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Cross-Border eCommerce

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Things to Consider Before Engaging in Cross-Border eCommerce

Hundreds of millions of consumers around the world are turning to international eCommerce sellers for items not available through their local market. While that’s great news for cross-border retailers, this new buying experience comes with new complications and concerns.

What is the Value of Cross-Border eCommerce?

One report published by DHL projects that global cross-border sales volume will continue to increase by 25% each year, more than doubling domestic retail’s annual growth. This means international eCommerce sales will reach USD $900 billion by 2020, up from USD $300 billion in 2015.

Merchants surveyed report an average of 10-15% overall revenue contribution by opening to international customers. These benefits were further expanded upon by offering faster international shipping options, with merchants providing this service growing 1.6 times faster than other retailers. As impressive as that is, it is still just the beginning.

Currently, shoppers in just three markets—the US, UK, and China—account for roughly 60% of all “high-value” (more than USD $200) transactions in the world. India, Singapore, and Western Europe represent much of the remaining 40%, but the balance is shifting.

Developing markets, particularly those in Latin America and Africa, show average annual growth of high-value transaction volumes to be 2-3 times higher than in the above-mentioned dominant markets. Thus, as developing countries in these parts of the world grow increasingly affluent, they will add even more potential to the value of cross-border eCommerce.

Barriers to Engaging in Cross-Border eCommerce

Embracing cross-border eCommerce offers a lot of benefits for merchants, but unfortunately, it’s not as easy as sitting back and letting the money roll in. Each individual market and region has its own unique idiosyncrasies that serve as barriers to easy adoption.

Challenges merchants could potentially encounter include:

  • Country or region-specific policies and legislation, such as Europe’s General Data Protection Regulation
  • Card scheme regulations that vary by region
  • Emerging and evolving payment method preferences, such as money transfers or cash on delivery instead of credit cards or PayPal
  • Data security expectations, such as PSD2
  • Elevated fraud risk in different parts of the world
  • Economic climates or political volatility that impedes international business
  • Customers’ expectations of shipping costs and delivery times

Making the decision to open up to international markets is not one to take lightly, as any combination of these obstacles could easily threaten a merchants’ overall profitability.


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Questions to Ask Before Going International

Contending with these and other challenges associated with cross-border retail demands that merchants think strategically. The first step is to ask the following before moving into each new market:

Who is already looking to purchase my product? Who else can I attract?

The simplest way for merchants to determine who is looking to purchase from them is analyzing web traffic. The number of people who come to browse by country of origin is a straightforward and reliable method of identifying whether there is a latent demand for a product.

The pattern of the traffic is also important to note. If traffic remains consistent, it could be a sign of ongoing curiosity, suggesting that by bringing the product to the market, the merchant could attract additional customers who may not already be aware of the product.

Is demand for my product significant enough to offset added cost and complexity?

Once merchants identify the degree of preexisting demand and potential in the new market, they need to weigh the burdens of entering against the potential gains. Will enough people buy to make it worthwhile to invest in any new payments or service infrastructure that might be necessary?

Can I meet the consumers’ service and shipping expectations?

DHL’s report suggests that 24% of consumers are worried about the feasibility of international returns, and that this might dissuade them from making a purchase. Other concerns about shipping time, cost, and availability of customer service also pose challenges for international sellers.

Retailers should be totally transparent about these matters. In addition, skeptical customers who do not like the idea of buying from an overseas retailer might be reassured if the merchant is co-branded with a recognizable and trusted logistics partner in the customer’s country.

Can I communicate my message clearly in a different market?

Language and cultural differences can work to a retailer’s advantage, making the product appear exotic and unique to overseas shoppers. However, these differences may just as easily be barriers that obstruct communication and service between retailer and customer.

Merchants should conduct their research and be sure that their voice and message is clear from the perspective of their customers, or they will risk earning little more than confusion and disdain.

Strategic Thinking is Key to Cross-Border Profitability

International eCommerce offers great new opportunities for retailers, but only if they operate strategically. Otherwise, they risk turning a winning business move into a serious revenue drain.

If you are interested in engaging cross-border eCommerce consumers, let the professionals help. Contact Chargebacks911® today and we’ll ensure any new risk exposure is identified and addressed with proactive solutions. We’ll help balance risk with reward to ensure your venture is profitable.


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