For businesses around the world, the rise in cross-border Ecommerce brings exciting opportunities to reach new customers and expand into new online markets.
In this guide, we’ll look at the value, growth and importance of Ecommerce to international trade – and explore some of the hurdles you may face when exporting your products or services abroad. Plus we’ll reveal the top countries to sell to online, tips for successful cross-border logistics, and ways Market Finder can help you take that all-important first step.
Cross border Ecommerce
The value of cross-border Ecommerce has been predicted to grow by 25% a year – almost twice as fast as domestic Ecommerce. In 2020, 1 in every 5 Ecommerce dollars will be generated via cross-border trade – and it’s not only the big players that can benefit: retailers and manufacturers of all shapes and sizes can access the benefits that international Ecommerce brings.
Before we consider those in detail, let’s get a quick recap of the basics.
What is cross-border commerce?
It’s simply the process of selling products or services via an Ecommerce website to buyers overseas. You can be a traditional brick and mortar store or purely an online business – what matters is that you’re reaching international customers in the international markets. It’s worth bearing in mind though, that while the concept is fairly straightforward, being able to tap into new mindsets abroad and persuade folks to try your products or services is no easy task. Tastes, cultures, competition and even attitudes to buying from foreigners vary in each country, so you’ll need to plan carefully before diving in.
The Cross-border Ecommerce market
Let’s take a closer look at cross-border Ecommerce market sizes and likely trends.
According to a report by Zion Research, the total value of all global cross-border Ecommerce hit $562.1 billion in 2018, and is expected to reach over $4 trillion by 2027 – increasing at a CAGR (compound annual growth rate) of 27.4%.
What’s driving this extraordinary growth? The creation of both the China Free Trade Area and European Free Trade Agreement – combined with new Ecommerce technologies making cross-border trade easier and cheaper – have certainly played key roles.
In the US especially, the rise in smartphones and internet use have strengthened the B2C online market, and Europe’s contribution is also expected to remain strong due to the growth in online buyers.
Importance of Ecommerce in international trade
The role of Ecommerce in international trade cannot be overestimated. The advantages it brings have transformed the way buyers and sellers do business, and Ecommerce will soon be the largest online market in the world.
Speed and efficiency are just two factors fueling this growth. For example, unlike traditional commerce, both the order and payment are typically made within minutes of each other, followed by a clear paper trail. Selling online also removes costly middlemen and the need for sellers to keep printing and updating marketing materials like posters, leaflets and banners. And, of course, Ecommerce’s inherent ability to quickly reach new customers around the world make it an irresistible proposition for firms looking to expand their business.
Cross-border Ecommerce growth
According to DHL, cross-border Ecommerce is growing almost twice as fast as domestic commerce. In 2020, it’s predicted to account for £900bn GMV (Gross Merchandise Volume), or 22% of the global Ecommerce market.
A recent study of apparel shoppers across 11 countries revealed that over two-thirds (67%) of them had purchased something from abroad in the last 12 months. This speed of Ecommerce growth worldwide is perhaps best reflected by looking at the high levels of Ecommerce spend per capita around the world. Top of the table is the UK, with an average $4,201 for each person – followed by the US ($3,428), South Korea ($2,591), France ($1,946) and China ($1,855).
International Ecommerce issues
While the commercial benefits of cross-border Ecommerce are significant, there are however many challenges which businesses must overcome in order to reap the rewards.
1. Language barriers:
75% of consumers prefer buying products from websites in their native language, and 59% rarely or never buy from English-only sites. As such, while shoppers may have their browsers set to English, it may not be enough to convince them to buy from you.
2. Culture interpretation:
Translating words is one thing...but ensuring they retain the same meaning and context is something else entirely. For example, the English word ‘gift’ translates as ‘poison’ in Germany – whereas in Denmark, Norway and Sweden it means ‘married’.
3. Internet speed:
Fast internet speeds in your domestic market mean customers can quickly and easily buy from you. But new users abroad may have slower connections, and this could impact your conversion rates.
4. Customer support:
You’ll also need to scale and adapt your customer support for each new region, more so if your product needs assembling or a high degree of ongoing support or servicing. For example, instruction manuals may need to be carefully translated, and any live support you offer will need to be in the native language. Monitoring the effectiveness of your FAQ pages and site search queries could reveal useful insights about what your customers need from you.
5. Payment preferences:
After converting your prices to local currencies, you’ll also need to offer payment methods your customers trust and feel comfortable with. While credit cards may be the norm back home, more popular methods could exist in your new market – and failing to recognize this could cost you dearly.
International legislation in Ecommerce
International Ecommerce legislation changes all the time, so it’s important to keep an eye on things.
In Europe alone, there are a number of mandatory obligations you’ll need to meet, including:
For example, your website must tell visitors how electronic documents containing information on the provider, client, products and/or services will be stored.
Within 24 hours, your Ecommerce site must also notify new clients or customers of any purchases they have made.
By law, your customers have 14 calendar days to change their minds and withdraw from the contract to purchase. If your website doesn’t clearly state this right, the period extends to 12 months.
You’ll need to inform users of your cookies policy – and that cookies are being used whenever they visit or buy from your site.
If your site gathers information from users (via registration, contact forms, etc), you are obliged to inform them. You’ll also need to tell them where their data is being registered and which management tools they use for future access, modifications or cancellations.
Cross-border Ecommerce logistics
A critical success factor for your cross-border Ecommerce plan will be ensuring you have a watertight international Ecommerce logistics strategy in place. That can be easier said than done, not least because cross-border parcel delivery has many more moving parts than domestic services – with multiple handoffs between shipping partners and customs making it tricky to give shoppers accurate delivery dates.
Here are a few tips that could save you a few headaches along the way:
1. Be transparent with customers:
Delays and missed deadlines will impact customer satisfaction and retention rates, so be realistic and set the right expectations around likely delivery times.
Also, does your logistics back-end provide detailed reporting of multiple carriers? Each one will have its own way of mapping and displaying tracking events, so make sure your customers can log in to see a joined-up view of the situation.
Having this level of detail on each of your carriers also helps you monitor their performance. That’s especially important when you consider that questions about order delivery status make up 30% of all incoming customer service inquiries.
2. Follow the rules:
Your new markets will probably have a range of different shipping rules and regulations you’ll need to follow, so it’s important to do your homework and stay on top of them. There may also be legal, financial, security, and data laws you’ll need to comply with.
For example, you’ll need a papertrail for each order – covering its value, shipping details, and the customer’s details. These documents should then be given to the courier/driver for use in the customs clearance process.
With tax regulations too, check local and government policies to ensure your customers don’t get a surprise bill in the mail.
3. Speak the customer’s language:
87% of consumers not fluent in English refuse to buy from English-only websites. You need to make sure your product pages are translated, along with any tracking or shipping pages your customers will visit.
International Ecommerce strategy
Next, let’s look at a few international Ecommerce statistics to bear in mind when it comes to creating your Ecommerce strategy.
76% of shoppers prefer free shipping rather than fast shipping.
60% of online purchases happen on Ecommerce marketplaces like Amazon or eBay.
40% of online purchases occur on retail sites.
61% of the time, online shoppers know the brand they want – and when they do, they shop mainly on retail websites.
35% of online consumers go shopping daily or weekly.
91% of shoppers will abandon retail sites if they don’t offer fast or free shipping.
51% of millennials use one or more subscription box service.
49% of shoppers prioritize ‘free and easy returns’.
61% are disappointed by their most recent holiday shopping experience.
Best countries to sell online
With a whole world of new customers to choose from, it can be tricky knowing which regions to focus on first. To identify best countries to sell online, let’s start by looking at the biggest Ecommerce markets in the world right now, and which areas are set to grow.
With an annual Ecommerce spend of $740 billion, China leads the field – way ahead of the US ($561 billion), the UK ($93 billion), Japan ($87), South Korea ($69 billion), France ($55 billion) and Canada ($44 billion).
Looking ahead to 2023, China sets the pace again, with projected growth of more than 70% – versus 44-45% for the US, France, Australia and Russia.
Impact of Ecommerce on international trade
The impacts of Ecommerce on international trade have been felt far and wide. Let’s explore a few of them.
Growth of small businesses:
Smaller firms are also tapping into the opportunities of cross-border Ecommerce by reaching more customers. In fact, research shows that 2 in 10 small businesses have grown their Ecommerce presence over the last 2 years, and more than 10% plan to increase their efforts.
Evolving supply chains:
Behind the scenes, supply chains are having to adapt to shorter product life cycles. Manufacturers are offering deeper product ranges to tackle price erosion, so warehouse operators must handle greater volumes of stock entering and leaving their premises each day.
The jobs market:
Cross-border Ecommerce is also affecting the jobs market, in both positive and negative ways. While the number of Ecommerce-related jobs has doubled in the last 2 years, there’s been a noteworthy drop in retail positions.
The role of social media:
Finally, when it comes to sell online, there’s the impact of social media. With consumers increasingly relying on friends and peers on Facebook, Twitter, and Instagram to shape their purchasing decisions, trust is having an increasingly important role to play – and brands are having to find new ways to navigate this.
For more information on the cross-border ecommerce opportunities for your business and best markets to sell online to, visit the Market Finder website. Along with guides and tips for new exporters, you’ll also discover which foreign markets are right for your products or services, and gain valuable insights into everything from disposable incomes to search volumes and ease of doing business.