Cross-Border eCommerce benefits – how to prepare for risks
Every growing brand dreams of becoming a global brand like Nike, Reebok one day. Now that’s easier than ever with growing cross border eCommerce. What Nike did in almost 50 years, internet first brands are doing it in a couple of years by riding the eCommerce wave.
Brands sitting in China and India are selling in the USA and European markets like there is no tomorrow. Some of the fastest growing brands globally don’t even have any physical presence anymore. Amazon and eBay are fueling that international growth for brands.
Regional eCommerce marketplaces like Lazada, SOUQ, LINIO, Flipkart, PayTM provide massive opportunities for brands looking to expand their business globally. If you are a brand having an ambition of growing rapidly, timing cannot get any better to start exploring these opportunities.
In this article, we will talk about how to prepare to go global. We will end with a check-list for you to circulate with your team.
Remember, your summer might be someone’s winter and your winter might be someone else’s spring (hint for fashion brands 😉 ). Staying ahead of your target country time would help you in long run. If you are a brand dealing in beachwear, why restrict yourself to 2-3 months long season only. There is always summer somewhere on this planet.
From a consumers perspective, Cross-Border e-commerce now allows them huge selection that was earlier not possible. Now manufacturers sitting in China can showcase their entire catalog rather than depending someone like Walmart to only sell selected items. Obviously, there are numerous challenges to be able to sell in the US for example for a Chinese brand that earlier only did white label manufacturing for Nike or a retailer like Walmart. Granted, it has become simpler with Google’s translation feature to communicate well in native languages. Still that doesn’t make it 100% straightforward, there are many more things to worry about. We will talk about some of these challenges in this article.
Without wasting any more time, let us dive deep into what a brand or seller requires to go cross-border.
Are you ready to sell Cross-Border?
You should always be prepared for what is coming next. Before jumping into a gigantic loop, here is the initial set of questions to check if you have the basics in place:
– What amount of investment is required to sell international, how much can you really invest?
[Charges for international shipping: taxes and duties, courier charges (DHL/FedEx/USPS) and extra surcharges involved]
– Is your target market familiar with your chosen product?
[If it is not, then you must be prepared to invest in marketing or on educating customers about the product]
– Are you prepared to handle multi-currency, multi-lingual, multi-tax and multi-assortment sale?
[Check if you are prepared to initiate international currency transactions; do you understand their language or have a native speaker on your end; keep a check on applicable taxes on a variety of products you have chosen]
– Are your resources and company flexible enough to handle the initial phase?
[Understand the culture and know your customers, build a relationship, try to live temporarily in the country to know your customers and understand their pricing structure]
I suggest you go through the blog post and then decide if your answers were satisfactory.
While you are working through the initial setup related questions, let me quickly discuss major advantages and challenges along with small tips related to selling globally via eCommerce.
Advantages of Cross-Border business
International reach in eCommerce:
The uninterrupted services by the World Wide Web are already helping users to market their businesses across the globe. With multiple online e-commerce websites like Alibaba and Amazon, you will be able to publish your products and increase visibility and reach.
In the below image, you will see the top 5 Leaders competing in the eCommerce industry. The GMV (Gross Merchandise Value) is based on the total value of products sold on these marketplaces. (Source)
Tip: If you deal in niche products that aren’t available globally, you pretty much have hit a gold mine here. Imagine someone specializing in Jaipuri Quilt which is only made in Jaipur, India. Now Indian diaspora is spread across the world. All over the world, Indian people will want to purchase that. If that manufacturer suddenly starts selling in the US/UK besides Flipkart in India, obviously there will be a huge demand. The icing on the cake is the fact that these customers will not even mind paying a bit more to get the product easily delivered vs carrying it all the way from India on their next trip back home.
Increased revenue by selling internationally:
With an international reach, the audience will increase steadily and with that, you will generate more sales and revenue. The foreign website products might seem cheaper and better to customers than in the home market.
Cutting out the middlemen:
Brands which used to rely on partners to distribute products are now adapting direct to consumer sales. In the past, the products were passed between multiple hands, shipping industries, distribution companies/warehouse and as a result products cost used to go multiple times of the actual cost. Whereas now brands can easily setup their stores online and reach their customers across the globe. That provides brands the ability to interact directly with their customers and alleviate the extra charges associated with middlemen.
Tip: Evolution in the eCommerce industry is making it easy for the brands to launch their online stores. Many brands and manufacturers are jumping on to this opportunity hence competition is already becoming fierce. It’s prudent to have a distinguishing factor in your product or marketing techniques. That will help you capture the market quickly.
You also need to understand the structure behind the transactions and the challenges you will come across.
Challenges and their solution with Cross-Border selling
Know about Local Laws and Regulations
– Every country has their unique set of restrictions and limitations based on categories like alcohol, medicines, weapons, relics, raw materials etc. So while shipping products to customers country, you need to meet their regulations to abide by their local laws. For example, there are some products which you cannot ship to
– As a cross-border seller, you must also have all the judicial rights and authorities in place. It’s a must to be on a safer side and having the strength of a legal framework to protect from any legal trouble.
– You can find your country specific shipping details from here.
Tip: The solution here is to know your limitations and country laws before planning to expand your business. So research extensively before you select a country to expand into.
Payment Methods for Cross-Border transaction
– Having a strong payment system is a basic requirement in the e-commerce industry or while dealing in any cross-border business. Check out Paypal, Payoneer, Stripe and choose what works for you.
– Furthermore, there is a possibility of coming across fraud cases in few transactions. Payment might get rejected or the third party application may charge you extra. Having a strong reconciliation in place and identifying such instances early on will be a lifesaver.
– You need to properly safeguard the customer details stored on your website. Hackers can reach your servers and steal customers usernames, passwords, credit card numbers, and so on.
Tip: Ensure your system is PCI (Payment Card Industry) compliant. Accept payment in methods that your customers prefer. The credit card is globally preferrable method to pay for e-commerce transactions. Some of the third-party applications include Payoneer and Paypal.
Logistics & Warehousing Support to sell internationally
– Another main strong point you need to develop is with the logistics part. With a quality product, your strong logistic support will also help you gain trust and make the buyers your repeat customers.
– With this, you need to take care of forward and reverse logistics and make sure the logistics charge do not exceed a reasonable limit. The logistics charges include customs duties & documentation, delivery charges, international shipping if you are drop shipping.
– The main challenge here is with customs clearance, paperwork submission on time, multiple carriers, security of the shipped products, delays due to bad weather etc. So plan in advance and have contingency plans in place. Also, strong communication with the customer will go a long way here, we will discuss that below.
Tip: Contact third party delivery companies like UPS, DHL, NZ post, Royal Mail, etc. Because of the competition
Communication gap with international customers
– Communication gap with customers is because either you do not know their language or is not having a local contact number to communicate.
– With the networks being spread wide, there are more channels of communications opening up. Whatsapp, Wechat, Skype, Google chat etc are becoming increasingly popular ways to interact with your customers.
By now you must have got a good sense of what is required to start selling globally. Now let us see if you are actually ready to go cross border:
Are you ready for Cross-Border eCommerce?
With that being known now, you need to make your systems and processes ready to interact with domestic and international customers and avoid the manual tasks as much as possible.
If you sell on multiple platforms like, your online store, Amazon, eBay, Walmart, Flipkart, etc, you will need to use a system which can help you with multiple requirements.
Your requirements should have the following:
- Inventory management for multiple marketplaces
- Multi-currency support with transactional capabilities
- Easily customizable system
- Logistics partner integration for Domestic/International shipments
Now that you are aware of all your requirements, start your research and get ready for some action with international customers. Furthermore, Get a virtual phone number and email ID of the country you are planning to serve in, this will provide your website with some benefit in local ranking. Also, hiring a native speaker wouldn’t be a bad choice to go with.
Click here to download the checklist for Cross Border eCommerce!