According to a report by DHL, global cross-border sales volume has been projected to increase by 25% annually, meaning that it will go from its 2015 volume of US$300 billion to US$900 billion by 2020. This is a staggering amount of increase and is caused by the hundreds of millions of consumers around the world who resort to international e-Commerce sellers to obtain items that are not available in their own local markets.
While we like to consider this as good news for the world at large and for international retailers, there are certain things you should consider before engaging in cross-border e-commerce solutions because this form of e-commerce solution comes with its own challenges and complications. But before we do this, let's share with you some reasons why we feel that this new pattern of commerce will continue its rapid rise and thrive for a long time to come.
The reasons why cross-border e-commerce is on a rapid rise include:
- The continuous simplification of the means of payments internationally. The invention and popularisation of cryptocurrency and other payment options whereby international payment is now a matter of seconds.
- Diversification in the raw materials and technological advancements of countries of the world, especially with countries beginning to concentrate more in developing their core strengths.
- Faster shipping options that are now available for international trades.
- Then there is the issue of developing markets, such as Africa and Latin America. With estimations of average annual growth of high-value transaction volumes in these mentioned markets, they are adding more potentials to the overall value of international e-commerce.
- Easier means of communication and advertisements, such as adequate use of the social media channels.
So what then are the current challenges of cross-border e-commerce?
The current increase in the value of cross-border e-commerce offers more benefits to merchants, but at the same time, it presents before them certain challenges which they will need to consciously address in order to thrive. These challenges include:
- Fraud risks which are prevalent in different parts of the world.
- Different legislations, policies and regulations that are peculiar to different countries may pose as a hindrance to conducting business in such countries. A good example of this is the Europe's General Data Protection Regulation.
- Strict data security expectations due to teeming hackers and internet fraudsters.
- Continuously evolving means of payments.
- Different card scheme regulations by regions.
- Volatile polity and differing economic climates.
- Concerns about delivery time and shipping costs.
Failure to duly consider these setbacks before venturing into cross-border e-commerce might drastically reduce the profitability of these merchants.
These challenges are why you should think it over and have your checklist marked out before venturing into cross-border e-commerce.
Things to be considered vary depending on the size of your business, but general considerations include:
- If you are a startup store, ensure that your business has reached a minimal inflection point like in the range of 100 sales.
- Also, be sure that your products have well-defined unique selling points that can help you influence customers in different countries and demographics.
- Strive to get an e-commerce website that is responsive and can scale perfectly on different screen sizes like mobile and web.
- Ensure that your business website is SEO-optimised for searches, page load and content in order to convert and keep prospects.
Other considerations include:
- People: You have to consider if you have a team that can support your effort. This might warrant you procuring the services of high-value team members even if it means outsourcing to them. There are a couple of freelancing websites from which you can find high-value team members on an outsourced basis.
- Product: Also, be sure that the products you are offering are perfect for the specific markets you have chosen. This is important because most countries have items that are prohibited from entering its borders. You have to be sure that your product does not fall into that category.
- Technology: Lastly, check if you have the necessary technological and technical know-how to drive your e-commerce trade. While at it, ensure the cost of such technologies are not so high that it may hamper your profitability. Also ensure that your technology is scalable so as not to run into analog time that may eat away your profitability and time. Still on technology, ensure you have certain apps that are meant international trade in your arsenal. Examples of such apps are MailChimp, Casengo and Shipstation. While MailChimp will ensure your mails get to the right people at the right time, Casengo will help you manage customers' messages while Shipstation will help you integrate with most of the shipping carts and catalogues.
Lastly, let's look at questions you should strive to get answers to before going cross-border with your business.
Questions You Should Ask Yourself Before Going International
With regards to the challenges facing merchants on the cross-border e-commerce fronts, it becomes clear than these merchants have to think strategically to escape the trenches in the terrain. As a guide, ask yourself these key questions before moving into any new market.
Who are my already-existing customers by default and who can I add to this list by my efforts?
The right answer to this question is important because it will present before you a path through which you should focus. One way of getting answers to this question is by analysing web traffics. These web traffics will give you a clue to the number of people who has interest in your product.
Of importance is also the consistency of the traffic. If the traffic is consistent, then it is a sign of massive curiosity which you can swoop in with your product or service and quell.
The demand for my products; will it be able to make enough profit to offset the extra cost I will incur due to added complexity?
On identification of the rate of demand for your product or service, you still need to be sure that your expected profit can cater for shipping, regulations and cost of extra expertise. This is to ensure that you don't incur loss in your business.
Will I be able to meet consumers' shipping and service requirements?
It is not enough just to get customers and strike business deals; it is important that you keep to your own part of the bargain at all times. You have to be sure that his country and pretty much his state has mechanisms by which you can reach him with your products. According to a report published by DHL, "24% of consumers have expressed concern about the feasibility of international returns". Challenges such as distance and the time for shipping should also be considered.
It is the mark of a good merchant to be realistic and open. If you cannot satisfy the needs of any client due to his location, be quick to recognise it and realistic enough to admit it rather than making core business decisions on the ground of hope.
With proper planning and strategies, you will be better equipped to tap into the ever-growing cross-border e-commerce terrain.