For many merchants, the question of engaging in cross-border e-commerce has only one real answer. It’s no longer something that is nice-to-have but rather a necessity. The opportunity is hard to ignore, even for a small company. Consider that the 2021 ATR report on cross-border e-commerce projects the value of that global market will reach almost $2.25 trillion US dollars by 2026. What seller wouldn’t want a slice of that pie?
The need for cross-border strategies for e-commerce brands
By its very definition, a cross-border strategy expands the reach of any business whose products and services are in demand outside the merchant’s home country. The internet recognizes no borders, which means with the right product and website content it is easy for a significant portion of organic website traffic to come from other countries. Online marketing all but eliminates the needs for expensive, physical ads and mailers across the world. Further, like the web itself, social media platforms—with friends, followers, and influencers, not to mention sophisticated targeted ad capabilities—aren’t limited by physical borders. These outlets have quickly evolved beyond social interactions to efficient platforms for shopping and e-commerce growth.
As important as a boost in sales volume might be, it is only one part of the longer-term opportunity. Having a cross-border strategy provides easier expansion into larger, foreign markets. This diversification reduces reliance on a single market which in turn minimizes the risks that accompany an “all in one basket” approach. In short, cross-border can help future-proof your post-pandemic business, insulating you from inevitable, sometimes wild fluctuations in the local economy.
The challenges holding many merchants back from cross-border e-commerce
Despite the short and long-term benefits of pursuing a cross-border strategy, e-commerce merchants face a few headaches in implementing a successful approach. Consider the follow examples:
- Local currency and pricing. According to a PayPal survey of international shoppers, 76% of cross-border shoppers insist on the option of being able to shop and pay in their local currency—no surprises at checkout. This underlines the importance of an e-commerce site being not only location-savvy but also enabling consumers in different markets to settle their transaction in the currency of their choosing.
- Duties and taxes calculations. Every country has its own customs, duties, and taxes on items shipped into its borders, some based on type of item, others on value, size, dimensions, or other characteristics. All these fees must be remitted to the taxing authorities at point of entry—which means they must be accurately calculated up front and accounted for in the total price the customer pays. If the customer cannot pay duties and taxes upfront for their order, they risk receiving a bill later when the item arrives at their door. Or worse, they might need to go to their local customs office to pay the additional fees and pick up their product, which makes for a poor experience.
- Offering local payments. Aside from seeing prices in their local currency, customers in different countries have their own expectations of how they should be able to pay for online purchases. Visa or Mastercard are not accepted (or widely used) everywhere, which means a cross-border strategy should be customized per market to include other options such as alternative payment methods—Google and Apple Pay, PayPal, Afterpay, WeChat, Alipay, or whatever is customary—deferred payment plans, or even cryptocurrency. Providing all these options and more can be complex and complicated to build into your e-commerce site.
- Shipping and logistics. Most e-commerce merchants are accustomed to shipping physical items domestically via the postal service or premium carriers. Cross-border shipments add a whole other dimension to these logistics, not only for the merchant but for the shopper as well. According to a 2021 cross-border e-commerce report, two of the top barriers to cross-border purchasing were expensive shipping (45% of surveyed consumers) and slow product delivery (36%). That is why it is critical that cross-border merchants offer multiple options of shipping that are optimized for speed and cost.
- Overall customer experience through end-to-end localization. Addressing the above nuances of cross-border e-commerce is essential for merchants to expand outside their existing domestic markets and satisfy their global customers’ desire for an exceptional experience. This means that not only does a cross-border e-commerce solution have to support a localized experience, but it must minimize friction at every step—from ordering to payment and from shipping to receipt—without increasing resources to support every possible market.
The importance of solutions to augment, enable, and simplify cross-border e-commerce
No merchant can expect to expand from domestic to cross-border e-commerce overnight without help managing the numerous factors that impact a customer’s journey, all the way from website experience to product delivery. Even well-established merchants with large IT budgets and staff rely on solution partners to handle many of these challenges. So, when a company is ready for its piece of that $2+ trillion pie, it is critical to select its cross-border platform and service provider with utmost care.
Of course, there are a lot of moving parts when going cross-border. Different departments in your organization will have different goals when selecting the organization’s partner and platform. Regardless, it’s important to select one that enables you to start going global quickly and easily while providing a frictionless, localized end-to-end customer experience. But once you’re international, it’s equally as crucial that your platform-of-choice allows you to scale your expanded operations to the sky as you refine and optimize your new cross-border strategy.