For retailers and brands looking to grow their ecommerce business, cross border ecommerce is a natural avenue to pursue given the compelling market opportunity. According to a study by Accenture and AliResearch, global e-retail sales hit $400 billion in 2017 and will increase up to $1 trillion by 2020. The combination of a well-known brand, marketing expertise and a streamlined supply chain will help capture and service demand.
While the magnitude of the opportunity could have a transformative impact on your business, capturing a share of the global ecommerce market can be daunting. Before launching internationally, retailers and brands should first consider the strategic business case for expansion, wrestling with questions like:
- Which target countries should we tackle first?
- How are the shopping habits of those local consumers different?
- What devices, channels, payment options and delivery methods do our target consumers use?
Our experts at Flow will dig deeper on each of those questions in upcoming blog posts. Below is a summary checklist of must-haves to start the journey towards global growth.
1. Authentic Localization
Everything about the consumer experience should feel native to the consumers in the target market. A local consumer experience dramatically increases sales and conversion rates. From the price display to the merchandise offered, the international experience should:
- display in local currency and use rounding to make pricing look local (i.e. round pricing to whole numbers like €60 or endings like €59.99 or €59.95, rather than using straight exchange rate converted prices such as €55.63);
- only offer permitted products by implementing product restrictions by country;
- account for relevant cultural and national preferences that could affect sales (i.e. having the correct support and contact flows); and possibly translate the site to the host country's language (the need for this varies by market, size of the catalog and other factors).
2. Transparent Taxes & Duties
Global consumers may or may not expect to pay taxes and duties. Retailers and brands often find themselves entangled in friction-filled consumer experiences when tax and duty costs weren't explicitly communicated prior to purchase. Knowing and choosing the right ecommerce tax and duty option is critical to setting up consumers for smooth transactions.
There are two options for handling duties:
- Send DDU (Delivery Duty Unpaid): While this option appears cheaper at checkout to the consumer because the duties aren't shown, this approach can create friction post-purchase when consumers receive their final bill for duties. This often manifests into a negative overall experience with the product when consumers receive an unexpected call from customs looking to collect. If unpaid, customs forwards the package to an independent customs broker for duties collection, likely leading to significant additional fees for which the shopper is liable (brokerage fees, storage costs and late payment fees). Best to avoid this scenario whenever possible.
- Send shipments DDP (Delivery Duty Paid): A little more expensive up front to the consumer, but reduces the friction down the road. A good cross border solution, like Flow, offers many different ways to display DDP that don't detract from the consumer experience: either incorporate the DDP fees on the product detail page as part of the price or at checkout. While the price is initially higher for consumers, they will avoid surprises (and be less likely to return the packages) down the road. These fees are also fixed and, thus, significantly cheaper than DDU brokerage fees.
3. Local Payment Methods
Local payment methods can become extremely nuanced. Visa and Mastercard may prove sufficient for U.S. consumers, but each international country has unique preferences retailers should accommodate to support sales.
For example, cash-on-delivery is popular in Japan and Alternative Payment Methods, like WeChat Pay and Alipay, are used by over 60% of shoppers in China. If local payment methods aren't set up on a site, that's more friction for consumers during checkout, and higher potential abandonment rates. Also, if retailers and brands don't set up for payment locally, they'll have much lower acceptance rates and also be charged higher processing fees.
4. International Shipping
Even for retailers with experience managing multiple domestic distribution centers, adding international creates a new complex equation requiring advanced optimization processes. Retailers must evaluate their order fulfillment processes and ensure they not only work globally, but are also efficient globally. They should also integrate with last-mile providers who accommodate local delivery methods. Distance doesn’t have to be disruptive — the right partner can help optimize logistics and delivery timing.
When exploring global shipping options, consider how to implement features like:
- Tiered shipping options, including express delivery (express delivery is hard to offer without a partner like Flow who can ship directly).
- Localized and customized address forms per each country's typical format (another key tip to avoid adding friction at checkout).
5. Easy-to-Use and Scalable Solution
Most ecommerce platforms don't offer the capabilities necessary to start selling cross border at scale. As retailers and brands continue expanding to new countries, they often have to customize these solutions, stretching costs and internal resources. Each new country should have the same quality ecommerce experience — without heavy lifting and significant investment for the retailer.
Some features required to effectively scale (which ecommerce platforms often don't include) are:
- End-to-end localization (from translation to checkout)
- Country-specific discounts and coupons
- Ability to share inventory and manage product restrictions
- International Content Delivery Network (high server capacity for rapid loading)
- Robust international payment and shipping integrations
- End-to-end integration (your solution should be the hub connecting carriers, 3PL partners, etc. while monitoring and optimizing each local experience)
- Risk management and regulation
- Self-service testing and analytics
Strategizing with a partner around these five core elements at the outset is well worth the time and investment. Choosing a solution like Flow means retailers and brands won't be slowed down while managing the minutiae of international ecommerce, but rather, can stay focused on providing fully localized, fully branded global experiences.
