What are the Challenges of X-border E-commerce?
by Raghav Raaz
At first you set up a web store just to see if it’s really a way to make a living and avoid traditional office routine. After a while the business grows, brings more sales and revenue. At this point a lot of ambitious e-commerce merchants decide that selling products on the local market is not enough. They want to expand the business overseas and attract buyers from all around the world.
However, trading worldwide inevitably causes a number of difficulties which every e-commerce enterprise has to face. The major challenges are examined in this article.
The differences among national laws greatly affect e-commerce and require retailers to adjust their operations and policies from country to country, thereby creating multiple obstacles for borderless business.
- Inconsistency: the laws and regulations regarding international trading in general and e-commerce in particular tend to change repeatedly, so online merchants have to keep a close eye on taxes and fees. Hiring an attorney to help you develop and maintain the legal environment is really a good idea.
- Limitations to sale: each country has a specific set of dos and don’ts regarding of what and to whom you sell. Even a webstore has to meet those requirements; so before entering a new market you need to make sure that your goods are approved for sale.
- Strength of legal framework: just living up to the local laws might not be enough. You should have the resources to defend your rights in courts when the need arises. The judicial process in some countries is rather slow and complicated. You shouldn’t expand the business to foreign countries until you are confident that you’ll be able to speak up for yourself.
- Domestic incorporation: many countries treat domestic enterprises differently from those incorporated abroad. Therefore, if you think that a certain country is one of your key markets and trading there is crucial for your webstore, consider local incorporation.
Payment Methods and Services
Seamless payment processing is a must for any online retailer, but that’s especially true for an international sellers. Credit cards remain a preferred payment method for the majority of customers from anywhere in the world, accounting for over 50% of all non-cash payment transactions. But the alternative payment methods become increasingly popular. As a store owner, you have a variety of options:
- prepaid solutions;
- online banking;
- cash on delivery.
China, Brazil and Germany, as wide global markets, can be good examples of how differently payment processing is handled in different countries.
So in China, only 1% of buyers pay with their credit cards. An online payment system named Alipay provides more than 50% of online transactions with over 15 million operations per day.
Brazilians tend to rely on cash more than anything. Boleto Bancário bank provides an opportunity to pay for goods via online banking, ATMs or in person the nearest branch of the bank.
Let’s wrap it all up in a simple statement: an online merchant needs to research the potential market, re-calculate prices and place them on a website in local currency, and quickly adopt payment mechanisms that clients are familiar with. That’s the winning strategy!
Logistics and Reverse Logistics
If you are selling something other than downloadable products, you will need to establish a strong logistics process. Smooth logistics is a huge competitive advantage for both online and offline sellers. Rather high costs of global logistics often become a pain point for worldwide businesses. Honestly speaking, there is only one way to go around it: search for partners and third parties that will do the job in a professional manner and at the same time wouldn’t force you to cut the bottom line too much.
But it’s not just about the expenses. Predictability and reliability are crucially important. Some e-retailers think that there role ends when products are delivered to a logistics company. That’s a failing approach. Clients expect you to ensure that the purchased goods will reach their doorstep. Nowadays customer experience is the king, so if you want to take your niche on the global market, make your logistics even better than local stores can provide.
Reverse logistics is even more complex. On the stage of planning your cross-border business, you need to make sure you’ll be able to deal with customs documentations and procedures, cover the costs and provide reverse logistics for international buyers.
Selling abroad usually means translating your website and getting a multilingual customer service. Well-known international companies which have already built up strong brand recognition attract buyers from all over the place just by offering a unified .com version of their website in English. For smaller e-commerce players going abroad includes translating a Webstore, product descriptions, a bunch of marketing materials, all consumer communication, and more importantly, offering customer service in the native language of the new target market.
Making your store multilingual is a tough task, but all your efforts will be rewarded by customers’ appreciation, higher conversions and improved search engine ranking.
Opportunity Equals Challenge
Think globally – act locally. Strat taking your business to the international level today: study the target market, learn about the rules and regulations, adopt currency and financial systems, create delivery infrastructure, and search for the common language with your customers. It’s a lot of work, but the result is totally worth it!