Enterprise challenges and risks for global commerce

Monday 9 May 2022 07:44 CET | Editor: Anda Kania | Interview

Selling globally offers significant opportunity for growing online brands but doesn’t come without risks and challenges. We learn from Tim Laudenbach of Digital River what are the right strategies in place to overcome these complexities

Cross-border spending is steadily increasing worldwide. What can you tell us about the size of the global commerce market for enterprises and the areas with the most growth? 

This year, worldwide ecommerce sales are expected to exceed USD 5 trillion for the first time, accounting for more than a fifth of overall retail sales. This number will likely continue to grow and proves that borderless ecommerce is a crucial growth strategy for online retailers. Southeast Asia, India and Latin America are regions of significant growth for retail ecommerce sales. By 2025, the Indian ecommerce market is expected to more than double from where it was in 2020. As well, ecommerce sales in Latin America were up 25% last year from sales in 2020. 

When it comes to online revenue share, the apparel vertical leads the way. The growth of mobile commerce and social shopping, along with the opportunities for personalized experiences and customized recommendations, is driving rapid growth in the industry. And selling globally offers large advantages: international consumers have a demand for brands with a global outlook and global expansion extends the life of seasonal, trendy fashion products. Segments such as beauty, entertainment, consumer electronics, and e-learning are also seeing significant ecommerce growth.

What are the main challenges these businesses face in the process of entering new markets? 

Cross-border commerce has become the new promised land for online sellers. The pandemic pushed shoppers who were once averse to online shopping into the mix and encouraged others to look across borders to source the products they could no longer access in physical stores. This shift requires brands to have the strategies and the right technology stack to match. 

Lack of expertise and infrastructure are top challenges for growing brands. Understanding the complexities of each new market and offering localized experiences in each locale is easier said than done. Every new market comes with new payment methods and currency preferences, new tax rules, new compliance regulations, new fraud risks, and new logistics concerns. For brands that choose to be truly local, a local entity is a must, and that is difficult for most brands to do on their own. Many brands choose to look to partners to help simplify these complexities and gain the infrastructure needed to enable local experiences for global shoppers.

Businesses need to consider consumer protection and satisfaction, local preferences, and relevant regulations from new countries and regions. What should these businesses do to assure they can stay relevant and compliant in these new markets? 

An optimized payments system can give brands a competitive edge when selling in new markets. A good payments system can enhance the customer experience, providing localized shopping experiences with currencies and payment methods that are familiar and preferred by shoppers in each region. It can also improve authorization rates by minimizing false declines and optimizing each payment transaction. 

Today’s shoppers are looking for convenience and transparency. Checkout processes should be simple and clear to reduce cart abandonment and there shouldn’t be any surprises after a shopper makes a purchase. The full cost of the transaction should be presented to customers at checkout, including any import taxes or regulatory fees that are passed on to them. From a regulatory standpoint, online merchants need to ensure they have proper invoicing, so goods are not stopped at borders. Working with the right processing partners to optimize your payments system and stay compliant is key.

What are the fraud risks enterprises may encounter? 

As ecommerce continues to grow, security concerns continue to increase for brands. With such rapid change in the industry, fraudsters can take advantage of businesses that had to adapt faster than they would have liked, looking for weak links and gaps in ecommerce infrastructure. Sophisticated bot attacks test payment types to check for system weaknesses and determine how to get orders through fraud solutions. 

Brands need a multi-layered, holistic fraud approach to reduce transactional risk. Device intelligence, custom behavioural modelling, attribute-based rulesets, and consortium data can minimize held rates and reduce false positives. It’s important to have the tools in place to stop fraud, without preventing good customers from buying your products. Continuing to invest and adjust as the fraudsters do is key to staying ahead of them. To be most effective, many brands find that working with a fraud prevention partner is often a better strategy than tackling the effort on their own.

What makes the cross-border commerce journey so challenging?

While it’s clear that selling cross-border is full of opportunity and growth, doing so successfully is more difficult than it seems. Cross-border commerce requires a deep understanding of global markets and customer preferences. As more consumers make purchases outside their home country, brands are expected to deliver transparent, localized, and seamless experiences – from browsing to checkout to delivery – regardless of where the shoppers are buying from.

Brands selling cross-border will also need to keep up with payment preferences, local tax laws, trade compliance, and customs regulations. It is crucial for sellers to have a deep knowledge of local regulations to account for even the slightest variances. Failure to understand the nuances in local regulations could result in serious financial penalties and bad publicity. Furthermore, complying with these rules and regulations can have a big impact on the customer experience. Brands need to ensure they have the right cross-border logistics systems, processes, and technology in place to be successful and to give their customers the experiences they expect. 

How does Digital River support enterprises in achieving a risk-free global expansion experience? 

Businesses that can’t afford to build out their own cross-border commerce strategy or lack the expertise to do so can partner with vendors that already have the expertise to successfully navigate these hurdles. Digital River helps brands simplify and supercharge international ecommerce growth by managing cross-border challenges on their behalf.

One low-code integration enables growing brands to localize checkout experiences, automate tax and duty calculations, optimize fraud prevention, and streamline cross-border logistics. Our Merchant of Record business model eliminates the risk and complexity of selling internationally. We take on the financial and legal responsibilities that come with global expansion so that brands can focus on the shopper experience and what they do best.

To learn more about how to future-proof your ecommerce business with a strong cross-border strategy, check out this article

About Tim Laudenbach

Tim Laudenbach is Digital River’s Director of Risk Management and Fraud Operations, responsible for developing and deploying customized fraud strategies for client organizations as well as managing day-to-day operational volumes. Tim has an extensive background helping companies manage risk with industry-leading techniques and technology. He uses his in-depth knowledge of fraud and chargeback solutions, and extensive experience setting up authorization and settlement strategies, to minimize expenses and limit exposure for leading brands.

About Digital River

With more than 25 years of experience, Digital River has mastered global commerce. An industry disrupter from the start, our Global Seller Services simplify global commerce expansion to help companies of all sizes grow their revenue by offering shoppers a localised buying experience in OVER 200 DESTINATIONS worldwide. Using our flexible APIs that combine payments, tax, fraud, and compliance into a single integrated solution, brands INCREASE CONVERSIONS, turning browsers into buyers as they virtually sell anything to anyone, anywhere in the world. The CHOSEN PARTNER of more than 3,500 global brands across the Americas, Europe, and Asia, Digital River is global commerce simplified.

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Keywords: cross-border ecommerce, cross-border payments, fraud management, risk management
Categories: Payments & Commerce
Companies: Digital River
Countries: World
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