Blog Photo - Cross-border E-commerce

Cross-border e-commerce: The ins and outs

Retailers are increasingly looking beyond national boundaries to reach new customers wherever in the world they may be.

A Pitney Bowes survey of consumers across 12 countries reveals that 64% of online buyers purchased from a foreign site in 2018. This is a 6 point drop from the year before, a trend explained by a strengthening US dollar, but still represents a vast pool of customers.

Globally, retailer confidence remains high, with a Payvision report showing that 81% of retailers agree cross border e-commerce was profitable in 2017. However, the rise of cross-border e-commerce has its challenges, not least that your homegrown audience can now buy from new, overseas competitors.

Other considerations include duties and taxes, legal matters, logistics, shipping and returns, payments, messaging and a host of marketing channels and platforms. From a marketing perspective, it’s crucial not to assume that what’s working well on your home turf will translate overseas.

If you’re looking to expand your cross-border e-commerce offering, this article contains critical information to ensure your strategy is a success.

The customer

The expectations of shoppers vary by market, so consider the buying habits, cultural attitudes and values of your new audiences. In Europe, for example, the recent eMarketer Cross-Border Ecommerce 2018 report warns that “even countries that share borders do not necessarily share digital shopping behaviour”.

Device penetration in each market, payment preferences and preferred channels – i.e. how they like to buy, as well as what they like to buy – are all critical factors. Such information will affect decisions about website localisation, content, UX/CRO, branding and merchandising as well as SEO and media choices.

For instance, in Latin America, low credit card usage (as well as poor infrastructure and delivery systems) hold back digital commerce in general, as well as cross-border buying.

In the EU, new rules against geo-blocking for services and physical goods sold on e-commerce sites across the Union as well as initiatives such as the Single Euro Payments Area (SEPA) have stimulated cross-border sales. However, could this also decrease cross-border purchases on non-EU retail sites?

In 2017, 52% of US cross-border buyers purchased from sites in China, while Canada was a distant second (13%) and the UK third (11%), according to the International Post Corporation (IPC) Cross-Border E-Commerce Shopper Survey 2017. The survey also showed that Australians are happy to buy clothes from overseas online businesses, while Japan exports more products to countries such as China and the USA than it imports.

The channels

Merchants responding to the global Payvision survey said that the biggest cross-border e-commerce growth factor has been the accelerated development of online marketplaces. It notes that by 2020, 39% of the world’s entire e-commerce market will be controlled by such marketplaces.

Pitney Bowes found that for cross-border purchases, some 62% occur on marketplaces – even higher than the 59% recorded for domestic online purchases. Better selection and keener prices, or a perception of such, are behind rising sales on these platforms.

Amazon was the leading marketplace used by cross-border buyers worldwide for their most recent purchase, at 25%, according to IPC – eBay (18%) and Alibaba (14%) followed.

Growing and developing consumer technology trends will continue to have an impact on channel and marketing strategy. Technology such as VR/AR, data science, blockchain technology, AI and machine learning will, together with the Internet of Things, transform the way retailers reach their cross-border customers in the future. Think of how conversational e-commerce and distributed e-commerce (the ‘buy’ buttons seen on social networks such as Twitter and Pinterest) might affect the consumer of tomorrow.

Rules and regulations

Merchandisers must consider an array of regulatory requirements when adopting a cross-border sales strategy. These include – but are not limited to – duties and taxes, import and export laws, packaging and returns and local consumer privacy and protection laws.

One example is the EU’s new Payment Services Directive (PSD2), which requires all merchants operating under a marketplace business model to acquire a payment institution license.

The location of where goods are sold and delivered heavily determines VAT requirements, particularly within the EU and countries such as Australia where tax must be paid in the country of supply.

US sales tax is a different prospect entirely, with over 12,000 taxing jurisdictions empowered to alter rates and rules.

Chinese cross border e-commerce is worth some $60bn but legislation might soon impact it. Two-thirds of Chinese e-commerce consumers had a cross-border purchasing experience in 2017, almost douple a year earlier, and on average those buyers ordered more than once a month from overseas. Legislation is under the microscope, though the Republic’s Ministry of Commerce recently decided to postpone higher taxes on goods bought online from foreign sites.


The top challenge cited in a 2017 Eurostat poll of EU companies carrying out digital sales in other EU countries was the high costs of shipping and returns (27%), a situation likely to be reflected in other global markets.

A notable exception is Australia because its geographic isolation and vastness mean shoppers do not expect free shipping.

Retailers should consider how best to deliver cross-border fulfilment, shipping and delivery -be that through shipping from a single fulfilment centre to establishing local warehouses or using third-party vendors. Consider not just the business costs of your logistics, but also the potential brand damage that unfulfilled or poorly fulfilled orders could create.

Merchants clearly see a positive future for cross-border e-commerce, but in order to capitalise on it, retailers must fine-tune their overseas ambitions, giving each market as much scrutiny as they do their domestic business. For those that get it right, the opportunities are huge.

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