Getting Started with Cross Border Ecommerce
Consumers across the world may still be wary of venturing out to retail stores, but they are certainly not apprehensive about shopping online from retailers outside their home country. Data from Global-e shows that cross-border online sales worldwide have increased by 21% from Jan to June of 2020, and it cross border commerce is expected to continue to grow to a $630 billion market by 2022.
Clearly geographical boundaries are becoming less and less important to consumers in their buying decisions. Cross border ecommerce – i.e. customers purchasing products from outside their borders – has gained massive momentum, with many major retailers planning to expand their cross border shipping options.
So how should one go about shipping your products globally and start selling in international marketplaces? Getting cross border commerce right does involve learning new things, but for the most part you will stick to the same ecommerce concepts that have brought success in your home country.
Let’s look at some of the advantages of conducting cross border ecommerce, and the key factors to consider, as you decide on how to get started with cross border commerce.
Why Cross Border Commerce?
Of course the main objective is access to customers in high value international markets in North America, Europe and Asia. Cross border sellers can also protect themselves from price fluctuations in different markets and take advantage of global holiday seasons and peak selling periods.
Cross border commerce is much simpler today, thanks to digital marketplaces like Amazon and EBay. Brands can leverage global logistics providers, create international storefronts with powerful marketing tools and customer service options, to help simplify selling globally.
If your brand is already selling successfully in your home country, tapping into Amazon’s global customer base by adding new Amazon channels is an excellent opportunity to consider. The prospective revenues from hundreds of millions of new customers in these markets is huge. Global shopping trends seen on Amazon during the pandemic highlight the massive cross border commerce opportunity:
Europe: During the pandemic in April and May, western European countries saw a 23% and 30% year-over-year growth in cross-border ecommerce sales.
Gulf region: Ahead of Ramadan in April, cross-border web sales grew 115% year over year in March, then surged to 575% year-over-year growth in April and 236% in May.
Australia and New Zealand: April and May saw a sharp rise in ecommerce, with cross-border web sales up 29% year over year. The region’s cross-border online sales increased by 10% in the Jan – June period.
Challenges of Cross-border E-commerce
Introducing your products to new markets comes with challenges. Gauging where there is demand for your products, and understanding how you can ship to these countries, as well as handle returns and customer service will be the primary concerns. International e-commerce enterprises will also need to consider how they deal with customs and shipping providers, possible language issues, payment processing and currency concerns, legal and tax regulations, and any marketing and customer service concerns.
Figure Out How to Navigate Local Tax and Customs Regulations
Clearing the customs inspection without any trouble is the one thing that will keep you awake when you start selling across borders. Each country has their own regulations and laws, and you will need to make sure that you are well acquainted with them.
For example, in the case of UK, as Brexit negotiations come to a close, cross border seller will need to be aware of any changes in rules, costs and regulations in terms of shipping to the UK once it exits the EU.
Cross border selling should also take into consideration any other fees, duties or levies associated with shipping to any country where your buyers are located. Make sure that your pricing takes into account any taxes in foreign countries before you start selling there. This is definitely one area where you do not want to make mistakes. Complying with tax laws and any other duties or regulations is of paramount importance so that you can avoid getting into any legal trouble with authorities in foreign countries.
Payment Methods and Currency Concerns
Make sure to adapt your payment methods and processing to the most popular and convenient options available in other countries. Unfortunately there is no single payment method that is universally used around the world, although credit cards are probably the one method that work in most countries.
Beware of financial fraud however, when you authorize credit cards used by international shoppers. International credit card merchants require address verification systems (AVS) on transactions so this method excludes countries where AVS is not present.
Study your target market well for payment options – you will be surprised at how payment methods vary from region to region. There are many countries where credit cards are wildly popular whereas they may be completely ignored in some countries:
In Spain: either Visa, MasterCard or American Express account for almost 100% of ecommerce transactions. France has about 60% of shoppers using a Visa, MasterCard or American Express. In Germany the figure is only about 30% of shoppers who use one of the big three credit cards.
If you look at Asia the picture is a bit different. In Japan roughly 75% of people shop online through. ‘Konbini’ convenience stores and then having it delivered. India and other Asian countries have a much higher percentage of shoppers who prefer to pay with cash on delivery.
There is also no universal currency accepted everywhere. Not every country uses the US dollar or Euro and only accepting those will limit your options. You will also want to keep an eye out for currency fluctuations. The bottom line is that you should not let yourself be caught off guard in terms of any financial considerations that will affect the cost of doing cross border commerce.
Make sure you have addressed these concerns and a whole new world of cross border commerce is out there waiting for you.
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