Cross – Border E-Commerce represents a driving force, of the global marketplace, with cross-border shoppers spending approximately twice as much as consumers who only shop domestically. The finding is based on a research study on the online and cross-border shopping habits of many consumers from a large no of countries.
Various agencies have to work in tandem to smooth the path of cross-border ecommerce. The problem arises from the fact that each of these parties has a different level of understanding, motivation, and sense of urgency.
However, it is possible to overcome the challenges once you understand them. Most hurdles can be divided into the following major categories –
- Inconsistency: Business requires the bare minimum consistency in regulation. But the challenges that ecommerce is throwing at regulators is causing them to repeatedly change their mind. Even in developed countries, such as the U.S., there is debate about the applicability of state taxes on ecommerce transactions, so you can imagine the inconsistency of legal and tax regulations in less developed countries.
- Domestic incorporation: Many countries treat their domestic companies quite differently from those incorporated abroad. So if you are serious about selling to customers in a specific country, you may have to incorporate locally to take advantage of this situation.
- Legal restrictions to sale: Every country has its unique set of dos and don’ts about what products can be sold to whom. Most countries consider transactions entered into by minors as unenforceable, but the exact age of legal adulthood varies by country. Similarly, several categories of products like – food, alcohol, weapons, and antiques, among others – have specific requirements. If you are shipping goods from a country that does not meet their regulations, you could be in violation of local laws in the customer’s country.
- Lack of proper legal frameworks: Several countries around the world have a rather weak legal framework. Even where the framework is sound, there is often a huge issue with delays in the judicial process. So, while an ecommerce player selling to another country will be bound to live up to the regulations of that country.
- Payment Methods and Processing: A robust payment processing system is absolutely necessary for ecommerce. Preferred payment mechanisms vary across the world, so you need to research your potential market before you make assumptions about your payment system. You will need to accept payment in the method that the customer prefers. Other than credit cards, there is no other truly global payment method.
Logistics and Reverse Logistics
Except for selling digital downloads, you have to develop a strong logistics process. Effective logistics has repeatedly proven to be a strong competitive advantage for online, as well as offline, retailers. The costs associated with cross-border logistics can be the tipping point for your ecommerce business.
It is not just about the costs. It is about reliability and predictability. You may have a logistic provider but customers believe that you are responsible for ensuring that the product reaches them. And if your delivery logistics are complex you can imagine the complexity of reverse logistics. Given the costs, customs duties, and documentation, many ecommerce players may not be able to provide reverse logistics in cross-border situations.
The business’s own readiness for selling abroad is equally important. Right from an appreciation of local tastes to sensitivity for cultural factors, you must develop a deep understanding of every market you intend to tap.
From the smallest e-commerce merchant to the largest big box chains, retailers of all sizes and from all countries are starting to recognize the significant global e-commerce opportunity.
Despite the list of challenges mentioned above, cross-border e-commerce presents huge business potential in growing economies around the world. A judicious approach will certainly help you to enjoy the benefits of cross-border e-commerce.