You know what we’re going to be talking about a year from now? How 2020 was the year that cross-border eCommerce passed the $1 trillion mark.
Any way you cut it, that’s a lot of commerce. But Alibaba, among others, is already predicting that cross-border sales will come within striking distance of 13 digits, giving optimists every reason to believe the trillion-dollar milestone will be reached.
And you’re safe to assume that for the foreseeable future cross-border is headed in only one direction — up and to the right. By 2022, UPS says, one in every five dollars spent online will be spent on a cross-border purchase.
So, it’s all good when it comes to cross-border commerce, right? Well, not exactly, or we wouldn’t be writing an entire blog post about it.
2020 will come with challenges when it comes to retailers expanding into international markets. The world, you see, is a complicated place. There is Brexit, or the constant anxiety over Brexit, in the United Kingdom and much of Europe. There is the U.S. vs. China trade war and the resulting tariffs, which affect the cost of goods and could complicate shipping and customs. The European Union is recalibrating its value-added tax and it’s implemented new customer authentication requirements for eCommerce that will have a limited direct effect on U.S. eCommerce businesses, but which could dampen the industry as a whole.
But here’s the thing about expanding into international markets and taking advantage of cross-border commerce: Like so much in life, you can’t sit still waiting for the perfect time. eCommerce is the fastest-growing segment in retail and cross-border is the fastest-growing segment in eCommerce.
By 2020, 451 Research says, digital consumers will spend $5.8 trillion online, up from about $2.9 trillion in 2018. That growth rate is about six times the growth of in-store sales. And an increasing portion of that online spending will represent cross-border purchases.
Trade relations, regulations, regional and global economies are all subject to change. Succeeding in a rapidly shifting environment takes agility and nerves of steel, but as a retailer, you’re used to that. Are changing world conditions all that different from the rapid shifts in fads, trends and consumer preferences in everything from how to shop, where to shop, when to shop and how to pay?
So, the time to consider international expansion is now. Moving into new foreign markets is not for every retailer and certainly not for every retailer at every stage of maturity. But by taking a thoughtful approach to deciding whether or not to make the move is a worthwhile pursuit. Here’s one framework we put together:
1. Start at the beginning.
What international markets make sense for your enterprise and the products you sell? Consider analyzing your own data to see whether international consumers have already been finding your site and purchasing from you. Are there helpful patterns in that data? Would digital sites tailored to those countries, and concerted marketing efforts, allow you to capitalize on that head start?
2. Study up on shipping and logistics.
Shipping internationally can be both expensive and confounding. Work your network to find retailers and vendors with experience shipping globally. Be transparent on your site about any additional shipping fees or taxes an international buyer might have to pay.
3. Understand culture and consumer preferences.
Consumers like to shop in their own languages. Localizing your sites is a key to success. While there may be exceptions, selling in your customers’ native languages builds trust and — of course — avoids misunderstandings. Also, consider whether what you sell and the way you sell it are culturally appropriate, or whether a different approach is required.
4. Offer consumer-friendly payment options.
No seller in China, for instance, would neglect to offer payment through AliPay and WeChat, while in the U.S. those payment options are relatively rare — for now. In some countries, credit cards are the predominant way to pay. Consumers in other countries are more comfortable with cash on delivery or invoices. Providing familiar ways to pay removes a huge barrier to conversion.
5. Know a geography’s fraud footprint.
Moving into new markets means selling to customers that you have never seen before. Fraud trends and the availability of data to protect retailers from fraud vary from country to country. Partners such as Signifyd can help, given that it processes millions of transactions on its Commerce Protection Platform and has likely seen before customers that cross-border merchants are seeing for the first time.
6. Consider getting professional help.
No, you’re not crazy for considering a global expansion plan, but you might seek out experienced partners. A vibrant infrastructure of vendors has grown up around cross-border commerce. They have helped retailers analyze markets, build and design websites, sift through local customs and languages, orchestrate shipping and logistics, deploy proper payment options and roll out fraud protection that maximizes orders shipped and minimizes orders declined.
So, yes. 2020 is likely to be interesting in the way that the unknown is interesting when it comes to cross-border commerce. The one certainty, of course, is that it will continue to expand and that it will continue to provide one of the best opportunities for retailers to grow in the coming year.
If you’d like to learn more about cross-border markets, you can check out Signifyd’s e-book, “International Retail Opportunities: We Look at the Top Nine Countries for Lucrative Online Retail Opportunities.”
This blog was authored by our partners at Signifyd. They enable fearless commerce by providing an end-to-end Commerce Protection Platform. Powered by the Signifyd Commerce Network, their advanced machine learning engine protects merchants from fraud, consumer abuse and revenue loss caused by barriers and friction in the buying experience.
To learn more about Signifyd or to talk with one our eCommerce Consultants about your plans for International Expansion, contact us today!