Worldwide online sales are due to reach $3.5 trillion this year – and expected to rise to a staggering $24 trillion by 2025.
While these figures are often (and rightly) highlighted to show the industry’s present and future vibrancy, what’s often overlooked is that cross-border purchases already make up $700 billon of this.
The growth of cross-border ecommerce - when consumers buy online from companies in other countries – shows there are almost limitless opportunities for digital and multi-channel retailers. Despite this, the industry’s success also remains a constant challenge for many authorities with few international rules or frameworks in place.
Preliminary meetings finally took place last month involving more than 70 countries and the World Trade Organisation about the future of the ecommerce industry, aimed at putting global processes in place.
Many existing trade agreements have been in place since before the digital revolution, often only covering large shipments through entry ports, whereas cross border ecommerce has seen a deluge of smaller parcels arrive at customs offices in recent years with little regulation.
But while these talks continue over the coming months, for many Redbox clients and other digital businesses considering expanding their reach, there are many things to consider.
Redbox speaks from a unique vantage point, not only recognised as one of the top Magento partners and one of the few awarded Magento Global Elite Partner status, but also having offices in the US, MENA, Europe and Asia Pacific.
It has seen us work with some of the world’s most iconic brands including Nespresso, Sephora and Nestle, where they are able to rely on our unrivalled insights from region to region. For businesses looking to expand into other countries, first-hand knowledge and experience of processes, structures and challenges are of the utmost importance.
Here are just a few considerations before embarking on a cross-border strategy.
Make sure you offer the correct payment methods
Knowing your different markets thoroughly and adapting accordingly is essential to successful cross-border ecommerce implementation.
Payment methods vary hugely from country to country. For instance, according to online payment service provider Bluesnap, Visa holds the primary market share for international credit cards in the Middle East and Africa, with Discover - boasting 57 million cardholders worldwide – popular in Brazil. UnionPay, a Chinese bank card dominates China’s card market.
Not to be forgotten are eWallets – which are becoming more popular around the world, with 48 per cent of Chinese shoppers using Alipay and Apple Pay the leader in the US and Canada. In Japan, a local payment method called Konbini, makes up a sixth of all ecommerce payment, while cash on delivery is still popular in the Middle East, although credit cards such as Visa and MasterCard and CashU – a prepaid card used in countries such as Saudi Arabia where credit cards aren’t readily available – are catching up.
To make your business work in other markets, you will need to accept payments in the method customers prefer and put in place robust payment procedures to implement this.
Don’t leave regulation to chance
It may sound obvious, but expanding your ecommerce enterprise into other countries can come with a lot of red tape. Businesses must learn how to get through customs in each country, with each having its own set of taxes and regulations. There is also the issue of what is legal in each country – with knives, alcohol and certain foods being welcomed across in some, but not others, while differing age restrictions may also be in place.
If you are shipping goods from another country, not meeting these regulations could see you fall foul of their local laws and in some cases, it may even make more sense to set up localised operations.
Partnering with an experienced ecommerce operator who knows the ins-and-outs and can advise on the best ways of overcoming some of these hurdles can be an essential part of any cross-border ecommerce strategy.
Spend plenty of time focussing on delivery and logistics
When your goods are dispatched from your warehouse and get to the country you are shipping to, you may be relying on delivery from local firms from there on in. Are they reliable? What happens if they are late or the products are regularly turning up damaged or lost? Are language barriers an issue in rectifying this?
Having a good product and getting it out quickly is just half the battle. If delivery costs are too high or they continually fail to get to customers in the time expected by the customer, the whole process falls down.
That’s without even considering the costs and logistics if goods need to be returned!
Know your market thoroughly
Any business expansion into other countries must start with a thorough working knowledge of the market you are planning on entering.
It is essential to gain insights into local tastes, culture and sensitivities from the word ‘go’. The product you are planning on selling and the way you conduct business could upset or interfere with local customs, laws or ways of life. Different marketing, social, logistical plans will be needed to reach a different audience.
Language can be another difficult barrier to overcome, both in talking to local people and getting your message across your various ecommerce channels.
A knowledgeable partner or someone with a common language and culture can help you navigate this. Multilingual customer support can be crucial in helping the business adapt and flourish.
Are you considering taking the next steps?
We have touched upon some of the important factors to consider when planning your cross-border ecommerce strategy. It can prove to be a daunting prospect for a smaller company – let alone a bigger one.
But if you think your company is ready to make the next step, ask yourself if you have ticked off the following from our ‘must-do’ checklist. Have you:
- Studied the new market thoroughly, including local customs, culture and taste? Employing someone who speaks the language or knows the local customs could save you time and money in the future.
- Spent time exploring the logistics and delivery processes? Pilot runs will help you know if there are any issues that need addressing.
- Looked into taxes and regulation? Ensure there are no hidden loopholes that could slow down your company’s expansion plans.
- Provided the right payment methods? You must provide the numerous methods customers prefer to pay by in each market.
Good knowledge of markets, logistics, customs and laws from country to country are essential.
Get any one of these areas wrong and it can prove the end of all your well-intentioned plans. But, get it right and there has never been a better time to expand into other territories.
Give Redbox a call and let us advise and help you plan your next steps.