Cross Border Commerce

Cross Border Commerce

Categories E-commerce | Others

The Worldwide Retail Ecommerce Sales: The eMarketer Forecast for 2016 report mentions a 6% ecommerce growth leading to $22.049 trillion in retail sales. The report forecasts the ecommerce market to touch $27 trillion by 2020! The data includes retail transactions across all commerce platforms. Along with other growth opportunities, a trend is visible where domestic ecommerce retailers are moving towards cross border commerce for expanding their business and market penetration. In this article, we will look into the cross border commerce industry in some detail.

What is Cross Border Commerce?

Cross border commerce is international trading. It implies the sales and purchase of products through online shopping portals. For example, a resident in the US can buy products from AliExpress.com, which is located in China. The trading takes place via marketplaces like Amazon, eBay, Flipkart, Alibaba and AliExpress. The trade can be B2C, B2B, and C2C.

Cross border commerce is growing. Around 15% of all B2C online commerce (approx. $424 billion) will be cross border by 2021, as forecasted by Forrester Research. China is the numero uno cross border online shopping destination, followed by USA and UK, according to an October 2016 joint survey by PayPal and Ipsos.

Anyone who has an online-based domestic ecommerce model can expand into the cross border commerce niche.

Best Practices to Create and Manage a Cross Border Commerce Business

There are three major areas to comprehend: logistics, payments, and website performance. Let’s understand their individual facets.

Logistics

Logistics would be complicated without a proper structure. In a domestic setting, maintaining a clear focus on the supply chain is simpler because the warehouse is mostly attached to the business. All orders are processed swiftly and without delay. What about international ecommerce? Retailers using Amazon and AliExpress as their selling channel has to incur heavy shipping charges, longer last mile delivery time and maintain an inventory, which is undoubtedly costly.’

There are two ways of handling logistics:

1. Dropshipping

In the drop shipping business, you don’t need to maintain warehouse inventory. You act as a medium between the buyer and the manufacturer. Buyers place orders on your cross border ecommerce site, you generate the same order with the manufacturer, and the manufacturer processes the order and ships it to the buyer.

In the drop shipping business model, all the retailer has to maintain is a proper stock display and quick payment processing gateway, and of course, partner with genuine manufacturers for product quality guarantee.

2. Self Warehousing

Here, the retailer needs to maintain proper stock, and monitor the sales without any margin of error. Once a buyer places an order, it has to be processed from the warehouse and shipped to the destination country. Maintaining self-product warehousing in cross border ecommerce is tough as you need to have a robust infrastructure to track sales and inventory, a a strong capital inflow. There is the need to factor in the cost of maintaining a stocked warehouse, the cost of shipping, cost of packing, and other untoward expenses.

Irrespective of the option chosen, the need to create a strong IT infrastructure site remains. Ecommerce CMS Magento is recommended as the software comes with various customizable inbuilt functionalities that helps to manage logistics without much manual intervention.

Payments

Keep these factors in mind.

1. Checkout Pages

Instead of maintaining various checkout forms, create “responsive forms” that will detect the location of the buyer and populate the page with the relevant currency and other form tabs. The checkout pages should be responsive for accessibility on ALL devices.

2. Currency

The currency exchange rate will have a strong impact in cross border commerce. Be careful with how the currencies are presented on the storefront. Local currency presentment involves using the local merchant payment processor to process payments in the local currency. The cross border commerce store should deploy Dynamic Currency Conversion (DCC) technology to detect currency from the customer credit/debit card and offer a choice of making payment in the merchant’s base currency or the billing currency. You can use Multi-Currency Pricing (MCP) is also useful.

3. Payment Channel

The cross border commerce platform should factor the cost of payments, which includes the cost of payment acceptance, local card restrictions, cannibalization vs. incremental sales, back office maintenance, and other IT operational requirements.

PayPal and Payoneer are recommended ecommerce payment solutions for performing cross border commerce transactions.

Website Performance

What could be the best practices to improve sales of the cross border ecommerce website? Here are some pointers.

1. Add Security Seals

A study by ConversionIQ found that ecommerce websites with the McAfee Secure Trustmark experience a higher trust factor as the visitors respond positively to the Trustmark. ConversionIQ studied a top supplement supplier and a major off road parts supplier and found a 12% and 23% increase in sales after applying the McAfee Security seal. When a group of participants was asked which security seal gave them the best sense of trust, Norton Secured Verisign was the clear winner.

2. Telephone and Address in Header

Displaying the telephone number and address in header increases the trust factor. The A/B split testing by Databox found that adding telephone number on the header increased conversion rate by 5%. Adding the company details gives the impression that it is legitimate and removes fears around scams and credit card frauds.

3. Shipping Fees

The No.1 reason for buyers to shop online is free shipping. Around 70% people identified it as a critical purchase factor, according to an E-Tailing Group study. Free shipping encourages people, and therefore, your global ecommerce market website should show the shipping terms clearly on every page / every product. Remember than even charging a small shipping fee can kill conversion rate.

Since shipping is a top factor in cross border ecommerce business, try to absorb the shipping costs in the product price without inflating the product price much.

4. Return Policy

While selling globally, never forget to add a detailed return policy. Returning/exchanging goods in the domestic marketplace are cost effective but not when you’re dealing with international clients. Ensure that the return policy states the number of days or weeks within which the buyer can return the goods and claim a refund. You have to ensure that legitimate reasons are provided by the buyer for claiming a return and refund. Also, think about who is going to bear the shipping costs of the returned product. Ideally, the retailer bears the costs.

5. Multi-Site Responsiveness

Ecommerce CRM’s like Magento have advanced customization features which allow the ecommerce retailer to create a robust and responsive website. As a cross border ecommerce participant, you need strong IT technology to localise the site experience. The ecommerce site should capture and analyse the geo-location of the buyer to automatically translate the webpage content and currency symbol and value to that of the local buyer. Multi-site responsiveness is necessary to build buyer trust and increase sales.

Endnote
Cross border commerce is growing, and if your domestic eCommerce business has the potential, you should definitely think of expanding internationally. If you are planning to have an eCommerce website that supports both domestic and international trade you can consider hiring our team of Ecommerce expert developers who can help you achieve the objective of your business to be selling products/services globally.