Tips for mastering cross-border e-commerce

Selling goods and services outside of a business’s home country – known as cross-border e-commerce – can provide an important and significant source of growth for SMBs looking to increase their client base and market share. It is not without its challenges, however. In this article, we’ll explore both the opportunities and challenges involved in conducting business internationally.

Why sell cross-border?

There are several good reasons why your organization might want to sell via cross-border e-commerce platforms. These include growing the market reach and revenue potential of the business, diversifying the customer base, and gaining access to emerging markets. Cross-border commerce can also offer competitive advantages, such as an enhanced brand image and reduced dependency on a single market.

If you are offering goods and services with a limited market share in your own country of origin, expanding across borders can be the next logical step to grow the business. It can also be a good opportunity to sell slow-moving or dead stock to a wider customer base.

The attractiveness of overseas expansion, for these reasons, has led to steady growth in recent years. According to a study by Statista, the market for cross-border e-commerce is expected to grow to $7.9 trillion by 2030¹.

Top challenges for cross-border e-commerce

A cross-border e-commerce solution is not without its challenges, which include:

Fraud: One of the most common type of payments used in this kind of transaction is through credit card, which can be susceptible to online fraud. In order to tackle this threat, SMBs are encouraged to enable address verification systems (AVS). This can, however, eliminate potential sales from countries where an AVS does not operate.

Shipping: Another major obstacle is shipping complexity, as taxes, laws, and import and export regulations can impact cross-border transactions. These shipping considerations may contribute to a total cost of shipping that can be high enough to negate potential profit from the sale. Calculate shipping cost as part of your planning process to understand the costs/fees involved in advance.

Compliance: Legal, regulatory, and compliance issues can also prohibit sales, with different laws operating in countries around the world. The administration of international commerce may place additional burdens on the resources and should be considered during the planning stages of international expansion.

Communication and culture: Language and currency discrepancies, as well as cultural barriers can present challenges. In order to support cross-border operations in a range of countries, it may be necessary to offer cross-border e-commerce websites using translation tools, as well as product and sales information in multiple languages and currency options. However, this can be complicated and, inevitably, it is unfeasible to provide options for the complete range. As such, it will be necessary to carry out research into the most profitable and convenient countries in which to do business.

Determine what countries to sell in

The following steps can help to determine which countries may be best to target for new sales:

Conduct research: Pinpoint which international markets are the most attractive. A range of data points can help to determine this, including information from market research, customer contact forms and social media.

Review options: It may be clear from the information gathered which countries have the largest numbers of potential customers, and which may therefore be targeted first in an initial cross-border offering. Initially these may be countries located in relative proximity or within specific trading blocks.

Consider costs and obstacles: Businesses looking to achieve a more global reach will need to weigh up the costs and administrative challenges against the potential increase in revenue and market reach. Shipping costs, legal and compliance restrictions, import duties, and taxes may prohibit sales of certain goods in certain countries or geographic regions.

Implementing a cross-border e-commerce strategy

Selling internationally offers potential advantages but requires the implementation of a coherent e-commerce strategy to achieve success. As noted above, this initially involves carrying out extensive market research to identify the location and value of potential new markets. It also involves researching the legal and compliance implications of selling in other countries, as well as crunching the numbers to assess potential profitability once all import duties, taxes, and shipping have been accounted for.

If cross-border e-commerce is still an option, your organization may need to invest in making a version of your website and content accessible in that market’s language, offering services in multiple languages and currencies, as well as paying attention to regional sensibilities in terms of the content offered. It is also necessary to set up and manage international payment options while being aware of the potential for fraud.

Considerations include:

Shipping and logistics: Fulfillment needs to be factored into any successful strategy.

Marketing: This will need to be optimized in the specific countries your business is targeting.

Costs: Fulfillment, marketing and other processes involved in cross-border e-commerce require an investment of both time and money.

However, the potential for opening up new markets and growing the customer base for existing goods and services can be significant and can help to elevate the business and brand to the next level.

Make cross-border e-commerce count

Although there are some obvious challenges and obstacles to international e-commerce, the potential to tap into and grow the business in new markets can be rewarding. It is also a road well-traveled, with systems and processes already in place to ease the commercial journey over international boundaries. The wide variety of payment methods businesses can accept with PayPal, including local payment methods, are an easy way to tick one significant hurdle off the list.