In the past decade, a shared sense of culture due to globalization, digitization, the emergence of artificial intelligence, and improved ease of doing business across the world has fueled the emergence of several big and small e-commerce companies.
While these brands initially tapped into their local markets, they soon discovered their advantage of being present in a virtual world with no boundaries. As a result, e-commerce quickly evolved to adopt cross-border sales.
Today, cross-border selling is not merely a luxury afforded by only multinational e-commerce players.
It has become not just a competitive advantage and an added source of revenue, but also a necessary growth driver for the bottom line of e-commerce organizations.
To analyze the status of cross-border transactions and purchases in e-commerce, Visa conducted a study, recording responses from nearly 1000 C-level executives in 10 global markets.
Importance of Cross-border Sales
The Visa GME study reflects an eagerness for expansion into global markets amongst both small and big e-commerce business people.
About 87% of the respondents agreed that tapping into global markets using online sales expansion holds immense growth potential for their brands. Cross-border sales are no longer seen as just an additional source of revenue anymore.
The race for reaching international markets has also become more intense, with 66% of brands already engaging in cross-border selling. Those that remain are quickly adapting and are expected to enter the international market soon.
However, even with the right amount of enthusiasm, small and medium-sized e-commerce players remain at a disadvantage when it comes to global expansion.
Challenges of Cross-border Selling
Despite the presence of excellent resources, several brands are yet to enter global markets.
About 88% of those not engaged in cross-border selling haven’t made any efforts to do so, and more than half of those who are already in international markets are not confident about their growth or ability to sustain.
Several challenges precede and encompass cross-border selling, and these are all the more prominent for small or medium-sized e-commerce companies.
1. Legality and Taxes
International selling involves multiple regulations and tax-related obligations that are seldom easy to understand.
Only 43% of the Visa GME survey respondents were prepared to handle legal compliance of global selling, while only 52% were confident about fulfilling tax obligations.
2. Technical Issues
One of the biggest issues plaguing cross-border e-commerce is the lack of proper technology and infrastructure.
Most e-commerce businesses that expand internationally do not have appropriate CRM systems and AI infrastructure in place to handle rising customer expectations, feedback, and complaints.
Similarly, only 52% of those engaged in cross-border sales are confident about payment processing methodologies.
To solve these problems, several business solutions catering, especially to cross-border e-commerce, have been developed.
However, most of these solutions are not suited or meant for small-sized businesses. Generally, too, small businesses are at a disadvantage when it comes to international transactions.
98% of small companies that plan to expand globally feel that most business solutions favor large-sized or multinational firms already equipped with better knowledge and resources.
Expanding Globally: The Way Ahead
The Visa GME brings to light some critical insights for e-commerce vendors regardless of their intention to expand globally. Clearly, to see profits, market growth, a better reputation, and increased reach, e-commerce businesses need to have an international presence. Here are some steps that can help even smaller businesses move ahead globally.
a) Gather Data
While expanding beyond borders, knowing which market to tap is essential. E-commerce organizations must conduct detailed market research of the locations where they plan to expand.
Studying financial requirements, tax-related details, market opportunities, and customer behavior in the targeted market are necessary.
Similarly, examples and methodologies of companies already flourishing in the market could constitute valuable research.
b) Plan Ahead
About 90% of the respondents of the VISA GME study admitted that they were planning to expand globally in the coming years. All of such brands must have a solid plan in place about expansion.
They should develop marketing, customer management, delivery, and payment strategies right now and start sourcing the required infrastructure.
c) Use Business Solutions
Once an e-commerce business has stepped into international markets, it has to strive to meet rising customer expectations and gain a competitive edge.
Using the right kind of solution for maintaining a user-friendly website, an efficient payment gateway, a smooth checkout page, and an excellent customer service mechanism is extremely important if a business is looking to sustain success in global markets.
To generate new revenue streams, expand product lines, and improve its market standing, every e-commerce vendor must find ways to tap into global markets.
However, rushing into new avenues without any preparedness is foolish, and hence, businesses seeking long-term success should start conquering the critical challenges of global expansion.