Expanding for Cross-Border Ecommerce: 8 Things to Consider

01/10/2024

Expanding for Cross-Border Ecommerce: 8 Things to Consider

The digital revolution has transformed the world of commerce and opened new avenues for businesses to grow and expand. Cross-border eCommerce that involves selling of products or services to an international audience using an eCommerce store or an online platform is also on a tremendous rise.

If you are looking for cross-border eCommerce expansion of your business, this article will detail the benefits it may offer you, the challenges you need to be aware of and the 8 top things you need to consider to benefit from the immense possibilities.

Cross-border eCommerce And Its Benefits

Over the next 5 years, cross-border eCommerce is slated to grow by 107% from $1.6 trillion in 2022 to $3.3 trillion in 2028, according to Juniper Research.

Cross-border eCommerce Transactions to Grow 107% Over the Next 5 Years

 

The benefits that cross-border eCommerce can offer any business contemplating to expand are numerous. Let us look at some of the benefits:

  • Revenue growth - Businesses can look at new revenue streams by expanding for cross-border eCommerce. The benefit is significant for those businesses that offer products or services that have broader appeal in foreign markets.

  • Expanded market reach - The obvious benefit of expanding businesses cross-border is getting access to international markets and catering to a global audience. This not only enhances their global presence but also their brand image.

  • Extended product life cycle - Any product can face market saturation when present in a market for longer. Through cross-border eCommerce expansion, the product life cycle can be extended as the same product is introduced to new potential markets. 

  • Mitigating risk - Risk mitigation is one of the crucial benefits as cross-border eCommerce markets provide a buffer against market fluctuations that a product may face in domestic markets. A product facing an economic downturn or market fluctuation can reduce its dependence on the domestic market solely by expanding overseas.

  • Economies of scale - Businesses can benefit from economies of scale by expanding their eCommerce operations cross-border. As order volume increases, they benefit from cost savings on manufacturing, marketing and sourcing. The cost of product per unit also decreases leading to improved profit margins.

Challenges of Cross-Border eCommerce

The outlook for cross-border eCommerce is bright but there are many challenges that a business may face. Let us take a closer look at some of the major challenges which the businesses need to be aware of:

  • Delayed shipments - In the times when fast and same-day delivery has become the norm, delayed shipments are quite frequent in cross-border eCommerce shipping. Some of the reasons which may result in delays are incorrect product classification, incomplete documentation, invoices and packing lists.

  • Custom compliances - Another challenge is missing out on adhering to the custom compliances which may result in delays and penalties. You need to be careful while assigning codes to products. A small mistake can also result in the levying of huge penalties by the customs authorities.

  • Currencies and Payment Methods - Managing foreign currencies is a challenge which many businesses face while expanding for cross-border eCommerce transactions. Customers tend to leave eCommerce websites prematurely when they cannot convert prices into their local currencies. 

The inability to offer the payment method preferred by the customer can also turn out to be a deterrent for the business.

  • Added supply chain and delivery costs - International shipping especially last-mile delivery logistics can be very costly in many situations such as in times of recession or in case of any global crisis such as COVID which the world faced recently. 

 

8 Things to Consider For Cross-Border eCommerce

The Cross-border eCommerce market is highly lucrative as it allows businesses to transcend boundaries and take advantage of international markets. To be able to do so, there are many crucial factors which businesses need to consider. 

  1. Identify New Markets to Sell

If you wish to expand for cross-border eCommerce, the first logical step is to identify the new markets you wish to cater to. Conduct a thorough market research to identify and then rank the new markets based on parameters such as GDP, population and consumer spending.

Once you identify the markets, preferably one market at a time, you then need to deep-dive into each market and understand its demographics, their taste and preferences, cultural nuances and how your product or service needs to be adapted to suit their expectations.

There are various ways by which you can gather valuable insight such as customer surveys, market reports and tools such as Google Trends.

  1. Check for Regulations and Restrictions

From the outside, a foreign market may look lucrative but it is critical to evaluate from any regulatory and restrictive angles. The first thing you need to ensure is that your product or service does not fall under restricted trade items in the market you wish to cater to. 

Many countries have unique product restrictions in categories such as food, medications, beverages, alcoholic beverages, pertaining to religion and so on. Check with the Government and other regulatory authorities who lay out these restrictive measures. To ensure full compliance, you can also consult with legal experts

  1. Custom Compliances

This is a critical aspect which needs to be kept in mind while expanding for cross-border eCommerce. It is essential to avoid delays, legal issues and additional associated costs. 

One of the most important elements of custom compliance is an accurate classification of your product adhering to HS (Harmonised System) codes. HS codes are six-digit codes which are assigned to every product which are sold cross-borders. This enables the customs authorities to apply duties and taxes correctly. 

You need to ensure that your product is classified correctly, failing which can result in overpayment or underpayment of customs duties and delay in customs clearance. 

Other custom compliances you need to consider are accurate custom valuation of your product,  obtaining requisite licences and permits, familiarisation with custom forms and documentation and maintaining records for compliances and audits.

  1. Pricing Strategy

When expanding in global markets, it is essential to evaluate and adapt your pricing strategy as it can significantly impact the profitability and success of your cross-border eCommerce strategy. 

To determine a competitive pricing, you should research competitor pricing strategies, customer behavior and market conditions. Factor in additional costs such as taxes, and duties and decide whether to absorb yourself or pass them on to customers.

Another important decision is to price your products in the local currency of the destination country or your own. It is advisable to offer both options and implement a reliable currency-conversion system for customers which is up-to-date and accurate. 

  1. Localisation

Localisation is a must if you wish to succeed in the cross-border eCommerce expansion of your business. Localisation is not just translation but involves adapting messaging, eCommerce strategy, and if needed product variations to suit the needs and sensibilities of the cross-border eCommerce market.

The website of your eCommerce website also needs to be multilingual and user-friendly. The images, content and layout should be localised to resonate with the target audience. Employ local SEO strategies, use country-specific domain names and provide localised customer support to meet the needs of the target audience. 

Payment preferences may also vary across countries. So it is important to provide multiple payment options to suit diverse customer preferences. 

  1. Integrate Technology

Leverage technological integrations to facilitate your cross-border eCommerce expansion. Technology plays a significant role in ensuring compliance with international regulations, streamlining operations and enhancing the customer experience.

You can use technology by choosing a robust eCommerce platform that offers international capabilities and supports multi-language, multi-currency and multi-country operations. Website localisation is another area where you can use technological solutions such as CMS (Content Management Systems) to your advantage.

Custom compliance software can help you immensely in ensuring custom compliance, managing documentation and calculating duties and taxes.

Other areas where you can leverage technology are implementing AI-driven customer support systems and chatbots, data analytics tools to gain insights into customer behaviour and sales trends and Inventory Management systems to help keep track of demand, stock levels and procurement logistics.

  1. Returns and Refunds

Due to the complexities of international shipping and various consumer laws, managing returns and refunds can be quite challenging, costly and time-consuming as compared to domestic eCommerce.  

So, it is important to formulate a comprehensive returns and refunds policy and communicate it clearly with the customers. It should clearly outline the timeframe, procedure and conditions for returns and refunds. Providing localised customer support to assist customers with return and refund enquiries is advisable.

Effective handling of returns and refunds in cross-border eCommerce expansion is an opportunity to build trust with the customers. 

  1. Partnering with a Trusted 3PL

International logistics can turn out to be quite complex, challenging and time-consuming if done entirely by the businesses themselves. To ease the stress, it is advisable to outsource the shipping and fulfilment process to a trusted 3PL who has the competence and experience to handle it effectively.

By doing so, you can free yourself from the stress arising out of the complexities of international logistics and fulfilment issues and use the time for business development and building business relationships.

Conclusion 

Cross-border eCommerce expansion has many benefits to offer such as expanded markets, enhanced revenue, economies of scale and a chance to mitigate risks due to domestic market fluctuations. 

However, it is also not without its share of challenges such as delayed shipments, problems with custom compliances and increased delivery costs. 

By careful planning and considering the 8 things outlined above, you can better prepare yourself to navigate the complexities of cross-border eCommerce expansion and achieve long-term success in the global commerce marketplace.


While business development and building business relationships should remain your core focus, you can outsource international courier shipping to a trusted partner. You can get in touch with us to know how we can be of service in your cross-border eCommerce expansion journey.

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