PayPal's 'modern spice routes' highlight power of Internet economy

A study released on Monday showed that Internet-powered shopping across national borders has created "modern spice routes" holding wealth for local merchants who tap into the booming trend.

Hong Kong, Canada, Australia, Germany, China, Britain and the United States will see a combined total of $105 billion in "cross-border online shopping" this year and that figure should nearly triple to $307 billion in the next five years, according to Nielsen research commissioned by Internet financial transactions service PayPal.

"Traditionally, the small merchant was left out," PayPal president David Marcus said of local shops competing globally for customers.

"Here comes the Internet, and small merchants can basically make the world their backyard market."

More than 25 percent of transactions handled by PayPal involve cross-border purchases, with the Silicon Valley-based service tending to matters such as currency differences, buyer satisfaction, and optimizing websites for smartphones, according to Marcus.

Of the markets studied for a report titled "Modern Spice Routes," the US was the most popular cross-border shopping destination, followed by Britain, China and Hong Kong.

China, Argentina, Russia, Brazil and Australia were listed among the hot locations for merchants to target exports.

Cross-border shoppers will spend $12.5 billion on clothing, shoes, and accessories this year, while $7.6 billion will be spent on health and beauty supplies, according to Nielsen.

"The scale of cross-border online shopping has never been mapped before and what is clear from this research is not just the current size of this market, but its massive potential for consumers to buy directly from merchants around the world," Marcus said.

"The message is simple: the emergence of these "modern spice routes" is great news for economies and small businesses the world over."

Saving money and finding items unavailable locally were the most common reasons given for shopping internationally online, according to the study.