Checklist: What It Takes To Be Part Of The $300bn Cross-border Ecommerce Industry
In the recent PayPal-Nielsen survey on the top 6 cross-border e-commerce markets in the world (USA, UK, Germany, Australia, China and Brazil). They found that there will be 94 million cross-border shoppers in total across these six markets. Together they will spend a total of $105 billion in 2015 (which is 16% of all online shopping). By 2018, there will be 130 million of them, spending nearly three times as much, up to $307 billion, five years from now.
Clothing, shoes and accessories represent the largest cross-border online shopping category in five out of the six markets. However, Brazilian shoppers were found to buy more computer hardware than anything else. Similarly, Australians value free shipping over quality and variety when it comes to their cross-border purchases.
Survey also found that 7 out of 10 consumers in all six markets cited fear of identity theft and fraud as the top reason for not making a cross-border transaction, with Australia the most fearful and Germany the least. Nine out of ten consumers on average also place great importance on having buyer protection for their overseas purchases. Interestingly, shoppers in the emerging markets of China and Brazil proved particularly keen to be protected, showing that a perceived lack of security can be a far bigger barrier to a purchase than any country border.
Shopper Segments As Per PayPal- Nielsen Survey
Fearless Adventurers: They like to be different and are always on the hunt for new overseas websites. Love shopping on their mobile devices and are happy to pay more for unique items not available locally.
Efficient Explorers: Busy people, so convenience is very important. Mostly buy from overseas sellers whom they know and trust, and will spend a lot for an online purchase, like entertainment or air tickets.
Value Voyagers: Love shopping and keeping track of the latest trends. Check and compare overseas purchases using their favourite online tools to ensure they find the best quality and good value products.
Safety Seekers: Shop online more for leisure, but like the variety and brands found on overseas websites. Careful about what they buy and only shop from trusted online sellers or those with a return policy.
Deal Hunters: Don’t shop online very often and when they do, they mostly buy from their own country’s websites. But if they spot a bargain or lower price on overseas websites, they will snap it up.
Cross-border Readiness Checklist
If you are planning to concentrate on multiple markets. It is recommended that your e-commerce platform or e-commerce marketplace have a multi-site capability. This will allow you to manage multiple websites from one admin dashboard. For example, you could have a site ‘example.com.au’ specifically for Australia, this can have goods and content targeting Australian customers. Similarly, you can have a site ‘example.cn’ with language and products targeting Chinese customers. Both these sites can be managed from a single backend.
Before launching any website for a particular market you should be well aware of the language and culture in that market. By the word ‘Language’ it is not just about Chinese or Japanese, it can be variations in English as well. Certain words can be offensive in certain markets so the words should be carefully chosen. The eCommerce platform you choose should be capable of easy language customisation. It is recommended not to use Google Translator since there are chances of misinterpretations.
As found in the PayPal-Nelson survey, security is one of the main concern that should be considered in cross-border e-commerce. It is recommended to have the payment methods commonly preferred by the users in the market(s) you are planning to serve. The e-commerce platform should be capable of managing COD, accepting multiple debit/credit cards and integrating multiple payment methods like PayPal, eWAY, online banking etc.
As you know the kind of currency used obviously varies between countries. However, it is very important that your e-commerce platform is capable of handling the currency exchange rates so that you won’t run into a loss. The platform should be equipped with an API which automatically updates the currency rates and should have a facility to manually edit them as well.
Tax rates vary based on country or even locations within the country. E-commerce platforms should have the ability to calculate tax based on the shipping address provided by the user. To facilitate this, the platform should have the ability to create geo-zones and assign tax to them. The platform should also have the facility to classify tax so that it becomes easy to assign them while adding the products.
As revealed in the PayPal-Nelson survey, trust is a critical factor in cross-border e-commerce. The sites should try to use efficient delivery service and provide insurance options as optional. The e-commerce platform should be capable of handle multiple shipping configurations like fixed charge, percentage, charged per order/item etc. apart from the capability of integrating third-party shipping API’s. If you are planning to have BOPUS (Buy Online Pickup in Store) facility the platform should have a facility to configure collection points.
For e-commerce marketplaces, It is recommended to have the facility for creating delivery zones which enable you to charge differently based on the delivery date entered by the user. Delivery zones also help e-commerce marketplaces to give priority for sellers in the buy box based on the location of their warehouses.