International E-Commerce Global Expansion
The most noteworthy frequency of cross-line customers, as per our examination report, was in Australia (89%), Canada (87%), France (81%) and Germany (77%). The greater part of the different nations surveyed, including the UK, China, and the US, were above and beyond 60%. With the pandemic powering internet business development, the cross-line shopping pattern is not easing back down and keeps on acquiring footing and developing.
International E-commerce Various variables are affecting this development. The worldwide idea of search and the expanding utilization of web search tools work with the disclosure of new brands and online retailers. The versatile entrance has likewise had an effect in assisting with driving cross-line purchases.
Mobile trade sales are projected to show a 25% development in 2020 more than in 2019, with extra development in 2021. An ever-increasing number of worldwide customers are additionally shopping employing cell phones, and the chance in m-business is showing noteworthy development. Through versatile, more shoppers approach web-based media stages. With the new worldwide pandemic and isolated rules, social shopping has become even more inescapable among consumers, which is the reason it provides a mainstream channel for some retailers to reach their worldwide client base.
Assessed E-trade Sales as a Percent of Total Retail Sales
In India, for instance, web-based businesses have discovered colossal potential: Customers burned through $38.5 billion in 2017. With $64 billion anticipated for 2020 and $200 billion in conjecture for 2026. Less than 65 percent of the populace is web-based, which means this market is a long way from cresting: Internet infiltration is scheduled to double by 2021. As a result, the India Brand Equity Foundation projects India’s internet business industry will outperform that of the United States by 2034, turning into the second biggest on the planet after China. In 2017, Chinese customers spent more than $1 trillion online — and on internet businesses first.
Online retailers are presently confronting their most prominent possibility in industry history to extend globally, particularly as the development of these individual business sectors is straightforwardly associated with beneficial freedoms in cross-line e-commerce itself. While Stat Trade Times calls cross-boundary web-based business “the new development in popular expression ticking the world,” there’s something else entirely to this pattern than talk: It’s scheduled to grow at twice the pace of the domestic economy through 2020. Forty percent of non-U.S. customers have made online purchases from an unfamiliar webpage, with cross-line buys averaging higher than homegrown. Worldwide e-retailers are currently developing 1.3 times more rapidly than single-country locales.
What’s International E-Commerce?
Global internet business is the matter of selling an item through an online business site to purchasers in other nations. As the expansion of computerized apparatuses expands web accessibility around the world, any organization can sell web-based, making global internet business simpler than at any other time for both unadulterated play organizations and brick and mortars. For conventional retailers, an online business can likewise fill in as a proving ground to decide if new, unfamiliar business sectors will be fruitful before opening an actual area there.
While it’s enticing for online business experts to accept venture into a country with a comparative culture will require less work, “worldwide” is critical. Regardless of how much nations share practically speaking, everyone is unique. Canada is not the United States, Belgium isn’t France. Each worldwide market merits its systematic arranging and thought.
Four Areas to Investigate and Look For Before International E-commerce Expansion
Regardless of monetary speculation, constructing a worldwide internet business presence requires exertion. That is the reason advertisers, coordination experts, and others should guarantee the circumstance is correct. How would you know if the business is prepared?
1# Start With Activities
Workers ought to either have worldwide experience as of now or gain some new useful knowledge. If they aren’t, consider recruiting new staff or moving certain people into homegrown jobs. From a monetary stance, it is suggested that businesses with worldwide desires cut out global advertising spending separate from their homegrown showcasing financial plan—relying upon by and large development system and economic situations.
2# Gauge Item Interest with A Worldwide Stockpile
Google Insights and comparative SEO estimation apparatuses can follow how frequently shoppers look for specific things as well as measure existing undiscovered traffic to your site. High transformation rates and additionally normal request esteem from a specific area are solid pointers also. Moreover, look at worldwide web-based business calculations that action which items purchasers in the objective nation are accustomed to purchasing on the web: For example, 47 percent of India’s online spend goes toward hardware, the country’s most popular online business category.
Yet, in China, garments, and paper towels are hot ticket things, selling preferable online over in-store: Digital Commerce 360 reports these and other “substantial things” make up 28% of the country’s web-based business deals.
3# Search For A Serious Vacuum
In non-industrial nations, new business sectors show sharp expansions in the number of customers utilizing portable to go on the web. Previously, customary retailers tragically ignored these business sectors instead of zeroing in only on development in business sectors with set up, actual activities. Indeed, even in their nations, they neglected to see internet business’ latent capacity, making it harder to later acquire market share.
For instance, in Belgium, for instance, German, French, and Dutch organizations have bigger portions of the overall industry than Belgian retailers for this very reason: domestic organizations were too focused on blocks and cement while unfamiliar contenders took advantage of the online lucky break. Worldwide online business permits more modest, more light-footed organizations to enter developing business sectors and build themselves up right on time as market pioneers.
4# Decide The Extent Of The Extension
4. D4. Decide that the world’s economic development is normally a lot simpler for internet business activities than for blocks and concrete. Will the organization have to open actual areas? Or then again, does worldwide development essentially mean adjusting website architecture, installation, and delivery for worldwide customers? Likewise, with some other drives, the better the organization characterizes its needs, the more likely it will succeed. Choose from the beginning what the worldwide extension resembles for your business.
While some argue that having a website automatically makes a company international, successful cross-border e-commerce requires more careful planning. Going global is far more complicated than simply converting the company’s books from USD to GBP. Many foreign countries, like the United States, have culturally distinct regions with distinct product and marketing preferences. Retailers should think about tailoring their sales, marketing, and customer service efforts to these specific markets as needed. This is especially important in multilingual countries such as Canada, Belgium, and Luxembourg.
Aside from cultural and linguistic differences, retailers must plan for national or regional payment options, variations in local legal regulations, the necessary taxes and duties, and global economic shifts. This information is critical in determining which country provides the best opportunities for growth for you. Canada, Mexico, and Europe have long been traditional early markets for U.S.-based retailers, but as the European Union experiences economic slowdowns, the fastest growing e-commerce opportunities are in India and China.
Management should determine the current market opportunity, project realistic market saturation, consider local pricing and payment methods, evaluate area shipping options, and anticipate all landed costs before entering any new country. Any early international e-commerce strategy should begin here, then move on to areas that are unique to the business.
6 Things to Consider Before Starting a Cross-Border Business
Despite their differences, localization and translation are frequently used interchangeably. Translation is the process of converting one written language into another, whereas localization is the process of adapting everything else for the local audience, including logos, website images, colors, and any other non-linguistic elements that affect sales. This includes ensuring that local payment and shipping options are available, that items are culturally appropriate for the target market, and that times, dates, and prices are displayed correctly in local formats (for example, 14:40 instead of 2:40 pm). Time zones are also important because they can result in the company and the customer having two different purchase dates.
Address forms should also be optimized for international use. While zip codes are required in the United States, many other countries do not have them. When they do, the format changes: In China, for example, postal codes are six digits long. They are alphanumeric in Canada, Ireland, and the United Kingdom. This field must be open and non-required for international customers to complete checkout, or completely adapted for different markets.
Localization is most effective when combined with translation. The US Department of Commerce International Trade Association reports on its site that customers spend twice as much time on a translated site and that translating purchasing instructions lowers customer service costs.
Translation, Commerce continues, “allows the company to be multilingual and culturally sensitive without the need for extensive redesign.” Localization and internationalization must be incorporated into an online exporter’s corporate strategy for website and business development.” A fully optimized site will use IP sniffing or other geolocate features to determine which country the user is in and then display the appropriate language for that locale. Avoid asking users to select their language by clicking on flags, as this may offend some customers.
Consider Taiwan, an independent country that is still claimed by China. People who live there speak Chinese, but they may object to having to choose the Chinese flag to identify their language.
Because shopping holidays are often country-specific, sales and promotions may also need to be adjusted. Green Monday, the first Monday in December, is, for example, a German version of Black Friday. Sint-Maarten is a popular shopping destination in Belgium on November 11th. Buen Fin, Mexico’s November shopping season, lasts an entire weekend.
Psychological pricing is essential even in the United States. According to the Harvard Business Review, customer perception of price is just as important as price itself. It is even more critical in other countries: Price is the number one reason that 68 percent of global consumers shop on cross-border sites. Marketers’ cultural triggers for subliminally connecting with customers must vary by country. Norwegian and Australian consumers, like Americans, prefer prices that end in a nine (for example, $15.99). Items sell better in China, Hong Kong, Japan, India, Brazil, and Argentina when the price ends in a zero ($16.00).
Currency conversion can complicate pricing even further. Exchange rate fluctuations could mean the difference between a profitable sales strategy and one that fails. As a result, the majority of e-commerce marketers sell items at fixed prices to ensure that their customers are not charged more once the item ships.
Keeping prices in USD, on the other hand, may result in missed opportunities and lower conversion rates. According to 15% of British retailers, customers abandon carts when prices are not displayed in pound sterling.
Consider whether or not display pricing should include tax. Customers in the United States understand that sticker prices are not all-inclusive and anticipate a higher checkout total as a result. This is also common in Canada, where, depending on the region, national goods and services tax (GST), provincial sales tax (PST), and/or harmonized sales tax (HST) can be added at the point of purchase. But in France, the United Kingdom, and other countries, often tax is already included. Adding the amount later may give the impression that your company is nickel and diming its customers. This might backfire: Customers upset with unexpected charges at checkout account for 16% of all cart abandonment in the United Kingdom, according to retailers.
3. Landed Costs
Landed costs in e-commerce are the fees retailers pay for a product to ‘land’ at the customer’s door. This includes taxes, duties, currency exchange fees, customs, tariffs, insurance premiums, shipping and handling charges, and payment processing fees; however, it excludes the cost of manufacturing (or acquiring) the actual product for resellers.
Landed costs in foreign countries can be unexpectedly higher. The average ship rate for sending an American product to Canada, for example, is approximately 25% lower than domestic, but the total landed cost is approximately 125 percent higher. Duty can work in a retailer’s favor in other countries: A 1000 AUD duty threshold and limited local supply make US sites more affordable in Australia. To keep offerings price competitive, compare an item’s effective cost to locally purchased products.
Accepting credit cards is a given in e-commerce, with credit or debit cards accounting for 72 percent of all online transactions. While PayPal is popular on mobile, where nearly a third of its payment volume occurs, it accounts for only 12% of online transactions.
If a business does not accept credit cards in the United States, it may as well not exist. When you go global, e-commerce becomes a completely different story. Sixty-one percent of American shoppers have two or more credit cards, compared to 19 percent in Mexico, where Visa is the most popular card. The situation is even more startling in Southeast Asia: According to payment gateway provider Ayden, only 15% of the population has a credit or debit card, in part because less than a fourth of residents have a bank account. In Kenya, cash accounts for 94% of all transactions.
How will customers be charged? Despite low banking penetration, electronic transfer accounts for half of Malaysian e-commerce transactions. There’s always cash-on-delivery (COD), which can be tricky logistically. Indonesia has developed its own version of COD, with customers printing their e-commerce cart, then taking the print-out to Alfamart, Alfamidi, or another convenience store, where they pay the store to finish the transaction. E-wallets such as GCash and SmartMoney are popular in the Philippines, and some countries have a small but growing number of cryptocurrency users.
This does not only apply to developing countries: According to 29 percent of British retailers, cart abandonment is caused by a lack of payment options. The best solution for your customers’ needs will differ depending on where they live. Even if businesses do limit payment to credit cards, the question of which one remains. In Brazil, where local card ELO is gaining popularity, 70% of credit card accounts are not authorized for international charges. This includes Visa and MasterCard, as well as local providers, which handles 15% of all online transactions in the country.
A/B testing is one method for determining which payment methods are best for each market. Not only should these methods be tested, but so should the number of options displayed at once, as the paradox of choice can reduce checkout conversion.
Shipping costs can often appear to be beyond a retailer’s control, as UPS, FedEx, and others set rates that the company must pay. Only a limited number of providers ship internationally, and each country has its own restrictions: Many streets in France, for example, are too narrow for delivery trucks.
Because recipients must travel to distribution centers for pick-up, many people prefer La Poste, the French mail system, which provides home delivery. Packages sent to rural provinces in Canada, such as the Northwest Territories, Yukon, and Nunavut, may take longer and cost more because shippers deliver less frequently to those areas. Whatever route you take, a lack of flexibility in shipping options is frequently an e-biggest retailer’s pain point.
Allowing customers to select their preferred delivery method can alleviate this concern, but it can also create a logistical nightmare for you. Many shipping companies offer e-commerce businesses special rates for regular or bulk shipments, but businesses cannot benefit if each customer chooses a different option.
Alternatively, decisions lead to growth: According to a customer survey, companies offering ‘premium’ delivery options and delivery times grow 60 percent faster than the average — particularly those in fashion or technology. Options may even be required in some countries to be competitive: Customers in India expect one-day delivery, which current market leaders Amazon India and Flipkart gladly provide.
Shipping costs are also a consideration: does the company absorb them or pass them on to the customer? In the United States, it is customary to charge customers a flat rate proportionate to the total purchase amount rather than charging customers at cost. Shipping charges are frequently waived entirely if a cart exceeds a certain amount.
Whatever method your company chooses to cover costs, make sure it does not turn away customers. In the United Kingdom, 73 percent of e-commerce shoppers abandon their carts due to high delivery costs. In Germany, 43% of consumers say free shipping persuades them to buy. A/B testing allows businesses to experiment with various shipping and delivery options and use the results to iterate quickly.
6. Customer Service
When a customer is dissatisfied with their order, it’s critical to have a plan in place for handling returns, exchanges, and refunds. While Americans jokingly regard returns as a constitutional right, consumers in some countries (such as France) assume that all purchases are final. Then there are the intermediary markets: Canadians may not return as frequently as Americans, but they still expect a 30-day window. When expanding internationally, it is critical to consider how your company will deal with each country’s return policy.
Some retailers, such as Anthropologie, have different policies depending on the country, explaining how returns may affect customers’ sales tax considerations on the company website. Cross-border purchases at Macy’s are final: the store does not accept exchanges for items shipped internationally.
Of course, customer service is more than just returns. Payment plans are used by consumers in Brazil, Mexico, and other countries. According to payment gateway provider Ayden, interest-free installments are applied to 80 percent of high-ticket e-commerce purchases in Brazil. Retailers’ increments range from two to twelve months. Even companies like Eventbrite let customers pay over time. In Mexico, installments can be divided into up to 20 payments. Payment on account is popular in Germany: 58% of online shoppers do not pay right away, preferring to receive an invoice after shipment.
There are market-specific expectations in addition to traditional customer service elements such as returns and shipping. In China, nearly 60% of consumers buy clothing online, but they aren’t motivated by variety: they shop on sites that provide style advice. Customers in India expect e-commerce sites to have a chatbot to answer purchasing questions.
Additional Considerations for International E-Commerce Expansion
A new country means new logistics. Early in the planning process, determine what level of infrastructure is required to be successful. Does the company need a brick and mortar store or is this global expansion strictly e-commerce? What about an in-country representative to navigate unexpected business issues that may arise? Is current counsel qualified to review local contracts and explain legal restrictions? In China, where 9.86 million domestic merchants already operate online, the government must approve new e-commerce providers for bonded import. In Kenya, sites need a Communications Authority of Kenya (CAK) license, and South Africa requires Consumer Affairs Committee registration. Does current counsel understand the new market’s required application processes?
Online-only retailers may need a new address: While .com is internationally ubiquitous, consider adding .cn, .au, and similar country-specific domains. Fully translated sites on local domains perform better in SEO, helping brands attract new customers in those markets. If translation is too intimidating, try buying foreign domains that redirect to your company’s main page. Even if these new URL’s are never used, owning them prevents competitors, domain resellers, and others from buying them first. Similarly, e-commerce companies should trademark brands and slogan in each new market, preparing for possible intellectual property theft in countries like China where piracy is common.
Make sure your e-commerce site also honors each country’s data security laws and expectations. In places where international privacy regulation GDPR has been adopted, e-commerce sites must get individual user permission before dropping cookies. GDPR started in Germany, but was later implemented by the entire European Union and the United States. According to the U.S. Department of Commerce, data gathering or use of any type is also prohibited in Israel without user consent, and Commerce indicates Canada has similar restrictions: “Entities cannot collect sensitive information without explicit consent by the consumer.”
Consumers in these countries will likely be more sensitive to how their data is gathered, stored, and used. In e-commerce, this affects customer viewpoint on product recommendations and retargeting ads: Instead of seeing them as personalization, they’re more likely to see your brand as invasive.
This European — and growing American — focus on information security also negatively affects point of purchase. In the United Kingdom, for example, online retailers say 25 percent of cart abandonment comes from customer concern over online payment security. Keep SSL certificates up to date, provide a guest checkout option, and don’t ask for more information than the company truly needs to complete the transaction and ship the product.
Before doing too much research, also examine product legality. In China, for example, Winnie the Pooh memorabilia was outlawed after memes compared the bear to President Xi Jinping’s physique. On a less political front, countries regulate skin care, beauty, and other chemically-based products in different ways. This regulation may be marketing directed (for example, France has strict requirements regulating which foodstuffs can be labeled as organic) or it may focus on how products are made.
Scandinavian countries often require proof that imported products were manufactured in ethical and environmentally-safe ways. Other countries ban certain ingredients (Kenya bans mercury, South Africa bans honey), while others require content warnings similar to California Proposition 65 in the United States. The right attorney can guide companies through what they’re obligated to disclose and partner with marketing to develop packaging labels that safeguard proprietary information.
By translating site navigation, item descriptions, and return policies into the local language, international e-commerce retailers not only better communicate with customers but also rank higher in search engines and eliminate risk of chargebacks.
As for the most important aspects of a site to translate, our latest Global Research Report revealed that the majority of shoppers in the top 8 global markets agreed that checkout, product pages, and reviews were the most important areas needed in their own language (74%, 72% and 68%).
Localized Language Expectations Across The Top 8 Global Markets
Localization is crucial to a profitable customer experience, but remember to also glean insight from existing marketing and purchasing processes. New countries might mean new challenges, but they don’t necessarily mean completely new work. Before expanding internationally, look to the company’s domestic successes for early guidance.
Go To Market
To succeed internationally, e-commerce retailers need to ensure two different types of product/market fit: (1) The actual items sold must be desired in other countries and (2) products must be sold on platforms and devices where target customers shop.
This is true for business anywhere, but in international e-commerce, it specifically means thinking beyond the site. Smartphones account for one-third of all U.S. e-commerce purchases, so in this market, adaptive design and apps are both givens.
But for cross border e-commerce, mobile options are even more essential. In South Africa, 38.51 percent of consumers shop by phone. In India, that figure is 65 percent and in Japan, nearly half of consumers prefer mobile browser to app.
Even customers who aren’t mobile-first like having the option: In China, consumers who shop via computer and phone spend 17 percent more time shopping than those limited to one device. They also spend across 29 percent more product categories.
In other countries, social media is a growing venue. Fifty-three percent of U.K. brands allow buying via Facebook, Twitter, and others. Only 25 percent of British consumers have actually made social media-based purchases, though, so this option is far from required. As more competitors move in that direction, it is worth investigating the prevalence of social media shopping in your target country.
Regarding more traditional product/market fit, market research should be of both a legal and cultural nature. Of course, e-commerce merchants should learn what currently sells well and whether existing competitors have monopolized the total addressable market in their target markets. Note that brick and mortar dominance does not equate to dominance in e-commerce.
For example, foreign companies have higher market penetration in Belgium than in the Netherlands. This is, for example, because traditional Belgian retailers were slow to offer e-commerce.
Also be sure to note that a country’s online demographics may not mirror its population. While most developing countries have greater internet penetration in cities, culture also affects target market demographics. In India, for example, women have traditionally been barred from having back accounts.
In 2014, only 43 percent had an account. But by 2017, that number grew to 77 percent. This late adoption has created an overwhelming male customer base for international e-commerce.
For products traditionally sold to women, there is now a competitive advantage, since early e-retailers neglected this group. But global e-commerce companies should also consider the age of the market. Whatever you’re selling, ensure you make decisions with the right set of demographics in mind to target.
Read Also About Top 10 Best Business Ideas in Dubai
To be successful in global markets, you will need to carve out or create an entirely separate budget to support marketing efforts for product promotion. To build your first international budget, research performance data in the target country, estimate acquisition and marketing costs, and align these expenses with the company’s larger sales goals. Some markets require larger budgets than others. Certain countries’ marketing channels charge more, and pay-per-click rates, for example, vary by location.
“If you don’t have much of a budget,” the U.S. Department of Commerce says in its online guide, “you will need to compromise on what you want the site to do.” Sometimes, making the business case for a separate international budget can be challenging, particularly when a business has little or no historical data or proven success in a given market. To overcome this challenge, start by looking at available market data, best practices, and market trends to make a case for a global marketing budget.
Consider getting out in front of the issue by crafting your marketing strategy before conversations for the new market launch get too far along. That way, you can align all the stakeholders early on and ensure a smoother process once marketing strategy planning gets underway.
Earlier in this guide, we discussed the importance of A/B testing, noting how small experiments can prevent brands from making big mistakes. A/B testing frequently across different target locales allows you to stay ahead of the game and continually optimize your site experience for each market. It’s important to stay current not just on what does and does not work for your brand, but also on larger market preferences and pressures as well. Then use your learnings from these larger trends in your testing strategy to see how your global customers respond.
As you assess all the necessary components for a successful international e-commerce strategy, think about which operations can be managed by technology. The right software solution will calculate VAT, duties, and taxes; integrate with shipping carriers; round prices; display correct prices on product description pages; and allow you to create rules that show the full product catalog to some markets while restricting products to others.
As you evaluate different platforms, think about how this new tech needs to integrate with software you already use. The right technology vendor will have available connectors to major platforms and APIs with hundreds of open endpoints. For more information on the right questions to ask a cross-border e-commerce solutions provider and technology vendor.