International ecommerce

Cross-border ecommerce: How to adapt your business for international success

Cross-border ecommerce: How to adapt your business for international success
Elizabeth Pokorny
Written by
Elizabeth Pokorny
Elizabeth Pokorny
Written by
Elizabeth Pokorny
Reviewed
Elizabeth Pokorny
Reviewed by
Updated on
June 19, 2023

The frenetic pace at which not only the global commercial landscape is evolving, but also the world itself is – means that adaptability is vital when it comes to 21st-century business, irrespective of sector or industry. Being able to adapt to economic shocks, whether endogenous or exogenous can often mean the difference between success and failure.

To give a timely example, you need only think of COVID19 and the havoc it’s brought upon businesses on a global scale, now more than ever businesses need to be proactive and flexible to both navigate through and continue to succeed in these unprecedented times.

When we consider this, it’s also important to appreciate the increasingly globalized nature of the world we live and operate in. Things such as trade agreements, technological developments, increased international cooperation, and much much more have eradicated many of the traditional barriers which impeded selling on an international scale. 

With a global market at our fingertips, there’s really no excuse to not make the most of it. And by the looks of it, you’d be foolish not to. A study conducted by Nielsen showed that 57% of individual shoppers bought products from outside their home country in 2019. With this considered, on top of the fact that the global cross-border ecommerce market set to exceed 1 trillion USD in 2020, it’s abundantly clear that cross-border ecommerce is the way to go. 

Naturally, if you haven’t already started this process or even considered it before, taking the plunge can be a daunting prospect. However, cross-border ecommerce is not going away anytime soon, and the quicker you adapt the better chance you have of gaining an advantage over competitors.

Luckily, this is something we know a thing or two about and we’ll be taking you through how best to adapt your business to achieve cross-border success.

If you’re already ready to dive right in, you can check our video first where we explain how to start an international business.

1. Introduction to the cross-border ecommerce market

Bringing things back to basics, cross-border ecommerce can be defined as the selling of goods or services online to consumers in different countries. This can be a B2C or B2B transaction.

The cross-border ecommerce market itself can be considered a subset of the global ecommerce market, which, in its own right, is growing at a rapid pace. As the global ecommerce market continues to become more and more lucrative, so too does the cross-border market in a world that has become increasingly smaller and more accessible thanks to globalization. 

Expert modeling shows us that ecommerce is becoming increasingly popular in terms of overall retail purchases from consumers on a global scale. By 2023, it’s estimated the global ecommerce market will be worth 6.5 billion USD and will account for 22% of all global retail sales as consumers become increasingly tech-savvy and purchasing behaviors shift in response to the digital age we live in. 

cross-border sales from 2014 to 2023 projections
ecommerce share of total global retail sales from 2015-2023

Why are more and more people shopping abroad?

Recent studies show that 67% of consumers who shop online are engaged in cross-border ecommerce transactions. Furthermore, 900 million customers are expected to purchase products internationally on the web in 2020. While it’s clear that those purchasing products outside of their own countries is on the rise, it’s also important to understand why they are doing so.

A study on US consumers shows that: 

  • 49% are doing so to avail cheaper prices available from retailers abroad
  • 43% are doing so to access brands that aren’t available in their home country
  • 35% want to purchase unique and special products that aren’t available in their country

Understanding the motivations behind cross border shopping will not only help you to increase your cross-border sales, but also enable you to adapt your offering to entice international consumers. 

What’s the tangible benefit of cross-border ecommerce? 

Of course, adapting and expanding your offering to an international audience can be a challenging pursuit that requires a certain level of investment in order to do things such as localize your offering.

However, E-Marketer’s 2018 Cross-Border ECommerce revealed that over 80% of retailers worldwide agreed that cross-border ecommerce has been a profitable venture.  What’s more, the Localization Industry Standards Association (LISA)  released a study showing that on average every €1 spent on localizing your website yields €25 in return. 

2. Steps to ensure your ecommerce store is ready for transnational success

Now that we’ve had an in-depth look into the growth prospects and opportunities in cross-border ecommerce, it’s time to take a look at what steps your business can take to ensure your ecommerce store is adapted to the additional needs and challenges presented by operating on a transnational scale.

What’s important to keep in mind is that the cornerstone of cross-border success is delivering the most personalized and localized experience possible. 

Transactional issues

Selling internationally on your ecommerce store comes with additional considerations that need to be catered for when it comes to payment processing. To avoid any transactional issues you’ll want to be prepared for the following: 

Payment options 

Since one of our main focuses is to personalize the customer experience, it’s important to be conscious of different popular methods of payment in each country, and to try best to cater to these preferences. For example, if a focus is to increase cross-border sales to the Chinese market, it’s important to be aware that alternative methods of payment such as WeChat Pay and AliPay have usurped traditional debit and credit card payments. 

Even in countries that are geographically close, payment preferences can vary greatly. Take the example of France and the Netherlands. French consumers tend to purchase with credit/debit cards but those in the Netherlands are more accustomed to direct bank transfers called iDeal. 

A safe bet when it comes to covering yourself for this is to allow as many payment options as possible, because quite often this can mean the difference between a purchase and a bounce. 

Currency Converter

In addition to providing a multitude of payment options, it’s also important to understand that your international customers normally purchase in different currencies. If consumers get to the check-out and don’t understand the price of an item in a foreign currency it will likely be a deterrent to purchasing. 

A good way of overcoming this obstacle is to integrate a currency converter into your ecommerce store. This will simplify the purchasing process for consumers and means they’ll be more likely to follow through on a purchase intention. Of course, they could check out the conversion themselves, but once they click off your site, who knows if they’ll ever come back.

Tax considerations

As certain and inevitable as death itself, tax is, unfortunately, going to come into the equation when it comes to selling internationally. Depending on where your goods are being purchased from and shipped to, fiscal authorities can impose taxes on certain transactions – this could be in relation to things like import or excise duties. 

In order to properly adapt your offering and prepare for the impacts these taxes could have on your revenue it’s helpful to consult a tax or legal professional to ensure you’re aware of the best strategy and practices going forward.

Another consideration you need to make is for the customer themselves. If you want to build customer loyalty and encourage repeat purchasing you need to ensure the customer is aware of the total price they are paying for your product – taxes included. 

Luckily, this can be done quite easily with the help of a tax calculator. The implementation of one onto your ecommerce store will mean that your customer is not landed with any hidden costs after the purchase has been completed, it’s important that potential customers are able to factor this cost into their purchasing decision otherwise they won’t trust the brand. 

Secure Payments

The last consideration you’ll need to make when it comes to transactions is arguably the most important – payment security. You need to make sure that your customers’ payment details and other personal data are not at risk when they make a purchase on your ecommerce site. 

This involves ensuring you have SSL (Secure Sockets Layer) certificates that encrypt sensitive information such as this during the transaction so that your customer and their data is protected from hackers. Security breaches are a major threat to not only customers but your business itself. And so, having confidence in this aspect of your ecommerce store is imperative. 

Logistics

Of course, when you sell internationally you need to think about how you’re going to get the goods to the consumer. Logistics such as determining whether you’ll have to use land, sea, or air freight are all important when it comes to this. There are also a number of country-specific regulations that come with the selling and shipping of certain items.

Fortunately, companies such as UPS have great tools that allow you to easily find out the existing regulations in different countries, allowing you to prepare for any obstacles you may encounter. 

It’s also important to scale at a pace your company can manage. Practical Ecommerce recommends choosing only one or two countries at the beginning of your international ecommerce journey and then building from there in a step-by-step process.

It’s important not to underestimate the complexities associated with multiple supply chains and to understand the risks associated with unregulated expansion. 

However, for those businesses who feel ready to take the plunge and start selling on a transnational scale immediately, there are a couple of options at your disposal. 

Dropshipping

Dropshipping is essentially a business-model whereby you can sell and dispatch products that you don’t actually produce or stock from your side. Basically, you process the order which is then fulfilled by a vendor who will ship it to the end customer. The vendor looks after the production of the goods, the storage and holding of the goods and the consequential shipping them to the consumer. 

This is an increasingly attractive option as it means businesses no longer need to have copious amounts of space to hold inventory and stock, which is in itself a considerable cost.

Another benefit associated with dropshipping is the fact that customers pay for the item before it is shipped, as a result dropshipping means you don’t have to pay for inventory upfront. Cash is a liquid asset for any business, and being able to receive payment from purchasers before paying suppliers is a form of wealth, which can be particularly beneficial to smaller businesses with lower cash flows. 

However, as attractive as dropshipping sounds, it’s important to properly research the feasibility of this business model. Many users report low-profit margins and consider it largely unsuitable for small ecommerce businesses. 

Holding your own products

The alternative is to hold your own products. This involves ordering from a supplier and keeping your own stock, producing the goods, and then shipping them to the end customer yourself. 

While of course, this adds additional responsibilities and considerations, it’s also quite advantageous in other ways. Notably, you have full control over the supply process, you can easily determine what you have in stock, how soon you can ship it and can better understand what the shipping costs will be. 

Another advantage is that you’re not relying on someone else to follow through with anything, if you’re in control you can ship out orders immediately. Furthermore, holding your own products is associated with higher profit margins as you are eliminating the costs associated with dropshipping. 

Downsides of this model include a higher initial investment cost and the risk associated with purchasing products for sales are made. The costs of storage need to also be considered when evaluating this model.

Which model is best?

Of course, there are benefits and drawbacks associated with each model, so your decision will depend on the type of ecommerce business you operate, how established you are, capital available for investment and other factors.

Alternatively, some retailers have built a business model that incorporates the two methods to attempt to maximize the benefits within both. 

Localization

As briefly mentioned above, localization is key to success when it comes to cross-border ecommerce. By definition, localization is the process of adapting a product or offering to a specific locale or market. The above example of adding additional methods of payments and currency calculators for example, are great examples of checkout localization.

However, there are other things we need to consider to give international customers the most personalized experience. 

Language

Probably the most important aspect of your localization strategy will be translating your ecommerce store. It’s absolutely vital that you make sure that if you’re targeting a certain market, that your product offering is available in a language that they understand. Research from the Common Sense Advisory (CSA) shows that:

  • 72.1% of consumers spend most or all of their time on websites in their own language
  • 72.4% of consumers said they would be more likely to buy a product with information in their own language

Considering this on top of the fact that only 25% of the global internet population are English speakers, what’s abundantly clear is that if you want to achieve cross-border success, you’re going to need to move beyond a monolingual site.

Fortunately, website multilingual solutions are available on the market which can facilitate this process. The Weglot translation solution, available in 100+ languages, enables you to make your ecommerce store multilingual in minutes without the need for any code. 

Additional benefits include the fact that Weglot is an SEO-optimized solution meaning all your translated web and product pages are automatically indexed on Google following best practices in international SEO. This is can really beneficial when it comes to SERP rankings which increase visibility and consequently sales and profits.

Cultural Nuances

In addition to language, it’s also important to bridge gaps beyond language barriers to have a successful localization strategy. This involves being sensitive to things such as cultural differences that exist between different geographic locations.

For example, if you had an advertising campaign on your ecommerce store for the Christmas period, you’ll want to be aware of the fact that Christmas isn’t celebrated in every country and adapt your offering accordingly. 

Luckily,  translation solutions such as the Weglot one are equipped to allow you to localize your images in a seamless process. So for say, countries such as Qatar that don’t celebrate Christmas, you can choose to localize certain festive images on your site to something more neutral.

Having capabilities such as these allows you to be both culturally and contextually relevant when selling transnationally. 

Cross-border ecommerce is here to stay

As global markets become increasingly accessible, operating a cross-border ecommerce store gravitates closer and closer to the norm. While this transition is undoubtedly a challenge for any business, it’s also a huge opportunity for businesses to broaden their client base, sales and global recognition. 

In conclusion, Darwin himself is quoted to say that it is not the strongest, nor the most intelligent species that survive, rather the one that’s most adaptable to change. This same sentiment holds true when we consider it from a commercial point of view, failure of your business is merely a failure to adapt, and inversely, success is a successful adaptation. 

Cross-border ecommerce is here to stay, the question is – are you?

Cross borders with an international ecommerce store: Try out Weglot’s 10-day free trial to see how it can help you localize your website and expand your global reach. 

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