Cross-Border eCommerce—Preparing to Sell in a Globalized World
Updated · Jun 03, 2022
The internet has made it easier than ever for businesses to reach new markets, and cross borders. However, selling goods and services across borders can be a challenge.
Cross-border ecommerce involves a number of factors, including shipping, customs, and payments.
In order to succeed, businesses need to carefully consider each of these elements.
Join us as we discuss this type of ecommerce.
What Is Cross Border eCommerce?
Cross-border commerce refers to the buying and selling of goods and services across borders. A party in one country or state sells something to a party in a different country/state.
It usually involves B2B and B2C transactions, but there are other types as well.
That is the basic idea, but what are its advantages?
Cross Border eCommerce Advantages
Cross-border sales present a unique opportunity for businesses to expand their reach and tap into new markets.
By selling products and services across borders online, businesses can reach a global audience without the need for physical storefronts.
This translates directly to access to a far larger market, as a business is no longer limited to a specific country.
It also means there’s greater potential to tap into niche markets. You may have identified a product that’s desired in another country, or a demand elsewhere for an item your country has an abundance of.
Cross-border sales mean you can capitalize on such discoveries.
Cross Border eCommerce Challenges
While this style of ecommerce offers some great benefits, it naturally comes with its own set of challenges.
The first is that the cost can be quite high. Not only will the shipping cost more, but there are also the issues of taxes, and the different laws each country has around importing.
As many businesses are expanding into foreign markets, another common challenge is increased competition.
Challenges aren’t the only thing to consider, there are some risks as well.
Cross Border eCommerce Risks
The biggest risk is the potential for fraud.
Because a business/person is dealing with a party in another country, it’s harder to confirm that the party is legit. Respectively, should something go wrong, it would be more complicated to take legal action.
Also, the chance for something to go wrong with an order due to the increased length of fulfillment grows accordingly.
There are more links in the chain with an international fulfillment, which adds more places for products to get lost, damaged, or stolen.
Tools Needed to Succeed
This type of ecommerce can be a daunting task, so it requires careful planning and execution.
What is needed for cross border ecommerce?
A Solid Fulfillment Process
A cross-border business must make sure they have a solid fulfillment process in place.
- Having the right products in stock
- Being able to ship quickly and efficiently
- Having a returns policy that accommodates longer shipping times
Reliable Shipping Partners
Businesses need reliable shipping partners.
Being with the right courier service can actually cut out a lot of the issues.
For example, worldwide brands like DHL and FedEx ship internationally every day, so a business can be certain that their products will make it to their destinations.
On the flip side, their fees could be forbidding for small businesses.
Knowledge of Foreign Payment Systems
Cross-border ecommerce also requires knowledge of payment landscapes in target markets.
How do the majority of people there pay for things?
Is it through recognized credit cards like Visa and Mastercard, or perhaps a payment gateway like Paypal, Venmo, or Paymate?
Or maybe the majority of purchases goes through mobile commerce?
Knowledge of eCommerce Law
Lastly, knowledge of ecommerce law is a must.
How business is conducted differs from one state to the next, so it’s important to be aware of the basics when branching out into new territories.
Successful eCommerce Strategies for Cross Border Beginners
Here are two strategies that can ease one into a cross border arrangement.
With dropshipping, a seller doesn’t keep an inventory.
Instead, merchants partner with suppliers, who ship directly to customers.
With this arrangement, a seller can partner with suppliers in different countries, who then ship to customers in those countries.
This cuts down on fulfillment time, and also gives sellers a partner familiar with the local market.
Returnless refunds are another useful strategy for international ecommerce transactions.
When sellers issue a refund to a customer without asking the customer to return the product, they can save time and money.
The potential for such savings grows if the product is to be shipped back from a distant country.
Naturally, such a return policy is attractive to buyers. Unfortunately, this is also one of the strategies that most enable buyer fraud.
International eCommerce Platforms
To end off, we’ll look at ecommerce platforms focused on international ecommerce.
Amazon is a global powerhouse, shipping millions of items to customers all over the world.
While Amazon's shipping options vary by country, the company offers a range of options for customers looking to have items delivered internationally.
Amazon is partnered with a number of international carriers to offer even faster shipping options in specific countries.
As a result, Amazon is able to provide a variety of shipping options to meet the needs of its global customer base and cross border markets.
This company frequently comes up in discussions on cross-border commerce. Its name is playful enough, with “X” being a stand-in for “cross.”
The company promises a complete solution to help businesses reach an international audience. The thing is that its reviews and reputation are terrible.
The overwhelming majority of users complain about the service, with some even dubbing it a scam.
It can at least serve as a lesson on the importance of research. Cross border is tricky enough as is, and so caution is a priority.
Cross border ecommerce is an excellent way for a business to expand its reach, and so grow its customer base.
Of course, the opportunities are balanced by challenges and risks. Expanding into new markets always requires due diligence, careful planning, and drive.
Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.