too. But, when you're looking at the US consumer scale, there's a lot of weird behaviors that we have that are very nuanced from many different cultures around the world. So I always look at Amazon as a benchmark when we talk about online retail, but taking a step back, you have to understand how American society has been over the last couple decades few decades, really, since the inception of credit cards, which were founded and absolutely scaled in America.
Matthew Steinbrecher:The consumer experience has very much so been driven around lines of credit, being able to buy something without necessarily giving up that money straight away.
Leo Tucker:Right.
Matthew Steinbrecher:And I think that's something that a lot of people just very fundamentally forget when they look at how Americans purchase, and what they're used to from purchasing habits. So in the US, it's common that every single American has about 4 and a half credit cards in their wallet, which is, you know, obviously, you can't have half a credit card, but that's a pretty staggering amount and significantly higher than any other country.
Leo Tucker:2.5 children and 4.5 credit cards. Exactly.
Matthew Steinbrecher:Yeah. At the end of the day, it's it's something that a lot of people really forget. You know, I myself probably have 6 credit cards, but I'm I have them all for different things, and I travel a lot. They all have their different perks and rewards and benefits. And so you look at this credit driven society that started way back when when, you know, credit cards really kind of became a thing, and then the banks adopted them.
Matthew Steinbrecher:The issuing banks started to build out rewards. So it started with stuff like American Express and Diners. The Diners card was originally, like, an exclusive club in New York that was only for very, like, high profile individuals, and they were able to get access to different clubs or different restaurants and things like that. And then it started to roll out to the masses and not be such a illustrious exclusive thing. So you have all these different segments of how credit cards started to build in segmentation within their audience to to create more of a consumer first experience when it comes to banking Instead of your traditional banking rails where you have a checking account, you load it up, you pay with that checking account.
Matthew Steinbrecher:They the banks really try to innovate and focus on this credit driven society wants to have the freedom to purchase what they want, assuming it's somewhere within the means of their purchasing power, but also the illusion that by purchasing with that line of credit, they're getting something in return. And it's built this, like, crazy society of consumer experience that I think has been, like, a struggle for a lot of people to figure out how to appease all these different shoppers, as we evolve in, you know, trending consumer experience behaviors.
Leo Tucker:So how does that play into you know, obviously, if I go online to buy something, I expect to pay with a credit card, you know, maybe a a Visa bank card or something like that. But what other things in the US do we see that's different from, let's say, Europe or Australia or, you know, Asia?
Matthew Steinbrecher:I think most people are so oriented towards utilizing their credit cards that they will always lean towards the credit card being the first purchasing option that they use.
Leo Tucker:Yep.
Matthew Steinbrecher:So, obviously, if you're an online retailer or some sort of SaaS company and you don't offer Visa or Mastercard on your website, you're gonna have a hard time scaling.
Leo Tucker:Nah. Forget about it.
Matthew Steinbrecher:And yeah. Yeah. It's it's just it's impossible to really do well without having those as kinda your staple options. And I would say most people in the States are pretty well aware of their lines of credit. They do use them as much as they can, but it differs a lot from from many other regions around the world because it's just not as heavily used.
Matthew Steinbrecher:It's not such a foundational requirement to an individual's, like, financial portfolio, if you will, in many other regions of the world as it is in the US. It's it's very staggering how much credit is utilized in the states in good ways and definitely in bad ways, but it's very different from other regions around the world that'll have different shopping experiences.
Leo Tucker:Let's talk for a second about, 3 d Secure. Occasionally, when I buy something generally on my credit card, which is my primary payment method, occasionally, I'll get a message that says, hey. You need to you know, we're gonna send you a 2 f a code and type it in here, and then you can purchase it. But pretty rarely, that seems to be more commonplace around the world. Can you talk to 3 d s in the States?
Matthew Steinbrecher:Yeah. I get this misconception a lot from businesses that are in EMEA, specifically. They think that by offering 3 d s in the US, it's gonna make fraud go away and, you know, they're gonna have a a better shopping experience. 3 d s is not really a thing in the United States. The issuing banks have not adopted it at all.
Matthew Steinbrecher:So, ultimately, the issuers are the ones that control the 3 d s experience, which is the 2 factor authentication to say, like, is this actually Matt Shopping? You know? Or, Leo, can you send me this 4 digit code that I sent to your phone to confirm that you're trying to make this purchase? That flow just doesn't really exist for us in the states. Very rarely will you get it.
Matthew Steinbrecher:If you buy something from overseas, it's possible you get that flow, but it's pretty rare for you to get that on a, you know, day to day basis of transactions. And I think what a lot of overseas retailers struggle with is understanding why we don't use 3 d s. At the end of the day, it really comes back to the US despite some of its issues with its banking system. It's still a very, very sophisticated banking system. So the real time analytics and communication structures from bank a to bank b, when you're just talking about a US domestic transaction, are very, very strong compared to many other regions in the world.
Matthew Steinbrecher:It's also that we always expect we're very shopper first and shopper friendly in the US, but we're also a very capitalistic society where we allow the banks to, you know, run a little freer than they do in some other regions around the world.
Leo Tucker:Right.
Matthew Steinbrecher:And so as a result of what you get is you have these banks that give individuals a credit card. Right? So I have, like, a Capital One Venture card, for example. It's a travel based credit card. Capital 1 is the issuing bank, and it's a Visa.
Matthew Steinbrecher:So Visa is the network that communicates to the banks. Capital 1 gives me incentives as a shopper to spend as much money as I can in certain, like, spending category segments so that I get points from them. So they want me to put as much money as I can on my line of credit because what they're hoping for is that I don't pay off that full line credit every month and every once in a while or perpetually, they get, you know, a 25, 26% return on my line of credit with them.
Leo Tucker:Yeah. Minimum payments are king. Yeah.
Matthew Steinbrecher:Yeah. Exactly. Right? Everybody wants to rack up interest. And so, you know, if you're a consumer and you're savvy with your personal finances, you pay it off in 30 days.
Matthew Steinbrecher:You don't pay any of those additional fees. So you get that line of credit for 30 days. But Capital One is incentivized to get me to spend as much money as I can to a point where I might not be able to pay off that full amount after that 30 day period. So they make an interest. Then you have me as a consumer, and our society in general is is pretty materialistic, I would say.
Matthew Steinbrecher:So for consumerism, it's quite high in the US. So a lot of people are buying a lot of stuff. Then you have your banks influencing you through different reward programs and incentives to buy more stuff so that you ultimately will rack up more debt with them, which hopefully they can recoup some of their investment, through interest rates. And then you kind of have how that all plays together with regulatory atmosphere. And so the banks care more about making sure that their customers are as happy as possible and able to spend as much money as possible with the least amount of friction in that process.
Leo Tucker:Right. And 3 d s is introducing significant friction to that process. I have to get a code. I have to type the code in. Do I remember, you know, the login or something to where I have to put in the code?
Leo Tucker:We're kinda talking about buying patterns. Let's talk about peaks and valleys. Like, when is it hot? Like, in the US, you know, obviously, we got Black Friday. We got Christmas time.
Leo Tucker:Let's talk about sort of cyclical buying increases and decreases throughout the year in the states.
Matthew Steinbrecher:I would say overall, you know, when we look at the US society in general, we are very materialistic. When you look at the idea of the holiday season, you know, Christmas time, everyone has an increased spending pattern, and that is partially fueled by them wanting to give gifts as part of this holiday season to their loved ones or their friends or whatever. But, of course, that then becomes exacerbated by the people selling them those gifts will offer extremely heavy discounts or some sort of incentive program to get them to spend more. And having that kind of sentimental value where typically you're around loved ones and, you know, you're meeting family and things like that, kind of that I idea in American society, at least, of gift giving, it's it's very fundamental to that sentimental feeling in the holiday season.
Leo Tucker:Season. Absolutely. You go to you go to dinner and you get a gift bring a gift.
Matthew Steinbrecher:Exactly. Yeah. And it's it's, you know, a lot a lot of a lot of my European friends think that it's a very shallow piece of our society, but it's a piece of our society nonetheless. And I think it's something that if you're selling to Americans, you gotta know this. You gotta know that that's kind of a valuable time for them to convert on your website or, you know, upsell them to something additional if they're already a long time subscriber.
Matthew Steinbrecher:Like, hey. You know, I know you really like my products, but it's holiday season. Maybe you wanna get something for your partner or whatever. All sorts of things that you can use to manipulate that, like, sentimental holiday feeling that is already a heightened sense of urgency on purchasing things, an impulse on purchasing things because your banks are giving your incentives. You're getting maybe you're getting holiday bonuses at work.
Matthew Steinbrecher:Everything is kind of driven around that cyclical time, which starts just before, well, I guess, for for most retailers, it starts just before Thanksgiving, which ultimately leads into Black Friday, and now Cyber Monday because why not make a whole weekend out of it?
Leo Tucker:Yeah. It's a whole long weekend.
Matthew Steinbrecher:Yeah. And then that basically bleeds into steep discounts all the way up until, you know, Christmas or New Year's.
Leo Tucker:Yeah. It's kind of an interesting thought. You know, with ecommerce being as strong and so many retailers coming out of the US, US Thanksgiving and Black Friday, probably more specifically, has really been thrust upon the world stage. Like, I imagine many countries around the world, especially anyone selling into the US, knows about Black Friday. It's not just a US holiday at this point.
Leo Tucker:It's it's it's global as far as retail space goes.
Matthew Steinbrecher:Yeah. But it certainly originated here. Yeah. And it's definitely you know, it's just a made up BS holiday. I like to call them Hallmark holidays Mhmm.
Matthew Steinbrecher:Like Valentine's Day. And America's really good at building these, again, coming back to, like, kind of that materialistic society like that that need to have something extra to go above and beyond for that particular day or that particular time of year.
Leo Tucker:Yeah. There's no better way to, loosen the purse strings than to tug on the heartstrings. So
Matthew Steinbrecher:Exactly. That makes sense.
Leo Tucker:So just to wrap it up, let's give some advice to retailers who are selling into the US. What are some quick points that they can address to have, you know, optimize their sales and their conversions to customers in the US?
Matthew Steinbrecher:Yeah. The first thing is making sure you truly understand the price points of what you're selling and and really understand your demographics. Even in the US, for anyone that's been here and been to different states, the South is different from the Midwest, which is different from the East Coast, which is different from the West Coast. You do have to understand where your product is selling really well. What type of consumers are are buying from you?
Matthew Steinbrecher:Is it, you know, women aged 16 to 30? Or is it men aged 75 to 90? You don't really know what you're getting. And I think if you don't focus on what your demographics are and how to best capture them, in what type of purchasing cycles that they want to have or that they need, you're not gonna drive conversion. So the biggest thing is you always wanna make sure you're giving good experiences with the checkout flow, firstly.
Matthew Steinbrecher:You need to make sure that it's a seamless checkout. There's not a lot of friction introduced in the checkout, and it's much easier to, purchase something quickly. Most of the time, we are impulse behavior driven. And, you know, if you're able to get someone to check out quickly, you will be able to convert really well on that particular individual. The second thing is obviously free shipping.
Matthew Steinbrecher:If you are able to give someone free shipping in the US and you can get it to them in 2 days, your chances of success selling that product are exponentially higher than if you're gonna take, you know, 7 to 8 days and you're gonna charge them $25. It will really hinder your ability to properly scale within the US if you're unable to hone that in and get those shipping timelines down. The third thing I would really say is don't introduce unnecessary friction. A good example that we talked about would be 3 d s. 3 d s is not really a friction point that we introduced.
Matthew Steinbrecher:You don't wanna offer that on your website. And I think just having as much of a localized experience and utilizing the local credit card rails is gonna be your 100% best way to sell in the US and appease your US customers. One of the the issues with banks in the US is if you are selling to a US bank and it's coming from a foreign bank. Because we don't have things like 3 d s, their the customer's bank is definitely more willing to accept the transaction and accept potential fraud on it. But they will still be a lot more reluctant to accept a transaction that comes from cross border and overseas.
Matthew Steinbrecher:And so I think if you're able to, number 1, have a frictionless checkout. Number 2, have some sort of free shipping or very quick shipping option to the customer so they can have that kind of Amazon experience in your checkout. Number 3, not introduce any sort of unnecessary friction like a 3 d s. And then most importantly, having, you know, a local presence here, a local bank here in the US will help bring all three of those things together to ultimately drive a very high conversion rate on your site and a a stronger lifetime value for each of the customers you're able to get on board.
Leo Tucker:Outstanding summary, Matt. Thank you for that. Thanks for joining us on consumer behavior here at Business Over Borders. If you like this content, don't forget to like this video and subscribe. And if you wanna see what we got coming up next, hit that little bell.
Leo Tucker:See you next time. Brought to you by The Reach Network. Visit with reach.com/network for more.