When you have built firm foundations for your ecommerce business nationally, the next step is to consider the cross-border ecommerce opportunities for growth.
Many companies are already benefitting from the substantial growth in cross-border ecommerce, especially due to the unprecedented increase in online buying during the pandemic. Demand for foreign goods and a rising middle class with disposable income, particularly in the Asia-Pacific (APAC) region, have also been important factors contributing to this growth.
There are a lot of things to think about when you’re planning to gain your share of the cross-border market. Here are some ideas to help develop your strategy.
Cross-border ecommerce as part of your strategic plan
Almost nine out of 10 ecommerce leaders believe an international ecommerce presence will be essential to their company’s success by 2024. However, two-thirds of those not yet selling in foreign markets don’t feel prepared to handle international transactions.
Businesses that are already beginning to prepare and plan their cross-border ecommerce strategy will certainly gain an advantage.
Growth in ecommerce spending – online access to global products and markets is attracting a new generation of shoppers with money to spend.
Forrester Research estimates ecommerce retail sales in the APAC region will be US$2.5trillion by 2023, while in contrast the US figure is likely to be $5.3billion. Forrester also predicts that cross-border shopping will make up 20% of ecommerce sales in 2022, amounting to US$630billion.
Online demand and access are increasing around the world. At the same time the ecommerce landscape is rapidly reforming due to changing demographics and government interventions to promote globalization and international trade.
Demand for imported goods – shoppers are looking for new products that were previously unavailable or inaccessible to most. There are many parts of the world that are far from saturated with online product availability, including China, India, Malaysia, and Indonesia.
New finance options – buy now pay later (BNPL) services could bring about significant changes in cross-border ecommerce by providing shoppers with alternative payment methods. With more digital payment options available, as well as generational differences in attitudes to credit, buying habits are changing. Many ecommerce businesses are finding that the boost in conversion rates and average order values provided by BNPL options generally outweigh the fees charged by payment providers.
Your cross-border ecommerce checklist
Implementing a cross-border ecommerce strategy requires some specialized information and careful interpretation to support the potential for business growth. Here are some steps you can take to get started.
Market research – depending on your market sector your areas of maximum opportunity will vary. Exploring emerging international markets for your audience and products will be an important first step to narrow the range of possibilities. For purely practical reasons your strategy might need to tackle one country or region at a time. Once you’ve identified the areas with most potential you can carry out a deeper dive into the culture, climate, and competition.
Regulations – meeting national or regional regulatory requirements can erode your profit margins, so it’s important to understand them fully and to bring in professional help if needed. In some markets you could even find that your products can’t be sold.
Pricing and taxes – you will also have to deal with regional tax regulations for your cross-border ecommerce sales. These can be complex and could affect your plans. While the amount of tax you will need to pay will be part of your pricing strategy, there are also other considerations. These could include shipping and in-country distribution costs, insurance, and sales commissions. Depending on the competition, currency exchange values and the viability of displaying your prices in the local currency will make a difference to your conversion rates.
Logistics service – fulfillment of your international orders can add costs and, if it’s not effective, will have an impact on customer service and reputation. Finding a reliable third-party logistics (3PL) partner could be the solution, helping you to attract customers and improve conversion rates with appropriate delivery options. They can become an integral part of your model for success, so it’s worth exploring volume shipping discounts, delivery timescales, and in-country inventory. They can also be a valuable source of local information and will understand local regulations.
Local support – language, culture and time differences can affect your customer service operations. Outsourcing customer service and support to a local provider might seem like an overhead, but it will help your business to expand in new markets. By providing customer support in the languages of the people you serve, you’ll immediately remove the first barrier to customer satisfaction.
Testing the market – assuming customers in another country will behave in the same way as those in your home market is a risk. Before deciding to go ahead it will be important to test your product and your ecommerce site with your target segment in that country. Even giants like Amazon have made mistakes, having to withdraw from China because they couldn’t compete with more popular local platforms.
Learn and reuse – when you enter your first foreign market you will learn a lot about what works and what doesn’t. Make sure reviewing and learning from the experience are included in your plans to streamline your entry into the next new market.
Creating the best possible customer experience requires a tailored approach. To meet the expectations of your new customers you might need to change your existing online offer or create a new ecommerce storefront.
Williams Commerce works with ecommerce businesses around the world. We have experience of creating multi-language, multi-currency sites and integrating business systems to provide exceptional customer experiences.
Our ecommerce consultancy team will be happy to discuss your plans for cross-border growth, so please get in touch.