Doing business with another country is like learning to play a sport. You don’t know what the ‘new rules’ of the game are, and that’s why it can be overwhelming to navigate your way around smoothly.
We’ve talked about the current upward trend in cross-border ecommerce quite a bit recently, and there’s a good reason for that. With international ecommerce sales anticipated to reach nearly $4.1 Trillion in 2020, and with nearly 57% of all online shoppers purchasing products and services from international retailers, the need to be aware and well informed while engaging in cross border transactions is strong.
If you’re an international ecommerce player, or transact with other countries in any way, this article will give you 3 concrete tips, so you can move ahead with more confidence. We’ll take a look at:
- How to address cultural challenges when doing commerce with another country.
- Cross-border transactional issues: things both buyers and sellers should be aware of.
- Logistical costs and issues involved in transporting your products to another country.
We’ll give you a practical look at what you need to do in the context of international ecommerce. From logistical considerations, to translating your website, you’ll begin to understand the importance of localizing your website as much as possible.
Part I: Addressing cultural challenges when doing cross-border commerce
Understanding your customers’ culture and researching your market to see if there’s even a demand for your product is key to your success.
Imagine trying to sell a product like packaged beef jerky in India, where nearly 80% of the population identifies with the Hindu belief system and abstains from eating beef; that would not only be unprofitable, but may be perceived as disrespectful by certain consumers.
Similarly, launching an alcoholic product like wine or beer in a country like Bhutan, where 75% of the population is Buddhist—and so, for religious reasons, doesn’t consume alcohol—wouldn’t be the smartest sales decision. The point here is that your product or service must blend in with the culture of the country you’re selling to.
The most reliable way to understand your potential new market is to either spend some time immersing yourself in the culture of the country; by traveling there yourself, or by teaming up with a local partner who understands the culture (we’ve previously spoken about how this is a key step to localization).
This is a great way to familiarise yourself with the culture, the people, religion, their way of interacting, and whether you see your product or service fitting in well with the local lifestyle.
Language is another key consideration when doing cross-border commerce. Of course, there’s little point in tailoring your offering to meet cultural differences if you can’t communicate with your new audience.
And, that’s where website translation comes in. An area many can be put off by as they simply don’t know their options.
Luckily, we’ve also talked about the numerous ways you can translate your website. And, the resounding conclusion? Website translation solution Weglot offers the simplest, easiest way to automatically translate and display your website into more than 100 languages – without the need for developers.
Automatic translation has seen a huge advancement within the last 10 years, with accurate translations becoming the norm. Of course, the need for a human pair of eyes when trying to give a completely localized approach to your website content is never a bad thing. And, through the Weglot dashboard, you can achieve just that by ordering professional translators to iron out any language nuances or colloquialisms.
Now you’ve got a translated website, you may also want to take the following into consideration when looking to understand your new markets further:
#1: Is the culture in your target market more inclined towards individualism, or collectivism?
Members of individualistic cultures, often associated with the economic system of capitalism, grow up in a milieu where uniqueness and personal success are rewarded; collectivist cultures, on the other hand, tend to foster a more egalitarian mindset.
Your marketing strategy will be completely different for each type of cultural mindset. Smart brands choose to “glocalize” their marketing approach, by retaining the global appeal of the brand, yet localizing the finer aspects of their marketing campaigns. This may include the language or slogans they choose, the graphics (to depict an individual, or not to depict an individual? A group setting, or not a group setting?), colors, and, of course, the language.
For example, McDonald’s launched in India with the same brand identity as the rest of the world: fast food for the masses. But in their marketing, they changed the language to Hindi, and even added some localized burgers to their menu to appeal to country-specific tastes, like the “Mc Aloo Tikki” burger.
That’s why McDonald’s has been so successful on the Indian market: they have been able to adapt their marketing while remaining a global company that offers burgers of a consistent quality.
#2: Do people in your target overseas market tend to make emotional or rational buying decisions?
While some cultures are characterised by emotional buying patterns, others may be more rational in their shopping behaviour.
In countries like the US, people don’t mind spending the night outside the Apple retail stores to wait for the product to be launched the next morning. They want to be the first to buy it, rain, hail or snow. They truly ‘fall in love’ with the product and want to own it as soon as possible. This is indicative of a highly emotional buying culture—even to the point of fostering habits like impulse buying.
Understanding these psychological differences will help you make the right decisions about which product to launch, what price to launch it at, and what’s the best time to introduce it to your target market to boost your chances of commercial success.
#3: What are the power dynamics of the culture you’re aiming to do commerce with?
This is an important consideration for international ecommerce, because in order to sell your products to international customers, you need to understand which actors influence the local market, and how they do so.
For instance, in the United Arab Emirates, many businesses rely on the social pull of members of long-established Emirati families. The government of the UAE has implemented policies to protect Emirati-owned businesses (in most—but not all—sectors) from foreign entrants to the market, by making it compulsory for international businesspeople to have a local Emirati partner own at least 51% of the business. In such a scenario, you’ll need to understand the way social ties influence business transactions in order to be successful.
Part II: Cross-Border Transactional Issues For International Buyers & Sellers
Whilst we’ve taken a look at how to understand and research a potential new market, it’s not just differences in cultures you’ll need to take into account when carrying out international ecommerce.
Website translation will give you mass appeal, but there are a number of adjustments you’ll need to make to your website to ensure a smooth purchasing process for your potential new customer. Let’s look at a few of these:
#1: Currency conversion fees
The buyer needs to look into whether they’re paying any currency conversion fees when buying from an international website. If a buyer is buying a product or service in another currency, their bank may charge them a fee for currency conversion to pay the seller.
Currency conversion fees can be a real turn-off for international buyers. A recent survey showed that nearly 13% of online shoppers will abandon their shopping cart if the price is displayed in a foreign currency. That represents a major loss of revenue for sellers!
This loss of revenue can be prevented if the online retailer tailors its site to suit multiple markets—in terms of language, currency, and media.
While we’ve already dug a bit into the language and currency aspects of localization, it’s important to remember that the text and prices aren’t the only elements of an ecommerce site: there are also the graphics, photos, and sometimes even videos, depending on how the seller presents their product.
Translation tools (and particularly Weglot) can make language-by-language media replacement really easy—so that you, as a site-owner, can maintain your site’s brand identity globally, while also adapting your visual content to the language-market in question.
For sellers, the challenge is calculating how much money they will ultimately receive when an international customer makes the payment. They need to check for any fees their bank may charge in order to receive the money from an international customer. For instance, Paypal, the money transfer company, usually charges a flat 4% of the total transaction value, and so the seller only gets 96%. These are all important costs to consider when you’re running a global ecommerce business.
There are a ton of taxation issues that could arise in the scope of conducting cross-border commerce. For instance, when you’re selling a product to an international market, the authorities in that country may impose taxes on the transaction.
This could be in the form of import duties, a sales tax, or a business income tax, and the only way to be aware of these taxes is to either consult an expert on cross-border taxation issues, or speak to a local professional accountant who is aware of all relevant taxation laws.
As the seller, you must be aware of all taxes, and how it’s impacting your business’ bottom line, and then seek ways to minimise your tax obligations, legally.
Buyers, on the other hand, will usually only be concerned with the final price they need to pay to buy your product in their country. For instance, if a buyer in Singapore is buying an iPhone in Singapore, they will want to know the final price they need to pay from Singapore—not from the country your store is based in.
Buyers may compare this price on other websites where they could potentially buy the phone from, so they’ll usually educate themselves about any taxes that may influence the final price, like GST. For buyers, the challenge is always to buy the product at the best possible price!
#3: Modes of payment
Cross-border commerce can only happen when your buyers feel empowered to make the purchase with their chosen mode of payment. If people don’t use PayPal in a certain country, and if you only receive money via PayPal from international customers, you’re limiting your chances of success.
The trick is to open all channels of payment. Try to make as many modes of payment—including credit/debit cards, PayPal, online banking transfers, or even emerging cryptocurrencies—available to buyers, so they never have an excuse to say ‘no’ to a purchase.. The risks are ever-lower in terms of payment fulfillment for these new types of currencies, and the potential for cross-border transactions is not to be ignored.
#4: Protecting transactions
The rise in global cross-border commerce has also been, unfortunately, accompanied by a rise in international commercial fraud. Hackers and cybercrime experts may be waiting to find vulnerabilities in your system and steal confidential information.
An important consideration, therefore, is to protect the financial transaction occurring between the buyer and the seller, so there is no loss of trust between the parties. Sellers must respect that international buyers are putting in a lot of faith by paying them from another country. That’s why they should invest in antivirus programs, and encrypt confidential information contained in transactions to prevent any fraud from happening.
Part III: Logistical costs involved in facilitating global commerce
One of the main costs involved in the global ecommerce process is the cost of logistics. In fact, sometimes the cost of transporting products from one country to another are higher than the cost of the product itself!
This is a key factor in determining which countries you’ll want to start selling in. If there is an obvious impact on your profit margins, then it’s best to stick to countries where there are minimal logistical implications.
Knowing logistical costs is an absolute must to succeed as an international ecommerce player. You should consider the following:
#1: The weight of your product(s)
The cost of transporting your products from one country to another is highly dependent on the weight of your product. The heavier the weight is, the higher the cost is—it’s pretty simple.
As a seller, you need to consider which logistics solution providers will give you the best price for the amount of weight you’re looking to transfer. You should also look into factors like the speed of delivery, the quality at which the goods will be delivered, and whether you can track the delivery of your products to the buyer.
If you have a local office in the country you’re selling to, you can consider the benefits of economies of scale by transporting a bunch of products together. It works out to be a lot more cost-effective than transporting products individually to buyers.
#2: The speed of delivery
Ideally, sellers should empower buyers to choose how fast they’d like the product to be delivered to them. The faster the delivery is, the higher the cost is, so buyers choose if they would prefer to pay for faster delivery.
If you’re transporting your products to an overseas warehouse or office, however, you should compare the cost of delivery among freight forwarders and then choose the one that suits their needs best. Building a relationship with your logistics solutions provider goes a long way in ensuring increased efficiency when delivering products to buyers overseas!
#3: International return policies
An important thing to consider is what happens if your buyers aren’t happy with their purchase. Do you have a returns policy in place for your international customers? If you allow buyers to return the product, you need to factor this cost in.
Thinking deeply about your returns policy as a seller is a very important cost consideration. On one hand it costs you a lot of money to bring the product back to your warehouse or fulfilment centre, but on the other, it enables you to win the trust of your international customers.
Wrapping it up
If you’re serious about doing commerce with another country, you’ll want to ensure you’ve researched your new market to see if what you offer will be a good fit in terms of culture and competition.
Translate the text and media of your website specifically to each target market, so your buyers can feel an emotional connection with your ‘local brand”. Make the buying experience as seamless as possible by extending the payment types you offer and ensuring you display the right currency per country.
Remember to take all of the factors discussed above into consideration, in order to launch or sell successfully in a new overseas market. “When in Rome, do as the Romans do” is one part, but “speaking Italian in Rome” is just as important! Website translation is the key that helps you “glocalize” so embrace it for its ability to help you connect with international customers!