Cross Border eCommerce – Key to Successful Entry in North America


April 9, 2020
7 MIN READ
Vinculum
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Vinculum
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The internet has made the world small and swift. If an online shopper finds a product of their liking anywhere in the world, they immediately want it in their house.

This opens many doors for small and big seller brands to gain an international standing and make their product a household name.

Financial gurus expect an annual growth of 20.6% in the global e-commerce revenue from 2017 to 2021.

It’s no wonder, then, that every brand would like to venture into cross border eCommerce.

The land of e-commerce

When seller brands dream of penetrating the international e-commerce markets, they usually picture North America – and they have justifiable reasons for this:

  • As of 2018, the average revenue per online shopper is the highest for the United States
  • The United States ranks no. 2 and Canada ranks no. 7 in the per capita spending across the globe
  • All the major e-commerce marketplaces like Amazon, Walmart, eBay and Etsy are based in the United States, introducing newer features to the American users before releasing them worldwide
  • E-commerce retail in the United States is projected to grow from 501 billion US dollars in 2018 to over 735 billion US dollars in 2023

So, what does it take for a brand to establish a cross border e-commerce business successfully?

Who can or should use cross border e-commerce?

Perhaps, a sure-shot way to take your brand across borders is to sell what others are actively looking for. As per Statista’s 2018 report, the following industries have shown tremendous popularity in the e-commerce business:

Product Segment Percentage of responders
Clothes 57%
Shoes 47%
Consumer Electronics 40%
Books, movies, music, video games (excluding downloads) 36%
Cosmetics & Body Care 32%
Bags & Accessories 29%
Food & Drinks 28%
Household Appliances 27%
Furniture & Household Goods 19%
Sports & Outdoors 18%
Toy & Baby Products 18%
Stationery & Hobby Supplies 17%
DIY, Garden & Pets 13%

Clearly, fashion and electronics dominate the e-commerce retail space worldwide.

Irrespective of the segment of your brand, you can attain a decent customer database, provided:

Your product is quite distinctive in the category

Most sellers assume this distinctive quality to be pricing. In fact, they believe that the overseas audience looks at their product only for its economic aspect. However, if you look closely at the amount of time shoppers spend in deciding on buying, you’ll realize that it’s really the product distinction that appeals to them. Price is a secondary feature.

You offer excellence in service

Your product may be one of its kind in the entire world; if it’s not easy to get, the shopper won’t waste their time on it. You have to make sure that the buying experience is easy for the customer through features like:

  • Low time for product shipment and delivery
  • Convenient payment options for the customer
  • Easy returns available
  • Product data in local language

A lot of the features that we have listed above can pose difficulties for a seller whose base is not in the country of sale. That’s where cross border e-commerce services can help.

Cross border eCommerce challenges

Before we look into how cross border e-commerce services can strengthen your retail business overseas, let us understand the full scale of the challenges you may face:

  • Selection of adequate markets – Most sellers believe Amazon to be the end-all, be-all marketplace for selling. However, certain products do much better in other markets. For e.g., Etsy is an appropriate marketplace for handicrafts; and for home goods, you may want to consider Wayfarer. By selecting only Amazon, you are limiting your product’s visibility and diluting its reach.
  • Competition – From your location, you may not have an exact picture of your competition in the market, and you may be tempted to reduce the price in order to gain the competitive advantage, thereby cutting on your margins.
  • Logistics – The logistics of the drop shipment model – where the seller ships directly to the customer through DHL or a similar service to reduce inventory risk – can prove to be very expensive per unit for cross border e-commerce.
  • Scalability – From the product not appearing on the listing to the unexpected demands, it is difficult to plan for scalability in cross border e-commerce without having clear insight into the marketplace.
  • Taxes & regulations – Sellers need to have a clear understanding of the taxes and regulations, not just countrywide, but right down to the city level.
  • Payment methods – Besides the usual payment methods of debit and credit cards, sellers should be able to offer payment methods that are prevalent in the country – e.g. Amazon Pay, Apple Pay, Paypal, Google Pay, etc.
  • Handling returns – Taking care of returns is a nightmare for any seller anywhere, and it worsens in cross border e-commerce. When an item is returned, the marketplace deems the order unfulfilled. The seller often has toresort to destroying the item in order to avoid storage fees.
  • Product pricing – This is a feature that a seller should decide only after getting an insight into the consumer’s mind on what they are willing to pay. Without direct access to these insights, it becomes difficult to arrive at the right pricing.

The need for cross border e-commerce services

An end-to-end cross border e-commerce services platform, like Vinculum, inserts a local partner in the purchase and fulfillment aspect of the retail experience.

How it works

  • A customer places an order in the marketplace or your webstore
  • They make a payment based on their preferred method
  • Once you (the seller) have received and verified the order, a local partner buys the product from you on behalf of the customer
  • The order is then shipped to this local partner
  • Then it’s the partner’s responsibility to clear customs, release the order and ship it to the customer directly or through third-party logistics

How it helps

  • By finding the best fit marketplaces and channels for your business to make it profitable
  • By understanding the US market demands and identifying the business model your brand should employ to meet your scaling needs
  • Offering third-party fulfillment of orders to make cross border inventory management and logistics more cost-effective
  • Doing a quality check on returned goods and coming up with alternate solutions, such as refurbishing, to reduce inventory losses
  • Ensuring business margins by helping with a profitable pricing structure
  • Offering various payment methods to the customers to ensure excellence in service and brand reputation

With so many advancements in mobile technology, e-commerce in North America will only grow further. The logical step for your business to enter the North American market is through cross border e-commerce. And to assure its success – partner with a platform for cross border e-commerce services like Vinculum.

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