Paypal Insights 2015-INDIA Millennials Report

PayPal Cross-Border 2015 Millennials Reporting INDIA Report PayPal Cross Border contacts: Melissa O’Malley, Astrid Huijssoon, Ritesh Arora PayPal Market Research Contact: Daniel Jenkinson Ipsos MORI Contacts: Eleanor Pettit & Peter Attwell

Advancement of technology is helping to open up commerce opportunities for everyone - across borders, anywhere, anytime and via any device.

Understanding that we are going through a commerce revolution, PayPal in partnership with Ipsos, conducted a global 29 market survey with approximately 23,000 consumers to examine how people shop online and across borders.

This survey is designed to gain insight into 3 main areas: • How online commerce, and specifically cross-border commerce is evolving • How and why consumers shop online across borders • How consumers pay for cross-border transactions

This report focuses specifically on the habits and attitudes of Millennial shoppers (those aged 18-34) and how these differ from those of the general population

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. Research Methodology This study was conducted across 29 markets and approx. 23,000 consumers globally. Fieldwork Sample, per market Global Fieldwork 29 markets conducted Sept-Oct This research was Sample of 800 Own and/or use an 2015 carried out to Internet-enabled th per market. India fieldwork 17 the international device* Sept – 6th Oct 2015 Nationally quality standard representative of Online for market online population survey research, ISO Aged 18+ Data weighted to adjust for 20252:2012 Respondents known population incidence 20 minute recruited from questionnaire online panels Questionnaire Transaction & Spend: Cross-Border Drivers, barriers and Cross-Border Past 12 Months & transactions & attitudes to cross- Screening Payment Next 12 Months spend border shopping

*Desktop computer/Laptop/ notebook computer/Tablet /Smartphone/Some other type of mobile phone/Electronic © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 3 organizer / PDA with wireless voice and data features/Games console with Internet connectivity (e.g. Wii) /Smart TV Publication Note The following information should be included in any news releases or materials for publication by PayPal. Additional guidelines on news releases are in Appendix A. Please note: All PR releases/materials for publication should be sent to the Ipsos team for approval prior to publication Research was carried out on behalf of PayPal by Ipsos Audience surveyed: Adults (aged 18+) who own and/or use an internet enabled device - *Desktop computer/Laptop/ notebook computer/Tablet /Smartphone/Some other type of mobile phone/Electronic organizer / PDA with wireless voice and data features/Games console with Internet connectivity (e.g. Wii) Sample size: 808 Method of data collection: Online survey Weighting: Online shoppers down-weighted by factor of 0.85 to adjust for known population incidence Sampling method: Quota sample If results are being published, please include contact details of the PayPal team Example of technical note On Behalf of PayPal, Ipsos interviewed a representative quota sample of 800 adults (aged 18 or over) who own and/or use an internet enabled device* across United Kingdom (England, Scotland, Wales and Northern Ireland)[INSERT APPLICABLE MARKET]. Interviews were conducted online between [INSERT APPLICABLE FIELD DATES FROM P3] 2015. Data was weighted to known incidence of online shoppers. *Desktop computer/Laptop/ notebook computer/Tablet /Smartphone/Some other type of mobile phone/Electronic organizer / PDA with wireless voice and data features/Games console with Internet connectivity (e.g. Wii) /Smart TV

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 6 Millennials are as likely to have shopped online in the past 12 months as the general population, and are no more likely to shop cross-border

78% General population Shopped Online in Past 12 Months Base: Internet users n= 808 82% Millennials Shopped Online in Past 12 Months Base: Internet users, Millennials n= 517

Incidence of Cross-border shopping Mix of Domestic and Cross-Border Shoppers among Millennials 62 Cross-Border Shoppers Domestic only 61 Proportion of online spend cross- 8% border: Domestic and Cross 36 1-10% Domestic Only 12% border 37 Shoppers 61% 11-50% 2 General 19% Cross border only Population 51-100% 2 Millennials

Q27. Thinking about shopping online, from which of the following country or geographies’ Q29 In the past 12 months, how much do you think you have spent on websites websites have you purchased in the past 12 months? Please include your home country if from other countries? . Base: Online shoppers (Millennials aged 18-34 n = 422) applicable. Base: Online shoppers (General Population n=632, Millennials aged 18-34 n = 422)

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level) 7 Millennials shop cross-border from the same categories as the general online population but Millennials are more likely to buy events tickets online

Incidence of Top Categories for Cross-Border Shopping (%) Incidence of Categories s for Shopping Online 53 86 Clothing/apparel, footwear and accessories 59 (%) 88 51 76 Consumer electronics 53 78 44 67 Entertainment/education (digital) 46 70 42 63 Entertainment/education (physical items) 43 66 42 64 Cosmetics/beauty products 42 65 36 60 Jewellery/watches 40 62 38 81 Travel and transportation 39 82 General Household appliances, household goods and 36 Population 66 furniture 39 66 33 Millennials 72 Events Tickets 37 79* 36 55 Toys and hobbies 35 58 31 51 Sports and outdoors equipment 35 54 Q28. In the past 12 months what kinds of products have you purchased from websites in Q6. Thinking about each of the categories below, please estimate your total other countries? Base: Cross-Border shoppers (General Population n =241, Millennials n= spend in each category over the past 12 months: 162) Base: Online Shoppers (General Population n = 632, Millennials n = 422) © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 8 * Significantly higher than the other sample (95% confidence level) Where Millennials shop (their cross-border destinations) is similar to the general population of online shoppers, with US being the most popular Top 10 Countries for Cross-Border Shopping (%) Cross-Border Shopping by Region (NET %)

27 North USA 27 America Europe China 11 11 Middle East 10 United Kingdom 10 28% 28% 17% 18% 8% 9% 9 Asia Singapore 9 5 Germany 6 Central/South 5 Africa 22% 21% Canada 6 America Japan 6 6 5% 6% 5 4% 5% Australia / New Zealand 6 6 General UAE 6 Population 3 Millennials Switzerland 4

Q27. Thinking about shopping online, which of the following countries or regions’ websites have you purchased from in the past 12 months? Base: Online shoppers (General Population n = 632, Millennials aged 18-34 n = 422)

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level) 9 Millennials’ share of online spend via different devices is the same as the general population, with almost a third of domestic and cross-border transactions made on smartphones Online Shopping share of spend Cross-border Shopping share of purchases Gen. Pop. Millennials Gen. Pop. Millennials 100% 100% 4% 4% 6% 7% 8% 7% Other device 11% 11% 80% 80% 29% 32% Tablet 30% 32% 60% 60%

Smartphone 40% 40% 59% 57% Desktop/laptop/ 53% 49% 20% notebook 20%

0% 0% Base: online Base: online Base: cross-border Base: cross-border shoppers shoppers shoppers shoppers (General (Millennials aged (General (Millennials aged Population n = 632) 18-34 n = 422) Population n = 241) 18-34 n = 162) Q10. You indicated that your total annual online spend in the last 12 months is as follows. How does this split by device? If unsure, please provide your best guess Q33. Thinking only about the purchases you make on websites in other countries, what proportion of your purchases in the last 12 months do you think were made using each device? © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level)10 Millennials are just as likely to use mobile devices for shopping online as the general population

Devices used for Shopping online (% use each) Devices used for Cross-border Shopping online (% use each)

93 95 Desktop/laptop/notebook Desktop/laptop/notebook 92 94 82 82 Smartphone Smartphone 84 85 38 48 Tablet Tablet 38 49 General Other device (e.g. Smart 24 Population Other device (e.g. Smart 30 TV/console) 26 Millennials TV/console) 33

6% Shop online only on a smartphone/tablet 4% Shop cross-border only on a smartphone/tablet

7% Shop online only on a smartphone/tablet 5% Shop cross-border only on a smartphone/tablet

Q10. You indicated that your total annual online spend in the last 12 months is as follows. How does this split by device? If unsure, please provide your best guess Base: Online shoppers (General Population n = 632, Millennials aged 18-34 n = 422) Q33. Thinking only about the purchases you make on websites in other countries, what proportion of your purchases in the last 12 months do you think were made using each device? Base: Cross-Border shoppers (General Population n = 241, Millennials aged 18-34 n= 162)© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 11 * Significantly higher than the other sample (95% confidence level) Like the general online population, Millennial cross-border shoppers are most likely to go directly to websites that they have used in the past

Ways of accessing Online stores in other countries (%) 60 Go directly to websites I have used in the past 59 I go to sites recommended or shown as links on social media 44 sites 50 48 I go to sites recommended by friends/family 49 I follow links from shopping comparison sites 45 49 When I search for particular brands or products on a search 47 engine, sometimes this leads me to foreign sites 48 Go directly to websites I know the web address for 43 43 I Search for online stores in countries where the exchange rate is 36 most beneficial to me 39 37 I look on foreign sites when I know there will be promotions 38 34 Look for websites in the country I want an item shipped to 38 General Population I click on advertisements or company pages on social media 31 29 Millennials I click on online banners/ advertisements 30 28 Q35. Which of the following best describe how you access online stores in other countries Base: Cross Border shoppers (General Population n = 241, Millennials aged 18-34 n= 162)

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level)12 1. CROSS-BORDER TRANSACTIONS 2. CROSS-BORDER BARRIERS & DRIVERS 3. CROSS-BORDER SHIPPING 4. CROSS-BORDER PAYMENTS

Attitudes to shopping from a website in another country (% agree)

It is not important to me if the online retailer is based overseas or not 58 58 It does not matter to me where the items are shipped from, as long as the 73 General Population price is good 73 I prefer large 'global' stores (e.g. Amazon) when purchasing from another 85 country 85 Sometimes it is not clear whether I am shopping on a domestic or 44 international online store 42 45 I am generally comfortable buying from an online store in another country General 47 Population I trust online stores from other countries as much as stores from the 55 Millennials country I live in 56

I have in the past made purchases on websites not in my own language 39 39 I would not feel comfortable making purchases from a foreign website that 60 is not in my own language 60

Q34b. To what extent do you agree or disagree with each of the following statements? Base: Online shoppers (General Population n = 632, Millennials aged 18-34 n = 422)

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level)14 Millennials’ Reasons for shopping cross-border are similar to the general population, with high product quality being the most important reason

Reasons for shopping from top cross-border markets (combined) General Population Millennials Higher product quality 69 70 I can discover new and interesting products 68 67 Better prices 66 63 Reputation of online store 60 58 More variety/availability of products/styles 58 58 Access to items not available in my own country 59 57 Trust in product authenticity 58 55 Better customer service 55 54 Faster delivery speed 52 52 I can use my preferred payment method 53 50 Shipping is more affordable 50 50 Online stores in this country are more trustworthy 50 49 Returns policies are generally better 48 48 I can access special deals in this country 47 48 Website/customer support is available in my preferred language 48 47 Favourable exchange rate 45 43 Q34c. You say you have made purchases online from the “country”/”countries” shown at the top of the “column”/”columns” on the right. Please select your main reasons for shopping on websites from this/these “country”/”countries” rather than the country where you live Base: Cross Border shoppers (General Population n = 239, Millennials aged 18-34 n= 162) © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level)15

Potential drivers for cross-border shopping are similar, but coupons/promotions and discounts are stronger drivers for Millennials

Top 10 Potential Drivers for Cross-Border Shopping (%) 54 Safe way to pay 56 54 Free shipping 53 51 Proof of product authenticity 52 47 Faster delivery 49 48 Costs shown/payment possible in your local currency 48 44 Lower transaction fees 44 38 Coupons/promotions/discounts 44* Free return shipping 42 42 General Favorable returns policy 41 Population 41 Millennials Customer support in my language 40 41 Q39. Which, if any, of the following would make you more likely to buy from a website from another country? Base: Online shoppers (General Population n = 632, Millennials aged 18-34 n = 422) © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level)16 Barriers to cross-border shopping are the same for millennials as for the general population, with shipping costs being the main concern Top 10 Barriers to Cross-Border Shopping Top 10 Reasons for abandoning cross-border purchases 50 Shipping / postage charges were too 45 Delivery shipping costs 51 high 43 Difficult process for returning 45 35 products 47 Delivery time was too long 37 Payment is in foreign currency 41 Preferred payment option was not 30 44 available 29 Having to pay customs duties/fees 42 27 and /or taxes Was not clear how much duty, tax, or 43 custom fees I would have to pay 26 Concern about identity theft / fraud 40 25 42 Concerns about website security General 26 Delivery time not fast enough 38 Population 25 42 Wanted to see if the same product was Millennials available from a website in my country 24 Unsure of the return policy for 39 shipments 23 41 Currency conversion rate was poor It is not clear how much 24 duties/customs fees/taxes I will have 38 41 Wanted to look for a better price 24 to pay 23 Currency conversion rate not 38 favourable 40 Returns were too expensive 24 23 Concern that I may not receive the 37 item 40 Had to pay using another currency 21 20 Q36. Which, if any, of the following reasons prevent you purchasing from websites in Q38. Which of the following have been reasons for you to abandon an online purchase another country (more often)? Base: Online shoppers (General Population n = 632, from a website in another country? Millennials aged 18-34 n = 422) Base: Online shoppers who have abandoned an online cross-border purchase © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. (General Population n = 274, Millennials aged 18-34 n=200) 17 * Significantly higher than the other sample (95% confidence level) 1. CROSS-BORDER TRANSACTIONS 2. CROSS-BORDER BARRIERS & DRIVERS 3. CROSS-BORDER SHIPPING 4. CROSS-BORDER PAYMENTS

% cross-border shoppers who have done each in the past 12 months

20 Ordered something that never arrived General 20 Population Millennials General Ordered something which arrived not as 21 Millennials Population described on the website 23

Ordered something and unexpectedly 29 had to pay additional fees to get it 30 42 46 delivered 20 Returned a product because it was not % % as described 23

Returned a product because I no longer 18 18 wanted it % of cross-border shoppers who have Bought products with the intention of 16 made cross-border returns returning some of them 17 30 None of these 26

Q40. Which of the following (if any) have happened to you in the Past 12 months? Base: Cross-border shoppers (General Population n = 241, Millennials aged 18-34 n= 162)

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. * Significantly higher than the other sample (95% confidence level)19 Millennial cross-border shoppers are no more likely to use freight forwarding than the general population Millennial Gen. pop. s Reasons for freight forwarding (%)

The online store I was purchasing 47 53 57 from did not ship to my country 48 % % It was cheaper than using the store's 49 international delivery 47 % of cross-border shoppers who To combine purchases from multiple 37 have used a forwarding address stores into a single shipment 39 (e.g. family or friends) To avoid or reduce income duties/tax 37 or other fees 38 24 Because the purchase was a gift for a 32 27 person I sent it to 31 % % Because I was travelling in the 11 country at the time 13 General Population % of cross-border shoppers 1 Millennials Who have used a freight Other 0 forwarding company

Q42. Have you ever done any of the following when buying products online from other Q43. What were your reasons for delivering to an address in the country of purchase/using countries? Base: Cross-border shoppers (General Population n = 241, Millennials n =162) a freight forwarding company? Base: Cross-border shoppers who have used freight forwarding (General Population n = 164, Millennials n = 119) © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 20 * Significantly higher than the other sample (95% confidence level) 1. CROSS-BORDER TRANSACTIONS 2. CROSS-BORDER BARRIERS & DRIVERS 3. CROSS-BORDER SHIPPING 4. CROSS-BORDER PAYMENTS

© 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 21 Like the general population, the top reasons for Millennial cross-border shoppers’ payment method preference are a quick payment process and safer way to pay

Top 5 Payment Methods for Cross-Border Top 10 Reasons for Preference (%) (% use each method) 53 Payment is processed quickly 52 51 Safer way to pay 50 84 42 PayPal Well-known, trusted brand 86 44 42 58 Accepted by most retailers Visa Debit card 38 62 37 Faster checkout 38 42 General Visa Credit Card Population 36 41 More convenient way to pay 34 Millennials 33 30 Mastercard debit card Purchase protection 36 34 Better currency conversion rate 30 32 33 Mastercard credit card 34 Receive rewards/cashback 28 30 I can see what price I will be paying in my own currency 29 29 Q44a. Which payment cards / methods have you used for online transactions / purchases from websites Q44c. For what reasons is this your preferred payment method for online from another country in the past 12 months? Base: Cross Border Shoppers (General Population n = 241, transactions/purchases from websites from another country? Millennials aged 18-34 n = 162) Base: Cross Border Shoppers who give preference (General Population n = © 2015 PayPal Inc. All rights reserved. Confidential and proprietary. 237, Millennials aged 18-34 n = 161) 22 * Significantly higher than the other sample (95% confidence level) Millennial online shoppers’ attitudes to using different currencies for cross- border transactions are similar to the general population Attitudes to using different currencies for cross-border transactions (% agree) I would prefer to have the option of paying either in local 83 currency or my own currency 82

I check currency conversion rates before making purchases in 78 foreign currencies 77

My bank charges me for making payments in foreign 62 currencies 61

The fees charged by PayPal for cross-border transactions are 58 generally lower than the fees if I used other payment methods 60

I would not feel comfortable making purchases online in a 53 foreign currency 55

56 PayPal charges me for making payments in foreign currencies General 53 Population I have in the past made purchases online paid in a foreign 47 Millennials currency 48

Q47. Please state whether you agree or disagree with each of the following statements about shopping online in other countries: Base: Online shoppers (General Population n = 632, Millennials aged 18-34 n = 422)