If you’re a small or medium sized company focused on growing your business, there’s a new trend worth learning about: cross border eCommerce. Instead of keeping online sales at home, trapped inside national borders, merchants are using their eCommerce websites to enter new markets, scale their businesses, and sell to customers all over the world.
You might be thinking that cross border eCommerce isn’t entirely new. It’s true that megasites like Amazon, AliBaba, and eBay have been selling internationally for years. Huge brands, like apple.com, sell to various countries through their flagship websites. What makes today’s cross border eCommerce special is that companies of any size can use the power of the Internet to become online multinationals. And if predictions are right, more will be getting in on the trend soon. The cross-border eCommerce market, valued at 579 billion USD in 2019, is expected to skyrocket to a whopping 2.25 trillion USD by 2026.
New Focus on Asia-Pacific Markets
Online international business is taking off in specific directions, too, especially towards Asia-Pacific (APAC) countries. Rising incomes and the growth of the APAC middle class has created increased demand for foreign goods. People are looking for ways to spend their earnings. They want unique items with special cachet, things that aren’t readily available on the local market.
As consumers in APAC regions snap up record numbers of imported goods, retailers are eyeing the massive rise in eCommerce sales. A survey by PPRO showed that in 2021, a whopping 42% of cross border purchases from Canadian businesses originated in China. For businesses focused on growth, those numbers are worth tapping into. Instead of heading into US or European markets, many online merchants are expanding first to APAC countries to reach customers with a growing share of disposable income.
Even in countries where the middle class isn’t growing as fast, cross border eCommerce can be a winning strategy. India, Malaysia, Indonesia, the Philippines, and Vietnam, are still largely unsaturated by international retail. However, there are large populations here and room to grow. The rise in Internet penetration and mobile connectivity throughout these areas means more opportunities to reach many more customers.
Retailers that can mobilize quickly to carve out territory in these growing markets before other companies do could gain a major competitive edge. Meanwhile, many foreign governments are encouraging foreign trade, which helps companies move faster. Whichever way you look at it, the conditions are favorable for companies to expand their retail footprint through cross border eCommerce.
The Many Cross Border Benefits
As reported in the Visa Global Merchant eCommerce Study (2020), 87% of merchants felt that expanding online sales into new markets was their prime growth opportunity. International trade online gives companies access to more customers and the potential to significantly grow their sales.
The same study revealed that 88% of business executives feel a global presence is necessary to remain competitive over the next few years. Being international positions you as a global leader, extends brand awareness, and helps build a loyal following. Better customer relationships and increased market penetration can increase business sustainability over the long term.
Cross border eCommerce also helps companies take advantage of different sales cycles to balance out sales lags due to seasonal or fluctuating interest. It can clear shelves, too. Unfortunately, some products simply don’t find an audience at home. Selling to regions abroad lets businesses discover new customers and earn revenue on lower demand items.
Going Global is Worth the Challenge
Despite the benefits, cross border business can seem daunting. Businesses need to do some critical legwork to prepare for online sales with an international scope.
Websites and apps are your main points of contact. These must be localized for language, currency, and cultural factors, such as design, style, and imagery. Currency can be a challenge, but businesses that want cross border conversions need to ensure their prices convert automatically to local tender. Online retailers should not assume that customers in other countries use the same payment methods their home customers do. Rather, companies need to research top payment methods in those new markets and make them available on their websites.
Online ordering is the easy part of cross border eCommerce, since you can control your website from thousands of miles away. Getting products in customers hands is a bigger challenge. Shipping and delivery is where the rubber hits the road. While international delivery has gotten more reliable and faster over the years, moving goods across oceans, continents and borders can present difficulties. Merchants should choose local shipping partners carefully and learn about customs clearance issues, duties and taxes.
A successful cross border rollout requires more due diligence. Here are some foundational steps to get you started.
Be strategic: Don’t choose target markets randomly. Figure out which countries are best for your business expansion. Identify potential markets for your products by assessing the culture, climate and competition in those regions.
Dig into export restrictions: Many countries have import regulations on types of goods, bans on medications, alcohol, and foods, or strict manufacturing requirements. Others have packaging and labeling requirements. Make sure the products you want to sell don’t contravene any local regulations or can be easily brought into compliance.
Develop a pricing strategy: Figure out how much similar products in the area cost. Determine what your freight, in-country distribution, insurance, and sales commission expenditures will be. Update your online store to take local currencies and sales taxes into account, and provide localized information for your cross-border audience.
Hire a logistics service: Delivery and returns are part of any eCommerce business. Now imagine trying to handle them for regions with entirely different delivery practices and customer expectations. Make sure your new customers get top-notch service by outsourcing logistics to local experts. It’s the most reliable way to ensure products are handled carefully, deliveries are completed within suitable timeframes, and returns are processed smoothly.
Outsource customer support: Hiring local support personnel to provide customer service in local languages, with cultural fluency, will help build customer trust and develop a loyal following.
Test your website: Before updating your website for cross border expansion, acknowledge that what works in your country might not work elsewhere. For example, different cultures have different expectations about website design, sales promotions, and different payment preferences. Conduct user testing before you launch to make sure your online store is optimally designed for your new audience. Update your site accordingly; it could mean the difference between success or failure of your cross-border campaign.
Rollout and repeat: After successfully launching in one country, save time and resources by following the same steps for every new country.
Cross border eCommerce is a great way for companies to boost their brand visibility and get their products to more people. It has its own learning curve, but can be a major profit booster for businesses that time it right and do it well.