Who purchases cross-border? Individual and country level determinants of the decision to purchase cross-border in the European Single Market

E-commerce possesses considerable potential for developing the internationalisation and integration of consumer markets by bringing sellers and consumers from different countries directly into contact with each other without the requirement for intermediaries. However, cross-border online purchases remain low compared to domestic online purchases. Large differences between individual countries are also observed in the percentage of consumers who purchase cross-border. While previous studies of e-commerce have concentrated on the decision to buy on-line, this study concentrates on the decision to purchase cross-border compared to purchasing on-line only domestically. To this end, a statistical qualitative response model is developed and tested against a large data set of consumers living in the thirty countries belonging to the European Economic Area. The results demonstrate the importance of country level determinants in addition to the personal characteristics of the consumer in terms of their age, gender, profession, educational background, location and trust in non-domestic suppliers in the decision to purchase cross-border. Among the country level determinants, domestic market size, economic development and ethnic fractionalization of the country are all shown to play an important role. The results have important practical implications for e-commerce sellers as well as public authorities. The country-specific socio-economic determinants can help to better assess the potential market for cross-border selling and guide public policies aimed at stimulating cross-border selling as a means to integrate consumer markets in the European Economic Area.