What is cross-border e-Commerce?

April 2021


Businesses today have the opportunity to trade within their domestic country, residence, or internationally with other countries. As a retailer, Cross-Border e-Commerce is defined as selling goods from a website of a national store in another country to another party. Cross-border e-Commerce can be between a retailer or brand and a consumer (B2C), or between two businesses (B2B), or between two private persons (C2C). For this article, we look to explore and understand more on cross-border e-Commerce between business and consumers. 

What are the current challenges facing cross-border e-Commerce?

When focusing on improving your cross-border e-Commerce opportunities, businesses must take the time to understand their existing and potential consumers by each market. This market-by-market understanding will ensure consumer trust and help improve future sales and revenue from each transaction.

Companies that have taken the time to understand their target customers and any general hesitations to international buying, will be in a better position to overcome them.

Forbes recently outlined that they see three defining challenges facing cross-border e-Commerce for the next decade to be: 

1. Cross-border taxation 

Each country may have different tax legislation for foreign exchange. This will affect the cost of the goods being sold and if there is little clarity of the additional tax at the point of purchase, this could lead to a negative customer experience. 

2. Hidden costs for consumers

In addition to the potential taxation of cross-border purchasing, customers may also have other costs added to the total cost of the goods. These costs can be based on the way the customer chooses to pay for the goods. Including the payment processor, card network, and banking networks. 

3. Trading versus purchasing currencies 

For most consumers, the best choice of transaction currency would be their own domestic currency. This improves the speed of transaction especially when the cost for goods should be compared. Currency rates do not stay static and converting currencies can incur additional fees. For the e-Commerce retailer maximising sales and avoiding cart abandonment, currency conversion efficiency should be a top priority.

Businesses must consider how these areas could affect their online visitors and customers. These challenges could change how they interact online and ultimately their final purchasing decision.

The growth of international e-Commerce 

The last year has had a huge effect on the growth of e-Commerce. With many restrictions on physical retail locations and with many spending more time at home, this is not particularly surprising. 

Predicted Global e-Commerce Growth.png

Source: Statista Digital Market Outlook 2020

Technological advancement in connectivity has aided the growth of global e-Commerce, with mobile accounting for more than half of global online traffic in early 2021. Mobile commerce is now a normal way for many consumers to purchase goods. This trend will continue to grow in cross-border markets with the accepted introduction of e-wallets and simple global payment solutions like PayPal, Google Pay, and Skrill, alongside credit cards and bank transfers for many online retailers.  

The strength of logistics and delivery management companies has also improved the way we receive goods and the timeframe of delivery. With more companies offering a range of parcel delivery services, consumers have more control over their deliveries, ensuring flexibility around their lives and when and where goods can be delivered, working around their lifestyles.  

When online retailers focus on creating solutions that fit the local market they are selling to, improved sales are likely to follow.  

International opportunities for e-Commerce businesses

When considering how to expand sales globally, cross-border market size and opportunities could be evaluated on the following areas, in addition to completion and price. These elements could aid the marketplace focus by country and help shape your cross-border strategy. 

Gross Domestic Product:

The GDP of each country is the monetary measurement of all goods and services annually. The GDP will give a view of the country’s economic performance. 

Consumer spending:

Average consumer spending per person. This can aid in gaining an understanding of the general spending patterns and the willingness to pay for goods and services. 

Population:

Understanding the overall population by age and demographics will give a clearer insight into the volume of your desired audience in the target market. It can also help compare each target group with the country's preference for digital commerce. 

Urban population:

Analysing the scale of urban to rural will allow both an understanding of accessibility to physical services and the impact of cost and accessibility for logistical elements such as the final parcel deliveries. 

In March 2020 just before the Covid-19 pandemic fully impacted the UK, Whistl conducted research into buying habits and trends for cross-border purchasing. 

The study of consumers' views on the advantages and disadvantages of cross-border shopping showed the main concerns were longer delivery times and the uncertainty of receiving the goods purchased. 

Disadvantages of buying online from abroad - graph.PNG

With the understanding of consumers’ prudent e-Commerce retailers, we are able to  create more cross-border sales by countering these disadvantages with up to date product descriptions, images and reviews and give clear delivery estimates to the customer. 

Cross Border E-Commerce with Whistl

Whistl has a diverse portfolio international parcel shipping solutions to help you to fulfil your customers' delivery expectations. From tracked international parcel deliveries, solutions for imported parcels with customs clearance (for goods coming into the UK), export solutions with duties and taxes paid or unpaid, and even returns solutions, delighting your customers with excellent customer service. 

Tailored delivery management services, helping you mitigate your customers' barriers to cross-border shopping, such as delivery choice and hidden costs.

Find out how Whistl can help

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