A guide to cross-border commerce
Expanding your business to a global scale or entering a new market can be complex. The benefits of cross-border e-commerce include expansion opportunities and increased sales, but there are some things to consider regarding shipping, taxes, and other logistical matters. Continue reading for a guide on what to think about when undertaking cross-border e-commerce and how to get started.
As the world becomes smaller, opportunities are growing; in the global environment that businesses live in today, cross-border e-commerce should be on everyone's minds.
Cross-border e-commerce is a growing trend, and it's a great way to increase your reach and stay ahead of your competition. With so many people doing business online, it's important to take advantage of the opportunities that globalization provides.
What is cross-border e-commerce?
Cross-border e-commerce is when businesses use websites, platforms, or marketplaces to join the international market and start selling the products of a national store to a global audience. 80% of e-commerce retailers worldwide agree that a critical driver behind cross-border e-commerce is opening up to new markets, which can lead to increased sales and higher profits, but it can also be used by traditional retailers testing an international market to see if it would be profitable to open a physical store there.
The concept has grown from covering large, multinational conglomerates to covering the entire spectrum of any online business today selling goods in different countries, and a study by Statista showed that the cross-border e-commerce market share was expected to grow from 15 to 22% from 2016 to 2022.
The benefits of cross-border e-commerce
Deciding to move internationally and start selling cross-border is big for many retailers. For consumers, the benefits to gain from cross-border e-commerce include unique products, the availability of several brands, and lower costs. For businesses, they are:
International expansion opportunities
Increased brand visibility
Competitive and/or first-mover advantage
The two primary cross-border selling options:
When adapting your business to cross-border e-commerce, there are two main choices of platforms to sell. The first is localized websites, as culture and consumer behavior differ by country. Therefore, it's important that you adapt and change your website's messaging, strategy, and copy – sometimes even your product variations – to meet the needs of the specific target market.
The second is regional marketplaces. The Global Online Shopping Study by Pitney Bowes shows that 46% of global online shoppers make most or all their international purchases via marketplaces, while 22% do them via retail websites. But, you have a more challenging time adapting your business to each market's culture and therefore have the risk of not standing out in the crowd.
Three things to keep in mind:
Payment methods and fraud
Global online payment processing can be challenging; consumers have access to different payment methods in different countries. Identify the most popular payment solutions in your target countries and start with those.
Remember that payment fraud connected to cross-border purchases troubles more than half of businesses, with credit cards as a significant factor. To prevent this concern, implement address verification systems and other anti-fraud measures.
Currencies, taxes, and exchange rates
There can be many currencies to manage for international businesses, and you need to be aware of the legalities surrounding exchange rates, tax regulations, and possible tariffs. Use applications that automatically convert prices to make the shopping experience easier for your customers.
Shipping rules and regulations
When setting up an international shipping program, make sure you understand all laws and customs surrounding the imports and exports of each country. Invest in the tools and resources necessary for successful shipping to avoid delays in customs clearance and other challenges with merchandise handling.
Another solution is to team up with a third-partner logistics service (3PL). That way, you can take help from experts specializing in those services and free up time for your business instead.
Identify potential markets: consider each market's GDP, and take into account how relevant their purchasing interests are to the products you sell.
Research the market: Before entering a new market, it's important to research the target country to understand its consumer behavior, market trends, and any potential barriers to entry. This will help you tailor your product offering and marketing efforts to the local market.
Understand local regulations: Each country has its own rules and regulations for cross-border commerce, including taxes, customs, and consumer protection laws. It's important to understand and comply with these regulations to avoid any legal issues.
Use local payment methods: To make it easier for customers in other countries to make purchases, it's important to offer local payment methods that are popular in the target market. This could include credit cards, mobile payment systems, or other options.
Provide local language support: To provide the best possible customer experience, it's important to offer support in the local language of the target market. This could include website translation, customer service in the local language, and product information in the local language.
Choose the right shipping and fulfillment options: To ensure that customers in other countries receive their orders quickly and efficiently, it's important to choose the right shipping and fulfillment options. This could include working with local carriers or using a global fulfillment network.
Set a specialized pricing strategy for each market. Do your research and include how you will alter your website in terms of language, currency, and relevant data to match the markets.
Acquire the right tools to manage your product information. Investing in advanced systems like PIM is essential to keep up the high quality of your e-commerce business and ensure a solid customer experience.
Overall, success in cross-border commerce requires careful research and planning, as well as an understanding of local regulations and consumer behavior. By following these tips, you can increase your chances of success in selling to customers in other countries.
A guide to cross-border commerce
Expanding your business to a global scale or entering a new market can be complex. The benefits of cross-border e-commerce include expansion opportunities and increased sales, but there are some things to consider regarding shipping, taxes, and other logistical matters.
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