It is estimated that by 2022, cross border ecommerce sales will reach USD 627 billion, up from USD 284 billion in 2017, and account for 20% of total ecommerce sales. What once may have been deemed a daunting feat and only fitting for large organisations, global expansion is now accessible for companies of all sizes, anywhere in the world. As with most economic shifts, the rapid expansion of ecommerce in 2020 drove incredible opportunities for brands that were well positioned to support customers online and left others looking for ways to meet customer expectations.
Last year, online sales accounted for 101% of all gains in retail. This means sales through all other channels declined – for the first time in history, ecommerce sales accounted for all retail sales gains. These numbers suggest a historical revolution. So, it’s no surprise brands are scrambling to add digital transformation and global ecommerce growth to their key priorities.
A key factor for whether your brand is falling short or growing during this economic shift may be whether you’re considering cross border commerce expansion. With the growing number of online shoppers around the world and growth in global ecommerce overall, cross-border commerce can offer businesses significant benefits, such as:
Recent reports cite more than 4.6 billion people around the world – that’s 59% of the world’s population – are now using the Internet. More people shopping online means more opportunity to sell your products, regardless of where they are located. However, cross-border success won’t come by simply building an online store. You must create an experience for your customers that seamlessly guides them through a purchasing process that is familiar.
The first phase in enabling cross-border commerce and creating these seamless experiences for your customers is to understand where to focus. Use these five steps to position your brand for cross-border success:
1. Use web traffic data to understand demand
It may seem obvious, but organisations often look to market growth rates to determine their number one priority. However, it is beneficial to start where you already have demand, as that will turbocharge your success. For example, if you are a European-based business, but are seeing a high volume of traffic on your website from Japan, you may want to consider this as an initial market opportunity.
2. Determine which countries will allow your product to be sold
To sell products across country borders, you must understand import requirements and how they apply to your products. This includes the country of origin for the final product and the materials from which it was constructed.
Great resources exist across major carriers such as FedEx, UPS and DHL that can help you understand country-specific guidelines and guide your international shipping strategy.
3. Give customers clear information on duties and taxes
Generally, when selling cross border, you or your merchant are the exporter and your customer is the importer. This means your customer is responsible for duties and taxes required for import. If these are not calculated correctly at the time of the transaction, the carrier will be required to collect from the consumer upon delivery, which can result in refusals and customer dissatisfaction.
It’s important to provide a clear calculation of final duties and taxes required for import using a landed cost tool. Presenting this information and allowing consumers to pay these fees upfront during the checkout process will improve conversion rates and overall customer experience.
4. Identify the right fulfilment strategy for your business
Shipping across borders is one of the biggest challenges of global ecommerce and requires deep knowledge of trade compliance, cross border customs clearance and commerce trade rules, import and export rules, fluctuating shipping rates, and more. It’s important to solidify your shipping strategy early to keep costs down and manage customer expectations. This includes considering what fulfilment method you’ll use, such as direct, third-party or drop-ship.
No matter which fulfilment method you choose, it’s crucial to understand all regulations and compliance nuances specific to your products and the new regions you plan to sell into. But it’s also crucial to provide efficient order fulfilment to get your customers their products on time and provide a positive experience, as 70% of shoppers are unlikely to make another purchase from a brand following a poor delivery experience.
5. Localise the customer experience to improve overall conversion
Localisation can mean a lot of things to different people, but it most certainly means that your products and the purchase experience will represent the local language and preferences. And this doesn’t mean just translating content. It is imperative to use culturally appropriate phrases and images.
Localisation also means understanding the desired shopping and checkout experience. Key considerations during the checkout process include displaying local currency and offering preferred payment methods; 76% of international shoppers say they prefer to purchase in their own currency – that’s a big reason to prioritise this for your brand’s checkout experience.
Even prior to the COVID-19 pandemic, cross-border commerce was growing at double the rate of domestic ecommerce. There’s no telling where ecommerce will go next, but with the right preparation and forward thinking – armed with the five steps above – you can grab a piece of the explosive growth and realise your cross-border commerce goals.
Want to dive in further? If you are interested in learning more about expanding your commerce operations into new markets, grab your passport to global commerce with Digital River’s new ebook here.
About Ted Rogers
Ted Rogers started at Digital River in 2017 and brings a unique perspective to the business, with past roles spanning from marketing to credit and fraud to operations. He served first as vice president and general manager of MyCommerce, then vice president of global expansion and fulfilment operations, and vice president of strategic marketing before being named chief marketing officer. His focus lies in communicating Digital River’s value and driving growth for customers and partners by taking a global, scalable and quantitative approach to marketing. Ted has an extensive background in ecommerce and marketing management, serving as a marketing executive in the industry for over 20 years. Prior to joining Digital River, he held a variety of leadership roles at FICO and Bluestem Brands, Inc – Fingerhut and PayCheck Direct.
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