Imagine that you’re looking to buy a particular item. However, this item is rather difficult to find, and none of your local retailers have it in stock. Is it time to give up?
No! Fortunately, after a quick Google search, you discover that an online store in another country has it available for sale. You place an order with a few clicks, and within a week, a package is shipped from overseas to your doorstep, containing the item that you wanted in perfect condition. Score!
All this is made possible, thanks to the magic of cross border ecommerce.
What is cross border ecommerce?
Cross border ecommerce, or “xborder ecommerce” in Internet slang, is the buying and selling of products from overseas. As an example, this can involve a consumer buying a product that the store owner ships to them from abroad. It can also be between a retailer or brand and a consumer (B2C), between two businesses (B2B), or between two private persons (C2C). Such transactions can take place on international shopping marketplaces, such as Amazon, eBay, and Alibaba, or on the multilingual websites of individual retailers.
Cross border ecommerce isn’t a new phenomenon. It has been around for quite some time now: Amazon was founded in the United States in 1994, and Alibaba in China in 1999, for example. Since then, the shopping landscape hasn’t been the same.
However, as consumers warm up to the idea of shopping online – especially with the COVID-19 pandemic driving people indoors – cross border ecommerce has gained huge momentum over the past few years. In fact, market research firm Kaleido Intelligence anticipates that global consumers will spend a whopping $1.12 billion on international shopping websites and digital services in 2022.
According to Visa, 90% of ecommerce leaders asked, said that an ecommerce presence would be vital to ensure success by 2024. If you run an online store or are planning to set up one, cross border ecommerce may be the key to unlocking exponential growth for your store. However, success doesn’t happen overnight and requires some knowledge of international ecommerce. You’ll also need to establish the groundwork to effectively execute your cross border ecommerce strategies. Read on as we share more.
What are the advantages of cross border ecommerce?
1. You want to expand your online store to an international market
Already have an online store? That’s fantastic – your ecommerce experience will come in handy as you work on going international. Before you take the plunge, however, be sure that your store:
- Sports a clear unique selling proposition, or USP. As a new entrant in your target market, you’ll need to differentiate yourself from the incumbents to gain market share. This means ensuring that your products have well-defined features and benefits that appeal to your target customer demographics. Having a USP is very important especially in this era as it helps your prospective customers distinguish your offering from the various other providers as well as make a sound decision on whom they want to invest their time, money, and trust in.
- Is financially stable. For example, it should already be comfortably hitting certain online sales figures or order volumes every month. After all, if you aren’t doing well locally, then chances are that you’ll struggle even more when venturing into foreign markets.
- Has a website that is adapted for scale. Can your store’s website support higher volumes of traffic as you market it to a larger audience? Is it optimized for speed? In addition, does it look right on different screen sizes? If your store’s website is lacking in these areas, then work on them before you make your overseas debut. These little details are important to keep clients on your website, but at the same time, optimizing your website also helps a lot with SEO and helps your page rank higher.
- Is equipped to handle cross border ecommerce-related logistics. You’ll need to be able to accept international payment methods (including converting foreign currencies to your local currency, if needed) and have a strategy for international shipping, among other considerations. These optimize the buying experience and improve customer satisfaction.
2. You don’t already have an online store, but want to sell internationally
On the other hand, perhaps you don’t have an online store yet. In this case, you’ll need to set one up before we go any further. You have at least two options for doing so:
- Set up one ecommerce store that’s powered by popular platforms such as Shopify, BigCommerce or WooCommerce. Setting up an ecommerce store this way allows you to have your shop set up quickly and even anyone with zero technical skills can set their shop up. Then, use a website localization solution (such as Weglot!) to translate your store into different languages for your various target markets.
- Set up a multi-site network, which will contain separate copies of the same website on different domains and in different languages. You can then manage all these websites (including their ecommerce logistics options) from a single dashboard. The best platforms for setting up a multi-site network are Magento and WooCommerce.
Pro tip: If you don’t have much web development experience, we recommend going with the first option, i.e. setting up your store using an ecommerce platform. It’ll be much simpler than trying to set up a multisite network and much less work.
What are the challenges of cross border ecommerce?
Regardless of whether you’re a rookie or veteran in the ecommerce space, you should familiarize yourself with cross border ecommerce before starting to sell internationally. Even though there are numerous benefits that it can bring, it can be quite challenging. In particular, here are four issues to think about and prep for when starting a cross border ecommerce venture:
1. Demand from overseas markets
People all over the world have different tastes and preferences, so you’ll want to make sure that there is demand and a customer base for your products in your target overseas markets.
For example, while root beer is a popular drink in the United States, it isn’t very well-liked in Japan. Hence if you run an online store selling root beer, you might want to give the Japanese market a miss.
You may be surprised to learn that some online businesses don’t do any ecommerce market research in this area beforehand. Instead, they assume that since their products are selling like hotcakes in their home country, then these products will also be a hit overseas. This is one of the major problems that can arise as the ecommerce market is very different in different countries and not conducting market research prior to launching can even end up in the closing up of the business as sales might not be too high.
Well, this assumption could prove to be costly if it turns out to be incorrect. To reduce the risk of launching your online store in the wrong markets, always do your homework on the potential overseas demand for your products first as conducting this research may even help you find new markets that were not even on your radar at first! Opening up your website to accommodate international markets means there will likely be dozens of ecommerce opportunities.
2. International restrictions
Before you decide to set up shop in a particular country, check what its local regulations say on running an ecommerce business there.
That’s because different countries may have restrictions on how certain products can be sold and distributed in their local market. For example, the import of foie gras is banned in India, while Canada prohibits the sale of raw or unpasteurized milk.
Separately, learn how to clear the local customs of your target markets. This is especially true if you need to get licenses or permits to import your products. Doing so can facilitate smooth customs clearance, and prevent your goods from getting stuck at the border – or even worse, being forfeited without compensation which can further ruin the experience of your potential customers.
Another restriction that may arise in an international context is tax laws. The tax laws governing foreign currency may vary by nation. This will have an impact on the price of the items being sold, and if the additional tax is unclear to customers at the moment of sale, this might have a negative effect on their experience.
How will you get your products into your customers’ hands? Figure out if you’ll be able to ship them to your target countries directly, or if you’ll need to partner with a third-party logistics service. Consistent and predictable logistics are almost a requirement for conducting successful cross border ecommerce.
In some situations, working with a local carrier can be beneficial. By doing so, you can leverage its existing delivery infrastructure for speedier deliveries, as opposed to trying to ship orders in more unfamiliar territory on your own.
Your shipping methods will also help you determine your shipping costs, and therefore your shipping pricing model. Alternatively, you may realize that the shipping costs for a particular product are too prohibitive, and look at selling other products internationally instead.
4. Cross border payments
We mentioned it briefly, but having the right payment methods for your new customers will be an essential part of boosting your ecommerce sales globally. Imagine not having the option to pay how you want to, or worse seeing the price of an item in a foreign currency.
Currency conversion and ensuring you’ve taken into account the preferred payment method of your intended market such as credit cards or PayPal (amongst others).
5. Customer service
This is an important consideration for customers deciding whether to shop with you – especially if you don’t have a physical presence in their country. How can customers reach out to you for help or recourse for their cross border purchases? To provide a stellar customer experience, you’ll need to implement effective customer service processes to reassure online shoppers that they will be taken care of if something goes wrong with their order.
One option is to hire dedicated customer service teams to handle support requests from your overseas customers, and especially in their languages. However, if you aren’t confident of your ability to hire staff proficient in your customers’ native tongues, you can also outsource your customer service to specialist agencies.
Don’t forget to tailor your online store for the global market
Apart from researching the four cross border ecommerce issues above, keep in mind that people prefer to shop in their own language.
In its 2020 edition of the “Can’t Read, Won’t Buy – B2C” survey, market research firm CSA Research surveyed over 8,700 consumers in 29 countries and found that:
- 65% of respondents prefer content in their language (even if it’s of poor quality).
- 76% prefer to buy products with information in their native languages.
- 40% will not buy from websites that are in other languages.
What this means is that if you want to expand your online business to other countries, then your online store will have to speak the language of your international customers. Not only that, your store content has to be accurately translated – down to the very details, such as your product descriptions – and also respect the cultural nuances of your target market.
Doing all this is vital to building credibility in new markets, especially as an overseas entrant. It is only when you’ve gained the trust of your international customers that you will gain their business as well.
Ready to get into cross border ecommerce?
Venturing into cross border ecommerce is an exciting prospect. If done right, you stand to not only increase your online sales, but also expand your presence across the world. The latter could be especially beneficial in building a lasting brand that is well-loved by global audiences for generations to come and in this era, having a presence around the world is almost mandatory to build a credible brand.
Reaping such global ecommerce success, however, starts with proper research and planning even before you launch your online store overseas. Consider key issues such as the overseas demand for your products, how you will ship them internationally (including whether there are any restrictions for doing so), and how you can provide outstanding customer service.
You will also need to translate your online store pages to tailor them to your target markets. Using a proprietary mix of machine language translations, Weglot offers an effective website localization solution for many popular ecommerce platforms, including Shopify, WooCommerce, Squarespace and more.