Decoding the Cross border eCommerce Puzzle - an Anchanto Document
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Cross-border ecommerce has seen significant growth, transforming retail dynamics by allowing consumers to purchase from international sellers. The market is expected to reach USD 900 billion by 2020, with opportunities emerging for a wide range of sellers despite challenges such as regulatory complexities and logistics issues. Innovative technology solutions are available to help online businesses navigate these obstacles and succeed in the global marketplace.
Decoding the Cross border eCommerce Puzzle - an Anchanto Document
- 2. Cross-border trade is by no means new. History is replete with examples of ancient civilizations indulging in high-value, inter-continental trade by land and sea. But, technology enabled eCommerce has given an unprecedented push to cross-border trade in recent years. 2
- 3. 3 Decoding the Cross–Border Puzzle In the last decade or so alone, eCommerce has completely transformed the way people buy stuff. Every day, millions of purchases are made online and a humongous number of products are delivered to end customers across the globe. Going a step further, technology has made it possible for consumers to buy products from foreign retailers and manufacturers. What earlier used to be majorly a B2B affair, now due to eCommerce, has quietly enveloped the B2C segment too. And because of a variety of reasons, consumers are slowly but steadily getting inclined to the idea of buying products online from foreign retailers and manufacturers. As for retailers and manufacturers, cross- border selling can become the Achilles’ heel in their eCommerce ventures. While local eCommerce in most countries is facilitated by home infrastructure, logistics, and laws, it’s the cross-border trade that can suffer because of many debilitating factors. Let us take a look at what cross-border entails for consumers, retailers, and manufacturers; the potential opportunities it offers; challenges that need to be tackled, and finally a viable and workable solution for it to become a pleasant experience for shoppers and a flourishing endeavor for online sellers. "What earlier used to be majorly a B2B affair, now due to eCommerce, has quietly enveloped the B2C segment too"
- 4. Development Of Cross-Border eCommerce Share 2015- 2020E Global eCommerce Market Percent 2015 Closs-border share Source: Alipay, McKinsey 15 100 100 USD 2,000 bn USD 4,00-4,500 bn -22 2020E Is Cross–Border eCommerce Worth the Effort? Absolutely! A survey on cross-border trade, which is part of the DHL Cross-Border Report , has revealed some stunning numbers: in 2015, the cross- border eCommerce market accounted for USD 300 billion in Gross Merchandise Value (GMV), which was about 15% of overall eCommerce. The report states that this is just the beginning and the momentum will only gain speed with time. It estimates that the cross-border market will grow by close to 25% annually till 2020. This is nearly twice the rate of domestic eCommerce and a growth rate that most traditional retail markets can only dream of achieving. By 2020, the cross-border market is expected to touch USD 900 billion GMV, notching a 22% share of the global eCommerce market. 4 DHL Cross-Border Report
- 5. Reference 5 This unrivalled growth rate heralds unparalleled opportunities for retailers, manufacturers, and online marketplaces on a global scale. With such impressive numbers, retailers should strive to put together their plans and board the cross-border bus as soon as possible. As the numbers suggest, cross- border is growing and is here to stay, the reasons for its growth assume significance too. This is because the reasons are directly related to the growth story. DHL’s report suggests that modern consumers from nearly all markets are increasingly getting inclined to finding the online seller of their choice. Consumers now do not buy products from across the border by chance, but rather make the choice consciously due to some basic reasons. As per Google's Consumer Barometer: Better product availability. A more attractive offering, including price. Trust in brands and online shops emerge as important grounds. Keeping in mind the future relevance of this rationale and tactical implications for online sellers, product availability and trust assume significance for creating and maintaining a sustainable USP. DHL Cross Border Report Source: Alipay, McKinsey
- 6. There’s certainly a trend in product category choices of consumers in cross-border eCommerce. Fashion and electronics lead in consumer choice and are followed by beauty and cosmetics, pet care, food and beverage, and sporting goods. This shows that growth opportunities exist for sellers of all categories and multi-category sellers are set to profit more on account of a wide portfolio, leading to more orders. 6 What Sells More; What Sells Less?
- 7. 7 7 Who can Benefit most from Cross-Border eCommerce? Until a few years ago, online selling was restricted to entities with deep pockets. Now, selling online is no longer a territory of a selected class of eCommerce enterprises. Existing technology enables even smaller online sellers and brick-and- mortar businesses to go global and sell across the border seamlessly. Opportunities exist for every class of online sellers, irrespective of scale and catalogue strength.
- 8. Challenges in Cross Border eCommerce For online sellers, foreign laws and regulations pose a certain degree of challenge. Countries have unique guidelines for cross-border eCommerce vis-à-vis types of products, consumer rights protection, labeling and discounting, and taxation. Businesses shy away from cross- border eCommerce considering the complexity, effort, and time involved in resolving these regulatory issues. 8 Challenges in cross-border trade are, in part, closely linked with consumer aspirations. As seen earlier, consumers started preferring buying from foreign, online sellers for some reasons. In the same vein, there are a few compelling reasons owing to which consumers may shy away from indulging in cross-border shopping. The most nagging issues faced by roughly all categories of online sellers, including marketplaces, brands, and small sellers are more or less similar. While strong and established players have some degree of advantage, all’s not lost for other players too. But, a deeper understanding of these issues on part of these businesses is crucial to circumnavigate them and stay relevant in the eyes of the consumer. Here are a few important issues, among many others, that plague cross-border trade.
- 9. Pricing and Payment Methods A good percentage of consumers feel that buying from foreign online sellers is either expensive or there’s no clarity on the final price that they have to pay. While providing a competitive price may not be always possible, maintaining transparency about pricing can go a long way in winning consumer confidence. Sellers need to inform cross-border buyers about the final landing cost of a product — including product cost, shipping, and duties and taxes — well beforehand. Sellers also need to provide options to consumers vis-à-vis payment methods and have widely accepted modes ready with them. Ultimately, it’s all about making the experience of buying online from a foreign entity convenient and pleasurable for consumers. Logistics and Returns Logistics Concerns related to time required for product delivery and ease of returns logistics weigh heavy on consumers’ mind. While logistics is the most essential aspect of eCommerce, it has now become the real differentiator owing to changing consumer aspirations, who want better quality products delivered to them in the least possible amount of time. 9
- 10. 10 Solutions to Enhance Cross-Border eCommerce Cross-border eCommerce players have technology to thank for, for alleviation of a majority of their woes. A few cutting-edge SaaS products offer services that take care of all pain points, including the ones mentioned here, and enable sellers to conduct their cross-border trade and serve customers seamlessly. Such multi-marketplace selling product offerings provide sellers quick integrations with marketplaces and 3PL players, local and cross- border warehousing, last-mile delivery and returns management, best-in-class SLAs, full visibility and data analytics, pricing management, and international payment methods too. With the help of these innovative solutions, online sellers of all sizes and scales can now sell across borders and fulfill orders seamlessly!
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