Cross Border trading shaping the future of eCommerce


November 9, 2020
5 MIN READ
Vinculum
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Thought Cross Border eCommerce Trade was there since the launch of Amazon and growing popularity of digital ads due to emergence of Google AdWords and Social Media Ads. Cross border ecommerce trading is a phenomenon that has emerged in the last few years customers are more likely to purchase products from outside their countries.

According to experts, this is expected that the global online trade will grow to a whopping 1.4 trillion while cross-border e-commerce trade for roughly 21 % of the same. In India, currently there are more than 400 million internet users with around 100 million online shoppers.

There is a positive impact of Cross-border e-commerce on import and export of goods internationally which is helping e-commerce websites save in several ways.

What is cross border ecommerce?

Cross-border ecommerce is an online trade that happens between a business and a customer (B2C) or between two businesses which are generally brands or wholesalers (B2B), or between two individuals (C2C) on any online selling platform or ecommerce platform like Amazon, eBay, Alibaba etc.

What risk-factors are there for cross border ecommerce trade?

Three major risks are there to influence your cross border ecommerce business:

  • The top most challenge is Fraudulence. Merchants who allow their customers to purchase from outside the borders face crucial challenges in terms of payment mechanism. Hence, it’s important to pick a good payment service that is aware of the local customer behaviour.
  • Logistics and reverse logistics is another important factor and can impact your ecommerce business negatively. It can influence the perception of your business by your overseas customers. Choosing a good logistic service like FedEx, DHL, UPS etc.
  • Regulations – Customs and regulations comes in between your business and your consumers. Before you start your cross border ecommerce business, you should always do a thorough assessment on the Taxation and local government. Regulations can potentially impact your business in a negative way.

What is future opportunity?

According to data, consumers are more conscious about the price now than before. The purchasing habit of today’s buyers is focused on exploring all the options before making the decision to buy.

Especially, the products under Beauty and Personal care categories generate the highest revenue while the second highest is by the products under consumer appliances and health care categories. This doesn’t end here but goes on with products under categories from fashion, luxury, toys and games to books, electronics and hardware.

There is no limit to the scope and range of products that can enter this extensive retail universe which everyone is a customer at some point. Thus, the opportunity of growth and revenue of the industry with cross-border has no limit as well.

Why cross border ecommerce is predicted to be the future of Ecommerce Industry?

Cross-border e-commerce trading happens when buyers of one country purchase from businesses such as merchants, traders or brands no matter where they located outside the border of their own country as the buyers find their products to be suitable for serving their purposes at more reasonable cost than their local marketplaces or local sellers.

Cross-border e-commerce trade is one of the fastest emerging trends nowadays to shape the modern markets of ecommerce which is projected to develop rapidly because Consumers today are very smart and prefer purchasing satisfaction more than anything else. They tend to compare any item via multiple sites and ecommerce platforms before they make any decision.

Here are the detailed reasons to support the prediction

Increasing Globalization

The post pandemic era came with a huge change in all business models especially; it impacted the eCommerce Industry in a very different manner. The influence is such, that businesses today are aiming to operate on the global level which will bring them good profit and massive growth.

  • The world is shopping online. Almost every second, thousands of purchases are happening online. In 2019, around 1.92 billion purchase of goods or services happened online.
  • Internet and social media made it easier than before. No matter where you live, you can order the bestseller from any country you want within minutes and receive it in a few days.

No Limit to Business Expansion

Businesses from all parts of the world are trying their hands in cross-border ecommerce trade as there is

  • Great possibility of massive revenue growth
  • No limitations in customer base and more purchase orders
  • Global expansion and brand awareness.
  • Sustainability and no limitations in festive seasons
  • Increased access to end users.
  • Selling of products of low-demand globally is easier

Extensive Range of Products at Reasonable Cost

Customers aren’t aware about what exactly they want to buy until they see a product, explore multiple similar options, or same product from different sellers and decide whether they need the item or not.

Domestic businesses or sellers on the internet can only present limited number of items where the global market shows thousands of options for 1 particular category/sub-category. Cross-border ecommerce empowers buyers with the power to choose from a wide range of products which are trendy and at their best offer price also cheaper than it is in the domestic market.

According to Statista, more than 12 million products Amazon has in its stores while approximately 80% of all goods on eBay are brand new.

The quest of businessmen to offer the cheapest rate and the best deal on a product is fuelling this fire of emerging trade. As consumers are shopping their desired items mostly from online and overseas sellers after exploring every possible opportunity, ecommerce is the only answer to this common need for both the sellers and buyers.

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