Cross-border commerce does not only rely on successful product delivery. Businesses also need to equally focus on the consumer returns management especially if local geography needs to be addressed. A well-oiled return management process has the power to exceed the customer’s expectations and fuels the business expansion process. This also ensures the brand loyalty. Hence, easy returns policy is the chief concern for any online shopper or consumer before taking a step into the online experience of shopping.
Let us understand why Consumer Returns Management plays a vital role in cross-border commerce.
The challenging part for any eCommerce business is providing a seamless shopping experience. There is also a constant challenge to improve the shopping experience keeping a focus on the consumers. This engages and retains the consumers in the chain. One such process in the chain is offering “hassle-free” returns to the consumers. eCommerce businesses should have the ability to offer lenient and flexible returns. This engages more consumers and retains the customer base with a thrust to expand the business. This also helps the businesses to function minimizing the risk of fraud and abuse.
Customer value and satisfaction
Any business whether offline or online should aim at clarifying the return policies to promote strong sales. According to the UPS survey, about 88% of the online shoppers check the return policies first and then proceed to shop. The rest will forgo purchases if they are unable to locate or understand the policies. Thus, it becomes essential to value the customer’s preferences and satisfy their needs.
eCommerce businesses have a variety of products to offer to the millions of customers online. They offer products and services for everything, right from fashion to electronics. Customers have the freedom to purchase from a wide range of the products. These companies can create opportunities in the competitive market with their accessible and easy return policies. This attracts the customers and they can leverage the online stores with the same old traditional touch.
Online shoppers should get the same offline shopping experience with the qualifying purchases. They have the leisure to check the product details before they add the items to the cart. Consumers and buyers can get the chance to check the minutest product details just like the traditional stores. Every product detail should include the product color, material texture, size, pictures and much more. Thus, eCommerce businesses have maintained the decorum that the offline businesses offer. They do offer exciting return policies that encourage the consumers to take a plunge into the wide shopping experience.
Fraud detection and prevention is the widest challenge in the eCommerce world. Businesses should keep a watch on the illegal activities if any. Those with the lax return policies might turn out to be great money for the hackers and criminals. To play on a safer side, eCommerce businesses should build definitive eCommerce return processes and policies. Also, they should maintain high-level security to avoid any such risks. Otherwise, they might become indelible marks on the names of reputable brands.
Efficiency in returns management
While returns will always be a crucial part of the business, they do not need to be a liability. To increase the efficiency and foster growth for your business, develop effective reverse logistics processes. This aids as a competitive advantage and can prove beneficial.
Hence, for effective returns policy, make sure you:
Create meaningful content about the returns process and policy.
Make the returns policy and process more understanding as per local demographics.
Offer flexible, convenient and easy options – such as in-store returns.
For businesses to redefine their returns management, here are some important points to focus on.
Focus on the global picture: Easy and flexible returns solutions should be available to everyone and everywhere. Businesses ought to focus on their current return logistics to manage the cross-border trade. They should be able to turn the local legends into international successes.
Make the returns process simple for online shoppers: Simplify the returns process and policies. This helps the customers to easily initiate the returns through calls or an online returns management portal. Businesses should provide 24/7 access to the customers through a customer service hotline.
Track your returns smartly: Know where your returns go when the customers send them. Businesses should aim at establishing cost-effective ways of determining the stocks and maintaining them.
Cross-border commerce is one of the most challenging ways for the online merchants to develop their presence in the market. The e-commerce merchants have started focusing more on the cross-border markets to grow their business. Today every merchant aims at expanding their business or market employing regional sensibilities and local market flavor for their success. They focus on building strategies that promote their growth in the online market and create a place in the heart of the consumers. To grow faster, they have to build strategies taking into consideration the market trends and key elements. Here are some of the best strategies:
Trust first: Pay locally; offer at a global level
A global offering can never be enough. Consumers demand secure transactions while shopping online. For this, online merchants have to focus on offering the commonly used, trusted and secured payment methods in the local markets. They have to ensure their customer’s safety, confidence along with the market’s conversion rates. Apart from this, the online merchants have to keep up with the pace of technology. The power of technology is undeniable in the expansion of markets in the global and local market. It binds the consumers and the online merchants across all the geographies and various channels giving a great experience to both in all terms.
Merchants need an overview of the market dynamics and the consumer’s behavior for the successful expansion of their online businesses. This way, it helps them to localize the experience. Moreover, businesses have to study the local payment cultures. For instance, in some countries, consumers trust payment modes as credit and debit cards while in some they trust e-Wallets.
Omni-Channel and Social eCommerce – The future
Omni-channel retail and the social eCommerce is the future already. This gives fully-integrated and seamless customer experience. This also helps to understand how the customers interact with the online brands across all the channels. The eCommerce merchants can gather the comprehensive data from various geographies, brands, and stores. This collectively helps to analyze the customers’ behaviors and preferences in a better way. Furthermore, this can help to create great customer offerings and provide loyalty solutions.
In the digital space, millennials prove to be great influencers. They play a vital role in voicing their opinions and sharing information. For instance, 50-60% of the consumers follow brands and products on social media. They browse a plethora of products on the social media. As per online surveys, 33% of the online shoppers utilize social media for potential purchases. Thus, the online and social recommendation of brands and products encourage the significance of cross-border trades and transactions. In future, social eCommerce and omnichannel strategies will become a major source of payment drivers too.
Go cashless and seek new opportunities
The eCommerce field is flourishing at a more accelerated rate. By 2019, it is expected to hit $3.6 trillion. This is the right time for the eCommerce enthusiasts and merchants to invest and expand internationally. To strategize a good expansion, merchants must understand the landscape and seek out new opportunities. They need to seek out effective ways of electronic payments as the global market is turning cashless. Most countries like North America, Europe carry out cashless payments.
In comparison to the domestic eCommerce market, cross-border eCommerce is skyrocketing at an unprecedented rate. Consumers have started trusting international sources to buy products that are unavailable locally. Online merchants can turn these higher demands into high-profit margins. They can grow their businesses effectively. That said, new opportunities arise with the growth of cross-border eCommerce market.
Key points to remember
While choosing the right step with the payment modes, here are some key points every merchant should consider. So, choose the payment partner smartly to grow your online presence and a strong global network.
Focus on the regional trends that meet the customers’ demands and expectations
Know the online market value of your products in terms of local and global market
Follow the customer shopping habits across various geographies, devices, and media
Integrate the trusted payment methods to ensure secure customer online shopping experiences
Focus on the fast delivery of the products and best return policies
Exciting payment cashback offers and coupons
Keep a check on the local regulations, exchange rates and policies
To summarise, developing a successful cross-border strategy is not just about best products and services. It is equally necessary to maintain trust, security and provide a great shopping experience for all the customers. Along with this, they also need to retain the customer base, product quality, brand awareness and customer satisfaction values. Thus, for a seamless experience, the online merchants have to focus on developing expansion strategies that are easy and trustworthy.
The cross-border commerce world is booming rapidly. With just a click of a button on smartphones, you can buy and sell anything across the globe. As per the Forrester study, the cross-border commerce is likely to double by 2021. This will bring a phenomenal increase in the outcome of sales and revenues. Thus, a majority of the online shoppers are going global in their search for sales and purchases. This has given a little run for money to the retailers. However, some of them have joined the bandwagon in the global marketplace.
For instance, the cross-border market of China will see a remarkable progress in 2021 with a huge increase in sales and purchases in this market. India and US are also following suit.
Let us understand the major considerations for the success in the global market.
Optimize local markets
As per research, a majority of online shoppers prefer using the globally recognized marketplaces. They focus on gaining a potential profit margin. This gives them a global recognition and a great customer outreach. It is necessary for these merchants to understand the market rates and values. Also, timely analysis of these helps them to increase their market.
Consumers should look out for multiple benefits to shop at marketplaces:
Free shipping and delivery
Ease of searching what you what at one click
Wide range of products for all categories
Faster delivery time
Customer Loyalty Points
Great customer experience
Cross-border market strategies
Marketplaces have crossed international divides. There has been a substantial increase in the purchase of online marketplaces. This ratio is high when compared to retailer websites.
These cross-border market strategies succeed based on a lot of factors:
Retailer’s market presence
How much risk a retailer has to undertake?
What difference lies between a marketplace’s and retailer’s own assortment?
Is the retailer fully aware of the cross-border policies and charges?
Be like the locals and pose like a foreigner
The US, China, and India have an astounding cross-border market. Whether it is clothes, cosmetic products, food products and electronic items, they hold their positions in the marketplace.
It is essential for these online shoppers to know the insights of the local markets. They have to be aware of the conditions of the local markets, policies and the tax benefits. They have to understand and analyze the demand and supply of their products in these areas. This is the biggest challenge though. But from the sell-side, it is the most important thing to consider while entering the global markets.
Participation in the national market
The online brands have to actively participate in the national markets. They have to continuously strive to build their presence. This gives a good exposure in terms of markets and the consumers. They have to keep the important things while expanding their business globally.
They have to understand the fiscal policies.
They have to be well prepared for regulatory challenges.
They should do proper calculations of the border taxes and custom duty charges.
They should ensure the import/export compliance.
They have to do accurate shipping and product costs’ calculations.
They have to manage logistics effectively and efficiently.
They have to process the data and conduct secured payments.
Focus on the brand and quality
It would be tough to survive in the global market if marketers rely completely on the brand. Product perception has to go hand in hand. As per a survey, 70% of the consumers make at least one cross-border purchase annually. This is because of the attractive pricing and discounts they get as well as the strong perception of the product aligned with local needs and quality expectations. Also because of the variety, they get in the products and its qualities.
It is quintessential to localize the brand. They need to create its online presence to enter the new global market. They have to deliver quality products and create a brand awareness to the local consumers. Thus, they have to look like an outsider but have to behave like the locals. The brand equity and the product quality matter among the consumers in countries such as India, China, and Hong Kong.
Manage the inventories and outlets
There are few of the retail brands that have managed to build empires. They have made the most of both cross-border and the domestic deals. These global brands do not enter the market directly. They have to plan and strategize cautiously. They have to manage the resources and the entire system. They have to be quick and efficient in delivering goods and services to their consumers.
Managing the inventory globally is one of the prime concerns for all the online retailers. They have to look into the challenges such as currencies, language, geographical distance, instant delivery and customer satisfaction. Regardless of the time zones and the cultural differences, they have to manage the inventories most effectively.
Brands have to evaluate the market position before entering into the cross-border commerce. As per the geographical and historical conditions, they might have to face huge challenges. But, they have to equally focus on the local brand perceptions to rise and stand out in this global market. Once they ensure compliance for all sorts of cross-border transactions, they surely can gain maximum success in multiple markets.
By 2021, the cross-border market will boom up to $1 trillion, as per recent Business Intelligence reports. There has been an exceptional rise in global purchases due to the ample reach, given by cross-border commerce along with its price and quality benefits. The driving force behind cross-border commerce has been the lack of access to goods domestically. Also, the better product pricing and affordable shipping contribute to its success. Thus, most of the consumers are turning to international vendors who are prevalent in local online markets.
Consumers in the countries like China and US import and export several products and services. For instance, people in China tend to everything from baby products to gadgets online owing to their lack of quality in some local markets. In response, merchants aim to expand their businesses to a global level, while making sense of the local sense, language, flavour, and preferences. They target the overseas market and expand their horizons to new global customers for obvious reasons.
Major Strategies that can leverage cross-border commerce benefits
Are you thinking about entering a new cross-border market or are keen to expand your eCommerce business globally? Here are some strategies you need to pay attention to.
Select the market appropriate to your business
Do your homework. Determine who will be your international customers. Understand your product value in terms of their demands and your supplies. You can consider the following factors before finding the best product :
What is the condition of your selling product in the market?
Will there be a substantial growth of your business with your product?
Who are your competitors and your consumers?
Possibly, there is a solution for all your queries.
You can search for the most trending products on Reddit, Alibaba and more.
You can decide accordingly and refine your selection later.
Finally, dive into the data analytics to validate your idea.
Check out the competition in the global market on the basis of surveys and reports.
Analyze your sales and calculate the profit margin.
Research on the trends in the international markets
A proper and efficient research always helps in providing effective results. For international markets, you have to be keen on the trending strategies and policies. You have to take into consideration the competitors, their product quality and the discounts they offer. You have to analyze your production rates and its corresponding market values. You have to focus on the product quality and its marketing so it can stand out in the international market.
You should not miss out on the data security and customer’s satisfaction. You can hire an international support in that case. These are going to be a real wealth of your company and its market value.
Focus on the payment modes
There are multiple payment options available in the market. Some have global access, while some are limited to local markets. You have to be very careful and precise considering the most secured payment modes in eCommerce. The payment modes vary largely in terms of countries.
In order to successfully scale globally, you have to focus on integrating and accepting all payment options. But again, know what your target market prefers. You can always consider the standard secured payment options such as Visa, MasterCard. Later, as per the market and sales, you can add the appropriate ones. You also need to take account of the local currencies and conversions for cross-border markets. Most importantly, you have to promise the consumers about their money security.
Be aware of the tax rules and regulations
This is the most important point when thinking about expanding your eCommerce across borders. You have to be well aware of the government taxes and how to apply them to your products. You have to investigate the custom duties charges and taxes. You have to inform about the additional charges to your customers.
You have to understand the free trade agreements before venturing to do business across the borders. You should also know the market policies and tax rules. Ultimately, these will be inclusive of the costs, packages, shipment of your product. Hence strategic pricing and quality based on local market conditions and competitions is highly important.
Set up an International returns policy
When you think about the cross-border market, you ought to consider the international returns and policies. You have to understand the local laws and the overhead costs. You have to be transparent about the return fees or the restocking amount. Also, you have to be clear to your consumers about the full refunds or the store credits.
You have to consider the approaches for faster and secured refund options. For this, you can build partnership with the logistic services or set up a local returns center. These can offer a number of return options to the customers. This altogether, helps you manage and simplify the process efficiently.
Apart from all these, one also needs to take the ownership of the business. You have to upscale the entire process not as an individual, but as a team. So, it is better to appoint the right manpower, resources and logistics in the local region too. You should also focus on the technology and services for delivering a standard process. This will help your business get major visibility globally.
That said, to make an impactful start in the cross-border markets, you need to identify the right marketplace. This can help you earn cool profit margins for your global business.
Devising International Payments for Cross-Border Commerce
Selling internationally can be a thrill and a hassle as one needs to process international payments efficiently. The good news is that e-commerce sellers do have loads of options to make global sales easy enough for buyers and sellers.
Do US Merchants Accept Payments from Abroad?
In most cases, they do not accept international payments since the processing fees are high enough with huge risk of fraud and chargebacks. For working with customers in other countries, one would have to set up an account for those orders specifically.
International Merchant Accounts give owners dealing with cross-border commerce with multiple solutions meant for small businesses. These accounts have the ability to accept money and process varied payments automatically. They also feature fraud prevention and other attributes. These accounts also offer alternatives to payment aggregators like PayPal, and even present buyers a view of an established business along with currency exchange rates as part of fees.
Once you’ve opted for international merchant account for allowing international transactions, here are some things you need to do
One needs to pay set-up fee to obtain processing equipment along with relevant software.
After installing the software, and set account information, link the account with business bank account.
The money received through the merchant account will be converted to U.S. dollars and transferred to bank account.
Instructions to link international payment service with marketplace
To link the payment service with the storefront, follow the rules and create your checkout process. Here are some payment aggregators and services that would aid cross-border ecommerce and international payments.
Being the most popular payment processor for online sales, PayPal now operates in a staggering 190 international markets and even accepts payment in 24 currencies without one needing a merchant account. Transaction fees are mostly lower than the fees levied by banks, most transactions are also swift and secure. It can be set up with an email account and a credit card only and there are several free tools for shipping and tracking reports.
One does get charged per transaction, withdrawals and currency conversions and one can set out adequate product prices for including those fees.
Set pricing for international customers in relevant currencies that are available for you to accept and the money can get transferred to the local bank account within a couple of days. Consider a dedicated merchant account if there are consistent transactions along with a dedicated chargeback department for the services.
Payment comes in default currency through PayPal based on account preferences. One can convert money at the standard rate to account for any wayward currency fluctuations. PayPal monitors foreign exchange rates and adds its own fee of 2.5 percent to the transaction especially when funds are moved from PayPal to bank account.
Individual credit card firms
One can work directly with merchant accounts including the popular Visa, MasterCard, and the like. But these provide limited international buyers’ options and thus limit sales.
International money orders
Your customer from another country can purchase money orders from their bank, and are mostly considered secure. Fees are minimal, but payment process takes up 8-10 days. Also these international money orders are liable to frauds!
International wire transfers
If one has forged a relationship with an international customer, international wire transfers can be swift although expensive at $35 – $60 per transaction.
This wallet is available in limited countries and the UI is uncluttered and boasts of a good online presence, and many cross-border commerce organizations have started using it.
Telegraphic Transfers between banks
These transfers have been used for several decades and now they are losing importance owing to convenient payment options.
Major marketplaces discourage use of personal checks owing to huge chances of fraud. One can even consider the checks on a case-by-case basis if you are the prime decision-maker and comfortable with varied taxes, currency exchange and ancillary fees.
Payment terms and methods are few and far between that actually work in an online marketplace. Check out the best mode of payment for your cross border commerce strategy although do encourage every channel for hassle-free payment for customers.
In our 21st century, no one has time to physically go shopping, instead of that people are getting more and more attracted towards online shopping or E-commerce(in technical term).
And it’s not at all a bad idea if you are thinking of a startup or small business for selling your product online. All you need is a platform, which help’s you to establish your own brand. Shopify is one of that platform that you must have a look.
WHAT IS SHOPIFY??
Shopify is a cool E-commerce platform that allows you to set up an online store to sell your products. It is all-in-one web-based platform that let the entrepreneur run their own online store.
Those days are left far behind when people had to worry about setting up a website from a scratch, just to start an e-commerce business. Because Shopify had made that difficult task a cakewalk for us.
HTML, CSS, JS, etc are the programming languages which are used for appearance and designing your website. Don’t worry if you haven’t yet heard about these names, Shopify still allows you to have full control over the appearance and setup of your store(without having knowledge of those programming languages).
Now let’s know the features that Shopify provides and why anyone should opt for Shopify rather than any other platform.
10 Reasons Why Shopify is a better option!!
1) Hosted Solution
Shopify is completely reliable as it hosts over 500,000 stores. Shopify was the first hosted e-commerce website solution to use a Content Delivery Network (CDN).
A CDN is a large network of servers placed across the world to ensure your customers can get your online store loaded quickly, no matter where they are. While choosing an E-commerce platform one of the aspects you must know is the difference between ‘Self Hosted’ and ‘Hosted’.
In ‘Self-Hosted’ e-commerce solution you download and run the software yourself. You need to set up everything from scratch, also managing the hardware infrastructure and operating system on which your e-commerce website is going to work on.
In case if you need help when your website run into an error, there is no centralized support system you can contact. In terms of security, uptime and managing traffic self-hosted is usually less preferred.
In ‘Hosted’ you don’t have to worry about managing the server, security, uptime, traffics, etc. Every technical aspect is managed by the platform provider. The hosted application can be deployed easily as compared to the conventional software.
These type of applications are managed by the service provider so, they are updated and patched with the most stable version and is backed by continual technical and customer support.
2) Supports Multiple Languages
Suppose you have an online store which is selling its product in Canada whose native language is English or French and you are planning to expand your business in Germany, then it would be preferable if your website appears to Germany folks in their native language (German).
Having the storefront in customers own native language creates a friendly impression, which in future can increase your business rate.
3) 100+ Professional Themes
“First impression is the last impression”
When any user visits your website the first thing that comes up is the design or look and feel of the store. So it would create favorable influence on the user if your store has a nice quality design and a good theme.
Shopify has a number of feature-rich, beautiful themes which are developed by professional web-designers. The design of your website always plays an essential role when it comes to e-commerce.
Thousands of dollars are being spent by the store owner to get their store designed by professionals. But if you are a Shopify user you get most of the themes designed by the professionals for free.
There is a range of free and paid theme in Shopify to find the right look and feel for your online store. Here are some of the examples of Shopify’s themes
These themes are even categorized according to design or product your store is selling. Shopify makes sure that themes are modern, clean (no bug), easily customizable, responsive design, cross-border compatibility and many more.
4) 100+ Payment Gateways
A payment gateway is simply a software application, which conduit between your e-commerce website and the bank that authorizes(or declines) your customer’s credit card payment. It is the final step of the sales process, without it you won’t be able to securely charge your customer when they purchase any items from your online store.
Shopify supports all the well-known payment methods such as
-Credit & Debit Cards – Cash on Delivery (COD)
-Net Banking – Wallets
-Bank Transfer – UPI
-EMI’s – PayPal
Some of the well-known payment gateways supported by Shopify are:
You get the ultimate freedom for choosing the right payment gateway options for your customer provided by Shopify. Shopify even has its ownbuilt-in payment system powered by Stripe.
Here are some of the reasons provided by Shopify for using their own Payment platform :
Shopify plan transaction fee is now free.
Lower costs with an online credit card rate of 2.4% + 20p (Basic), 2.1% + 20p (Professional), or 1.8% + 20p (Unlimited), and no hidden charges or extra fees
Managing of orders, payments and payouts can be done directly through Shopify.
5) Manage store with your Smartphone
Are you worried about your online store while enjoying your holidays or trip with friends or family?
Not to worry anymore now onwards, because the Shopify mobile app lets you manage your orders, product, staffs, and customers from anywhere just with your smartphone.
Manage Products in-app
→ This mobile app will let you upload your products images.
→ Set the features and pricing details of the product.
→ Adding the products to collections.
Process your orders with few taps
→ Completion of order, refund to customers, or archive orders.
→ Manage tags and notes.
→ Conversion details can be viewed.
Respond to real-time information or queries
→ See the live sales or visitors traffic
→ Get notified instantly when you receive the order.
→ Get in touch with your staff members.
6) Unlimited Products and Bandwidth
→ There are no restrictions on the number of products you sell on your Shopify store. Which means if you start your store with just 100 products and if you want to add some more 200-300 product items in your store no one will stop you doing that.
→ No one will charge you if your online store is visited by hundreds, thousands or crores of visitors. There is no limitation on the how many online visitors go through your store, and also how many files or photos you upload to the store.
7) Integrate with Dropshippers
Drop shipping is a method in which you don’t have to keep the products in stock. Instead, you directly get in touch with the wholesale supplier that stocks its own inventory.
So whenever you receive an order from the online store, you forward that particular order and shipment details to the supplier and they ship the goods or product directly to the customer.
Oberlo is the app for Shopify users, to easily import and dropship the product.
There are very few platforms like Shopify that provide drop shipping integration. Here are some benefits of drop shipping.
→ Investment is very less as you don’t have to set up an inventory.
→ There is no limitation on items you want to sell, you can offer thousands of items to your customer.
→ Nothing to worry about manpower, as it is all handled by the supplier’s side, which eventually frees up your time to concentrate on your marketing strategy, operations, and customer service.
Shopify will always be there to help you and your customer whenever needed. Here’s how
Team Shopify is available 24/7 on live chat. Isn’t that convincing, if you or your customer get immediate answers to your questions and queries.
Suppose you have some questions, but there is no requirement of getting that answer immediately. In that case, you can opt for their e-mail support option, just mention whatever inquiries or issues you have in an e-mail and Shopify will be at your service with all relevant information within 24 hours.
Don’t feel like typing up entire queries or problems?? Not an issue!! The “anytime” helping guys are always there, you can call them whenever you are facing a trouble, even if it’s 3 AM!
9) Gift cards
It is a special type of product, whose value (amount) can be used as payment. You can also issue a gift-card to customers for free as a reward for using your store. Your customer can use the gift card to make a purchase from your store both online and in person.
Your customers can even send the gift-card to other users so that they could attract more users to their store. A gift card holds a balance (paid by the owner of gift-card), which could be spent over more than one order.
When making a purchase in your store, a customer can redeem the value of a gift card by entering its unique code at checkout, and if the payment amount exceeds from the amount in a gift card, then the customer will be prompted to choose a second payment method.
Click the link to learn more aboutShopify Gift-Cards and how it can boost up your E-commerce business.
10) 14-Days Free Trial
You cannot learn swimming unless you jump into the water and try once yourself. That’s why Shopify gives you 14 days free trial to have a personal experience with them. So one should try Shopify platform at least once if they are planning to start an e-commerce business.
It hardly takes a couple of days to start and set up an online store with Shopify.
So why wait and watch other reaching and achieving heights of success from e-commerce business, get a start now by registering yourself in Shopify.
It is easier than before to leverage global markets today. Social media scales geographic borders, highlighting brands in international markets more easily than ever. Although gaining visibility is comparatively easy, SMBs need to establish a strong foundation in place for long-term scalability in global ventures.
Merchandise Products for New Markets
Neglecting merchandising process is a huge mistake for those entering new markets. With local elements in creative visualization, customer service and order processing, merchandising needs to be accorded huge importance too. Investing in people and collaboration tools can help entrepreneurs strike good relationships with the new markets.
When merchandising, the top considerations should be:
Climate – Be sure to account for the climate of the target market
Competition – Look at how the competition has positioned itself with the products they are selling through different channels
Consumer Trends – A product that is popular domestically doesn’t always succeed internationally. Do thorough consumer testing and surveys in the region before launching the product there. Most businesses target regions where they have witnessed sales before they launch the product, specifically in that region.
Religious Affiliations– Religion in some markets play a huge role in using some products. The products should not be in way marketed to offend religious sentiments
A Sound Cross-Border Commerce Strategy for Success
Some factors need to be respected and aligned with, for consistent success in cross-border commerce for accessing certain geographies for business. Some of those factors include:
Hire International Support
Hire high-value team members, in-house or freelance. Outsource the support work to them for competent international support services. Likewise you might need language support in some countries, especially if the local language is something else than English.
Support your lean business when it goes global, maintaining brand standards elsewhere too. Hire competent freelancers only for your business tasks.
Double Check Product Restrictions in each Country
While most products are inherently safe to sell across borders, double-check to see if there are any product restrictions in any country.
Some verticals like apparel, beauty and cosmetics, consumer electronics and health goods have particular restrictions by country.
Ensure the Technology is Scalable
Make sure that you have an e-store powered by technology that is scalable and not at all cost-prohibitive. One should select a platform that features out-of-the-box attributes required for standard processes in cross-border commerce without having to incur additional monthly costs.
The technology should be able to incorporate basic functionalities that can process discounts, coupons, emails for abandoned carts, analytics, customer groups, shipping, and payment etc. Going global without having the support of a strong technology platform is the onset of a huge disaster. You may be able to sell products, but rising costs, inefficiency in efforts and even result in lower margins would hinder you consistently.
Divide Processes and Hire Resources
For SMBs, going global is a big step and as they grow, the workload grows too. SMBs are usually lean and managed by a handful of stakeholders.
One needs to take ownership of the business but one should also understand it is not a one-person job. Do not restrict bringing on help for scaling processes and one can use assistance where the internal team lacks in terms of skills and resources.
While exploring cross-border opportunities, the right manpower and resources in the local areas are extremely important in getting the business major visibility
Most countries embrace a VAT or GST tax system that defines how cross-border commerce works there. It is essential for entrepreneurs to get the tax rules and regulations sorted before doing business in a particular country.
Taxation for cross-border commerce in the US
United States is an OECD country that embraces a final sales tax system wherein sales tax is consumption tax based on the final transaction of the offerings – product or service.
More than 12,000 taxing jurisdictions apply sets of rules for specific products and buyer location. This makes it difficult for enterprises elsewhere to promote trade of their offerings in particular locations.
In US tax laws, ‘NEXUS’ describes a situation that showcases an out-of-state business with a physical presence in a US state and is required to pay income taxes and collect sales taxes within a particular state.
The Nexus determines the actions that a company needs to pursue in a state before it is supposed to pay taxes. As a foreign seller, exceeding $20,000 turnover or more than 200 orders is a requirement.
For example, if a particular buyer and seller are located in a US state, the seller can collect taxes for the buyer and remit them to the state. This applies even if both parties are in different US states, and the seller has some presence in the form of a warehouse or office in the buyer’s state. If buyer and seller are in different states, the buyer is required to pay sales tax to his state only.
Taxation for cross-border commerce in China
The Chinese Enterprise Income Tax (EIT) is levied on income gained by any Chinese enterprise that has been initiated and managed in China. This fact includes physical presence and even websites of foreign enterprises and any income sourced in the country.
China has invested in different rules related to new business dynamics so that it does not lose tax revenue. Online stores are required to register and disclose identification for taxation of e-commerce by the government.
In general, VAT is levied in China at 17%.
Other taxes applicable to goods sold in China include consumption tax along with taxes mentioned by PwC. One can look for a breakup of taxes from the General Administration of Customs of the People’s Republic of China website.
The State Administration of Taxation administers VAT, while the customs collect import VAT on their behalf.
While importing goods, the taxes applicable as mentioned by Dutycalculator.com include:
Duty Rates – Duty rates range from 0% to 100%, with average duty rate levied at 12.47%. Laptops and some electronic products are free of duty.
Sales Tax – Imported goods are subject to VAT at 17% or reduced rate of 13% for specific products
Minimum thresholds – Duty and VAT are charged when together they take up RMB 50 or the import is exempted from both taxes.
Other taxes and customs fees – Consumption tax is imposed on alcohol, petrol, jewelry etc. The rates vary from 1% to 45%. The taxes are calculated based on CIF value and its duty.
In recent years, the importance of cross-border commerce in China has grown drastically thus boosting online trading in logistics, customs, and shop registration. Several barriers have been significantly eased in many respects.
The government has launched pilot zones for cross-border e-commerce, in Hangzhou, Shanghai, and Chongqing. The Pilot Zone in Hangzhou tries to reduce online transaction costs by making use of VAT, postal tax and even export tax refund in some respects.
The country’s regulations for foreign investment in e-commerce have been liberalized off late. The regulations council has set a deadline in 2020 for China to achieve unified, competitive, and reliable e-commerce market. The government strives to lower the barriers to market accessibility, reduced tax burdens and proper streamlining of registration processes.
The Ministry of Industry and Information Technology has eased foreign ownership restrictions in cross-border commerce according to a note in 2015. To view a detailed report and rules and regulations of promoting cross-border commerce in China, check out the PWC China website.
Now we can buy anything from nearly anywhere in the world just by clicking a button on our smartphones. Yes, cross-border commerce is actually booming, and one can expect the juggernaut to continue in 2018 and beyond until the foreseeable future.
Smartphones have made shopping easier. One can expect more shoppers coming out of their self-imposed abstinence from online shopping owing to minimal security concerns nowadays. A Forrester study revealed that cross-border commerce is expected to double by 2021 with staggering revenue of $424 billion expected by that time. Cross-border sales shall include 15% of online purchases too. China’s cross-border market is expected to grow to a whopping 40% in 2021 and the country can easily fuel growth in the domain.
The McKinsey report revealed that most wealthy people in China, buy foreign clothes and gadgets that are mostly not available in China. Baby formula is quite popular here.
Why? Because cross-border shopping helps them in deriving better prices, and good protection from counterfeit goods too. Now that is a major point!
The Leader in Cross-border Commerce and the Future Prospects
The US is touted as the world leader of cross-border commerce trade – including imports and exports. The country has a trusted cross-border market worldwide and known for its product quality too. A DHL survey revealed that 75% of respondents who make foreign purchases selected the US as their ideal destination for online shopping. Now that says a lot about the US as a major cross-border commerce.
How does it augur for other countries though? Pitney Bowes recently disclosed its Global Online Shopping Survey that reported 66% of shoppers who shopped the web locally have made purchases from other countries in their recent past. Singapore, Australia, and Hong Kong are top countries with most number of cross-border shoppers. On the other hand, Japan has grown its cross-border confidence tremendously in the recent years.
Smoothening the path of commerce locally!
Although the predictions are fantastic and rightly so, cross-border e-commerce is far from easy, for retailers owing to huge competition and diverse trade laws in every country. A 2016 survey by Paypal revealed 30% of consumers from different countries buying from the US, abandoned their cross-border purchase midway since they were unaware of the taxes or customs fees involved in the purchase. Here is what every cross-border commerce provider should know:
The exact kind of taxes and fees incurred through cross-border sales
Right communication to local customers in the country about the products.
No customers should get lost along the way, so multiple processes should work in harmony – the ordering process on site and payment methods along with calculation of taxes and alignment of government regulations
Communication of returns should be in clear words including the fulfillment clauses and delivery mode.
The return process should look seamless. For the seller, problems arise from the fact that each of the parties involved has a different level of understanding, motivation, and sense of urgency when it comes to getting the goods from one country to another.
Getting fulfillment right is the key to successful cross-border commerce and retailers know it. According to the Chinese Cross-Border Sellers survey by The Payoneer, 71% said fulfillment is highly important and logistics play a major role in this respect.
If 2018 is the year you plan to initiate cross-border commerce, ensure that the products are available locally with a good distribution in place in an international market. Also, ensure that your logistics partner is clear about the bigger picture. While consumers are driving the demand for cross-border e-commerce, get the right add-ons for your e-stores and the right domain experts to everything runs smoothly at the local level.
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