The e-commerce market continues to thrive. In 2018, global e-commerce sales accounted for over $3 trillion, an 18% overall increase from 2017. This tremendous growth seems to be a trend; consumers all over the world are continuing to spend more and more online. Modern e-commerce companies have tremendous potential in the international market. However, many businesses and customers have qualms with cross-border e-commerce. These issues often involve localization, exchange, and logistics problems that frustrate and alienate international customers.
Many companies are so eager to break into the lucrative cross-border e-commerce market that they forget a few crucial steps that enable a better experience for customers and build a stronger global reputation for their brand. E-commerce businesses that want to start selling cross-border or expand their reach on the international stage should know how to overcome the five most common challenges for cross-border e-commerce operations.
Challenge One: Local Currency Acceptance Issues
Different markets transact using different currencies. If you plan to sell your products in markets that use different currencies, your e-commerce site must be able to display prices and accept payments in the local currency. Expecting your customers to calculate with exchange rates is not realistic; international e-commerce presents enough challenges that customers could easily abandon their carts if the e-commerce site does not ensure local currency acceptance.
Additionally, offering local payment methods for customers in different markets is also an important factor in localizing the experience. Consumers in some markets only use certain payment methods, so be sure to research the preferred payment methods and purchasing practices in any new market to make sure you’re creating a shopping experience that feels domestic to the local consumers.
Solution: Make the checkout experience feel localized for your end customers in different markets. If you’re going to sell to China, your e-commerce site should accept AliPay and WeChat Pay. If you’re planning to sell to France, your e-commerce site should allow for payment processing with Carte Bancaire. For the Brazilian market, you would need to configure Boleto Bancario payment processing. Also, be sure to offer multi-currency pricing. Research the currencies and preferred payment methods in your targeted international markets.
Challenge Two: Taxes and Duties Are Unclear or Inaccurate
Taxes and duties will vary between markets. Calculating taxes and duties accurately at checkout will ensure that the customer knows how much they will end up paying for their purchase.
Furthermore, providing customers with the ability to pay those duties and taxes upfront can help mitigate issues later, so that they are not surprised by an additional bill upon delivery. One challenge for online retailers is product harmonization or classifying products which help to quickly and accurately calculate the necessary duties or taxes that will be charged for shipment to different customers in different locales. If not properly calculated, customers might be required to pay additional fees at their local customs offices. For retailers this can be a big risk because some customers can be so frustrated with this additional bill that they could refuse the package and send it back to the retailer, resulting in unnecessary cost for the brand.
Solution: Implement a feature or functionality that calculates accurate duties and taxes for your customers. This may take time and effort to configure, but it will be well worth the investment when you no longer need to worry about customers having poor experiences with your brand due to surprise customs charges or other fees you failed to calculate for them during checkout. Investing in a technology solution that can help with these calculations is important for any online brand looking to sell cross-border.
Challenge Three: Customers Expect Localized Checkout
Different countries have different address formats, so your shipping step at checkout on your site must match up with the format for each country where you sell your products. This is one example of localization that is needed to provide your international customers with that domestic experience at the most important step of the conversion funnel. Displaying accurate prices, duties, and taxes in the right currency in addition to providing direct shipping options with accurate and clearly-outlined delivery windows are other factors that play into creating that localized experience that will build trust with your shoppers and help them have a best-in-class shopping experience. Without addressing all these pieces of the checkout puzzle, it could cause potential customers to abandon their cart and buy from your competitor. E-commerce companies cannot use a one-size-fits-all checkout process for all the markets they sell into. Localizing and creating a more tailored experience for each market is key.
Solution: Develop localized checkout pages for the markets you are entering or are already selling in. If you sell to China, make sure your Chinese customers will have a checkout page in Chinese, and ensure the address input boxes match the Chinese address format. As mentioned previously, be sure to display local currencies, calculate accurate duties and taxes, and offer those local payment methods and shipping options that optimize for cost and speed. The checkout flow is one of the most important (if not THE most important) part of your e-commerce site, so it is essential to think critically about each factor impacting that experience for the customer.
Challenge Four: Direct International Shipping Is Too Slow
Many international consumers contend with unknown delivery times when they order products from businesses located in other countries. Due to the nature of international logistics, an order can take anywhere from a few days to several weeks or even months in some cases to reach the end consumer. Many customers find the delay in receiving their packages frustrating. They may avoid international e-commerce or shop from a competitor to simply remove this frustration.
Some e-commerce sites do not offer multiple shipping options and instead charge international customers a flat rate based on average postage fees. This may work in some markets but not in others. Consumers in certain countries may have a higher expectation for free shipping or may expect that two-day shipping will be available to them. Unless an e-commerce site offers multiple shipping options with clear pricing, international customers in some areas may feel uneasy about purchasing from the site. Additionally, certain types of international shipping could be problematic for retail and not work with their unit economics. Retailers need to carefully craft a shipping strategy that makes sense for their business and their consumers in all the different markets they are in.
Solution: Offer customers reasonable shipping rates at various levels as local logistics allow. Providing multiple shipping options to each market will increase customer confidence and allow them more control over how and when they receive their items. There are many different types of shipping offerings that could work in different markets. Some retailers find that they can subsidize free shipping in certain markets with robust logistics networks. In other markets where shipping to remote locations might be more expensive, retailers may want to offer a flat rate to offset the cost of shipping or have a minimum threshold for the free shipping offer. These different shipping offerings can help make the unit economics for the retailer more attractive while still offering consumers reasonable shipping options that won’t deter them from shopping with a local merchant.
Challenge Five: Lack of Catalog Targeting and Localization
With so much competition in the global e-commerce market, customers in virtually every country have a plethora of choices when it comes to making online purchases, and companies have more tools than ever to create personalized experiences for much broader audiences. But many e-commerce merchants fail to localize their product catalogs when selling abroad. Sometimes catalog targeting is necessary for responding to restrictions of selling certain products into specific countries. Other times the merchandising strategy may be seasonally driven. For example, it might not make sense to offer certain apparel items to consumers in Australia during the same time of year as U.S. consumers because the seasons are different. Similarly, certain styles may be more popular in certain markets than in others, so it might not make sense to merchandise your French website with the same products as your Brazilian website. This is typically common in the apparel and accessories industry but could be true in other verticals as well.
Solution: Companies trying to strengthen their international e-commerce success need to develop tailored catalog listings for different countries in which they sell their goods. Establish a catalog system with the flexibility to display specific products in targeted markets while excluding other listings from appearing in those markets. Before you launch any type of marketing campaign in another country or territory, research the local market so you can develop competitive pricing for the products you offer there.
Build Strong Customer Relationships to Expand with Greater Flexibility
International e-commerce holds incredible potential, but it requires thoughtful investment of time, effort, and resources to create valuable customer relationships in different geographies. Localizing all aspects of the checkout flow, offering multi-currency pricing, providing personalized catalogs, and other factors will help online merchants stay competitive with local businesses.
Choose your business partners with care as you expand your international e-commerce reach. Developing a strong international presence in the e-commerce arena can be facilitated with the right technologies and solutions.
Find and work with providers who can help you configure and deploy localized experiences for customers in the global marketplace. Research potential partners with solid track records who can help you develop flexible solutions for cross-border e-commerce. Eventually, the work you put into developing professional contacts and cultivating a strong international catalog will pay off tremendously and accelerate your brand’s growth in the global market.