Cross-border e-commerce is a trend that has gained tremendous popularity, as consumers purchase goods from other countries. Ecommerce has seen an increase in cross-border transactions as the technology and brands allow consumers from around the globe to buy products.
What is Cross-Border E-Commerce?
Cross-border e-commerce refers to online trade between a company (retailer or brand) and a customer (B2C). Or between two companies, often brands or wholesalers (B2B). Or between two private individuals (C2C). Here’s a B2C example, as people buy products from marketplace platforms such as Amazon or eBay or Alibaba.
The Cambridge dictionary describes a cross-border as anything that occurs between different countries or includes individuals or companies from different countries. The phrase describes international e-commerce generally when it comes to cross-border e-commerce. This includes the selling or purchase of goods across national boundaries through online stores. Buyer and seller are not in the same country, and therefore not regulated by the same authority, use different currencies and speak different languages.
Online trade within the EU often referred to as cross-border e-commerce, with its single market and shared currency in the many Member States, such as transactions from Germany to China.
With revenues set to hit $630 billion by 2022. As with many major retailers increasing their cross-border delivery options. And regional borders becoming less and less important to customers, it is widely expected to continue to grow.
Why Should Online Sellers Extend International
27 percent of US shoppers polled said they shop both domestically and cross-border, according to Statista. This rises to 71 percent for Austrian shoppers.
Cross-border e-commerce is not new but the pace at which products cross borders is rapidly growing.
Such figures indicate an incentive for brands and online retailers to promote their products to new audiences, and to raise sales and revenue.
Challenges come with bringing the goods to new markets, however. Is your product in demand? How do you handle returns? Can you go shipping to those countries?
The most successful solution to cross-border sales is to incorporate new marketplaces to the existing selling sites like Amazon and eBay.
Where are the e-commerce opportunities across the border?
Chinese cross-border e-commerce is worth $60 billion but it may impact by the legislation. The explanation for the possible policy intervention is due to companies using cross-border e-commerce as a means of circumventing the legislation through local agencies on their goods.
The booming backdoor route, known as cross-border e-commerce, enables Chinese consumers to buy overseas-manufactured products online and effectively bypass regulatory issues that have hampered access from cosmetics to cognac to the consumer products. The government is now looking to reform the legal loophole in the face of pressure from traditional retailers at home, and the loss of tax revenues.
Reports indicate that Southeast Asia’s e-commerce market will hit US$ 200B by 2025, with online sales growth of 32%. It is the world’s largest market for internet users, with 600 million customers and 260 million people online. It makes complete sense therefore that both Amazon and Alibaba have increased their interest in this region.
Australians like purchasing clothes online from outside their borders. Since March 2016, a series of regulations have been released by the Chinese authorities with the intention of expanding normal import tariffs and regulatory requirements to products imported into China through cross-border e-commerce. The new regime sparked a backlash among cross-border e-commerce sellers both in China and abroad and was indefinitely put on hold just a few days before Premier Li’s March 2017 visit to Australia and New Zealand. Goods imported into China through cross-border e-commerce are hoped to continue to benefit from the low tariffs and regulatory exemptions.
Cross-border sales are the fastest-growing segment of e-commerce in France. Nearly half of all French customers regularly buy from cross-border merchants and 19% of all online purchases in 2016 made on non-domestic websites, four points higher than the 15% European average, most often in Germany, the United Kingdom, Belgium, the United States, and China. The major problem with French customers is that their purchases are fairly small compared to the countries above listed.
Mexico is a long-term opportunity because of the staggering pace at which the e-commerce industry is rising (21 percent). Security concerns over payments hamper the production. Amazon has partnered with a local retailer to ensure clients can pay cash for their purchases. The market has low competition and with growth rate, Mexico may become the most important Latin American e-commerce market in the long term.
Align yourself with other countries’ payment methods
The first thought maybe something like, ‘The entire world is using credit cards so isn’t that good enough? ‘Oh, probably not. Pitney Bowes wrote an insightful article that looked at the breakdown of payment systems in various countries and it’s a little shocking how the numbers stack up.
The prevailing way to pay online at La Furia Roja is to either use Visa, MasterCard, or American Express. As for online shopping, one of these three cards used by just about every single user.
Using one of the big three credit cards — Visa, MasterCard, American Express — for e-commerce transactions, the economically strongest EU country has just over a quarter of online shoppers (30 percent).
Somewhere in the center of Spain and Germany lies the nation of fine wines and cheeses, with about 60 percent of shoppers using a Visa, MasterCard or American Express to complete their online purchases.
Forget about credit cards — they’ve got something called Konbini in Japan, where about 75 percent of people shop online. Konbini is just like convenience stores, with people finding a product they want online, going to a Konbini with the reference number, paying for it there, and then getting it delivered.
Cash is king here, as is the case with other Asian nations. How it works is when a shopper goes online, picks an item they want, and then pays for it with cash until it gets to their doorstep.
Stay clear of the shipping costs when selling across borders. It can vary depending on the courier services you select, as well as the shipping method. You’ll have to pay import taxes in certain countries too.
Cross-border e-commerce is here to stay and must consider as an e-commerce market growth strategy. It requires investment (payment processing, resources, and logistics) and should be implemented for the full effect in a phased manner.
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