Cross-Border Ecommerce comes with its Risks and Benefits

Ecommerce is now bigger than ever before. In the US alone it is estimated that more than 80% of people have made a purchase online at some point in time. Online shopping is expected to cross $1.5 trillion worldwide. This makes it one of the fastest growing markets. Statistics indicate that more than 70% of shoppers prefer to shop online because they are looking for good deals. Following closely behind is mobile commerce. Mobile app usage has increased by more than 44% in the last few years.

What makes e-commerce even more interesting is its ability to facilitate cross border trade. As anyone can access your internet websites or your facebook stores, you have the potential to receive an order from any part of the world. Cross border ecommerce is becoming increasingly streamlined and it is believed to account for $ 14 trillion in sales in the last year alone. Selling abroad is becoming very popular. Business usually tie up with third party providers in other countries to ship their products. Online retailers like eBay and Amazon are shining examples of the extent of cross border ecommerce possible in today’s times.

Defining Cross Border Ecommerce

So what exactly is cross border ecommerce? When online retailers sell their products or services to customers located in other countries, it is referred to as international ecommerce or cross border ecommerce. This means that in all probability, customers would pay in a different currency. The product purchased is then shipped across geographies to its destination. So cross border ecommerce is basically trade across borders in the online world.

Advantages

One of the biggest advantages of cross border ecommerce is that online businesses get access to new customers and new markets across the world. It becomes easier to find and build markets for your products. It also opens up the possibility of customizing your product to suit different markets.

Challenges

There are several challenges that online businesses face, when they venture out into global markets. It is often a good idea to partner with a provider in the buyer’s country to facilitate delivery of goods and also provide customer support. It is very important to understand local laws, rules and regulations. Also some understanding of local culture can go a long way in building a good customer relationship as culture influences customer preferences and expectations while making purchases. Sellers will also need to work out a good model for shipment and delivery so as to remain cost effective. There could be several duties and taxes involved in cross border ecommerce which you will need to factor into the price of your product.

In case your goods have a limited shelf life, then this makes the inventory, shipment and delivery process even more complex. Packaging requirements could also vary by country. Hence, you need to understand the market requirements and do a thorough cost benefit analysis before venturing into the global market. You will also need to identify the growth potential for your online business when you enter a new country. Is it worth the overheads and what are the risks involved?

Thus, expanding into international markets comes with its own set of risks but with a good strategy and risk mitigation plan in place you can build new markets for your products and services.