As an eCommerce brand owner, how do you visualize the growth trajectory of your venture in the next 5 years? With global B2C eCommerce reached U$ 4.8 trillion in 2023 and is expected to hit U$ 6.5 trillion in 2029, global expansion can offer significant growth opportunities for businesses and organizations.
Successful eCommerce brands prioritize global supply chain management as a strategic tool during overseas expansion. Expanding businesses beyond domestic borders isn’t a lofty ambition reserved for large corporations amidst the digital revolution. Even small and medium-sized enterprises are tapping the global eCommerce market, reaching customers beyond their domestic confines.
However, exploring international marketplaces presents a fresh set of challenges. From understanding diverse customer behaviors and international regulations to managing cross-border logistics, global eCommerce presents several hurdles.
Forward-thinking eCommerce brands have come up with a tactical approach, balancing their ambition with meticulous planning. An effective global supply chain management strategy ensures seamless operations across various demographics.
In this comprehensive guide, we will share some tried-and-tested global expansion strategies so you can seize opportunities and embrace growth with these effective guidelines. Let’s start!
Cross-Border eCommerce Statistics Every Business Owner Should Know
Before exploring the challenges of cross-border eCommerce and recommending viable solutions, let’s take a look at the global eCommerce landscape:
- As much as 61% of consumers consider international merchants to be trustworthy
- With 36% and 25% market share, the US and China are the top regions where customers shop products internationally
- Ecommerce growth in the US is projected at 11.8%, and it is currently valued at $843 billion. India and Mexico are among the fastest-growing global eCommerce markets.
- Around 59% of customers prefer social media platforms to purchase products internationally
- While fashion has been consistently ranked first in worldwide revenue, food is predicted to surpass to become the best-selling global product category.
Key Challenges to Cross-Border Ecommerce and Their Solutions
Several factors, including global supply chain management, pose significant threats to international expansion. As an eCommerce business head, you might be stuck with the common hurdles, but you’re not alone. As much as 55% of eCommerce businesses find cross-border expansion challenging when it comes to operations.
Now, let’s take a look at the key challenges of global eCommerce growth, along with the right strategies to overcome these hindrances.
Cross-border regulations and taxes
One of the prime challenges for eCommerce brands lies in understanding international trade regulations and norms. As you expand overseas, it’s imperative to know taxation norms in each country you sell your merchandise. The taxes, tariffs, and compliance norms vary from one country to another. Furthermore, these laws are not only complex but also dynamic, frequently changing over time. Global brands need to thoroughly research these obligations and understand them before expanding beyond the borders.
Comparing Europe's complicated tax systems for cross-border commerce. Source: taxfoundation
With more than 13,000 taxing jurisdictions in the US alone, the challenge is real.
Ecommerce businesses need to adhere to a host of trade laws, including import and export restrictions, local standards, and customs regulations. In some regions, local governments form special regulations regarding the safety of data, return policies, and products. Failure to comply with these norms can invite hefty fines and penalties.
Solution
Successful eCommerce brands invest in comprehensive research on tax laws in international marketplaces. Besides seeking professional support from local experts to ensure adherence to import and export restrictions, they also incorporate automated tax software to ensure compliance. With professional assistance, you can respect local standards and customs regulations.
Be prepared to resolve cross-border regulations and taxes. Source: dualitytech
Logistics and global supply chain management
Most eCommerce retailers initially struggle with cross-border logistics. Managing logistics efficiently ensures that eCommerce brands can deliver their products at the right cost, within the promised timeframe.
Now, as you foray into multiple countries, global supply chain management turns out to be a key hurdle. How do you find reliable freight carriers and manage your warehousing requirements?
Also, eCommerce brands often struggle with issues like custom clearances, which are generally time-consuming. External factors like natural disasters and political instability can also disrupt international supply chains. As an online brand, you have little control over these challenges.
According to fictive, improving supply chain visibility is the top priority for 55% of manufacturing-related businesses. Amongst them, 85% of leaders in engineering, supply chain, manufacturing, and product development plan to or have adopted AI; and 48% of companies say they are under increasing pressure to improve sustainability in the supply chain.
Solution
For successful cross-border eCommerce expansion, effective logistics is a priority. Working closely with local logistics companies and setting up distribution centres in important markets significantly reduces the delivery time. This strategy also reduces the shipping cost, which makes your eCommerce offerings more competitive.
Successful eCommerce brands like Ubuy have established benchmarks with sound global supply chain management. Partnering with the right vendors for cross-border logistics, online brands can overcome all types of turbulences threatening to disrupt their supply chains.
⭐ You Might Also Like: The Global Supply Chain Playbook
Managing cross-border payments
How do you manage cross-border transactions, given that each country has its own currency? Moreover, the preferred payment methods differ significantly across demographics.
Radial found that 58% of consumers say that having multiple payment methods is an essential factor when they select an eCommerce brand. Additionally, 26% of respondents cited lack of alternative payment methods as a reason for cart abandonment in Coresight’s study.
Moreover, fluctuations in currency exchange rates may affect the pricing and profitability of businesses. The transaction fees associated with different payment methods also differ significantly.
Without a transparent mechanism for cross-border transactions in place, it’s easy to get entangled in money laundering laws. An informed approach to international transactions is imperative to ensure safe and resilient cross-border trade.
📚 Read More: What Are International Payments? 5 Common Types
Solution
A frictionless payment process is a necessity to facilitate cross-border transactions. Successful eCommerce brands invest in robust payment gateways that respect local norms while ensuring optimal security. These gateways support most of the international currencies and support different payment methods including PayPal, digital wallets, bank transfers, credit cards, and debit cards.
Besides, it’s imperative to bill customers in the local currency. This approach brings several benefits to the table, including:
- Satisfying buyers who prefer shelling out the local currency
- Reducing the exposure to exchange rates
- Slashing transaction costs since foreign currency conversions aren’t necessary
To ensure hassle-free cross-border transactions, implement a secure and robust payment gateway on your eCommerce site.
Payment and credit card fraud
Global eCommerce brands face a persisting challenge while dealing with payment and credit card fraud. A study reveals that in 2024, retailers may lose around $25 billion due to payment fraud issues.
With eCommerce transactions on the rise, the potential for fraud continues to deter customers from making international transactions. Scammers exploit vulnerabilities in international payment systems, which justify the need for SSL certifications on eCommerce websites. With the inception of generative AI, 52% of businesses expect a higher number of online attacks in the next 12 months. Naturally, fraudulent activities are likely to deter customers from purchasing merchandise from online vendors.
Solution
To secure cross-border transactions, eCommerce brands must incorporate automated payment solutions. This significantly enhances control to check payment processes.
Online vendors should implement robust security measures like SSL certifications, two-factor authentication, and advanced fraud detection systems to combat payment and credit card fraud. It’s imperative to update and monitor these systems regularly to identify potential vulnerabilities. Educate your customers on secure payment practices, while collaborating with payment processors to ensure safe transactions.
Language and cultural barriers
While devising global expansion strategies, successful eCommerce brands address language and cultural barriers in international markets. The challenge lies in understanding local cultures and offering adequate customer support in their preferred language. A cultural misfit can inflict damage on your brand loyalty. Successful virtual retailers invest in translation services.
Also, eCommerce brands hire marketing professionals capable of adapting the content of campaigns in local languages. This establishes a strong bond with the local audiences.
Another linguistic challenge lies in offering customer services in the local language. The agents need to understand cultural sensitivities to establish a strong rapport with international customers.
Solution
The secret to ensuring customer satisfaction and addressing linguistic barriers lies in providing online support in local languages. This approach works wonders when it comes to retaining customers. Do you know that 75% of customers are likely to return to your brand if you provide customer support in their local language?
Leading eCommerce retailers go a step further, respecting cultural contexts and aligning the support timing to the local time zone. It’s imperative to train your customer service department to tackle inquiries effectively to foster trust and loyalty. Ultimately, all these efforts nurture a better brand reputation.
🔥 Read More: Ecommerce Localization: How to Localize Currency, Language, and Pricing for International Shoppers
Return and refund policies
Customer protection laws largely vary across demographics. This makes managing returns and refunds a challenge during global expansion. Given that each country has its own set of laws, online brands often struggle to cope with the regulations. Inconsistencies in return policies can lead to dissatisfaction among customers, damaging the reputation of the brand.
Fit/ size issues and damaged/ defective products are the top 2 reasons behind product returns. Source: parcellab
Customers expect hassle-free return policies, and the failure of eCommerce brands to fulfill these expectations leads to a decline in customer loyalty. Besides, logistical challenges like high return shipping costs and longer processing times further complicate the situation.
Solution
For eCommerce brands, it’s essential to come up with a standardized return and refund policy based on demographics. It should accommodate the regulations and expectations of customers in each target market. These policies should be mentioned on your eCommerce portal, making it easy for buyers to understand the clauses.
Partnering with local logistics providers can help you address global supply chain management challenges. Focus on streamlining the return policies for customers, offering a fast and hassle-free experience. Leading online retailers invest in local return centres and pre-paid return labels, besides providing a simple system for customers to request returns. This will significantly enhance the trust and satisfaction of customers.
Adapting marketing strategies to local markets
One of the significant hurdles threatening eCommerce growth is the inability to adapt marketing strategies to local markets. Marketing strategies that prove effective in one country may not work in others. This is due to varying cultural differences, consumer behaviors, and local trends.
Why localized marketing is important. Source: redokun
Failure to adapt marketing efforts to the local context often results in poor engagement. This significantly reduces the effectiveness of your campaigns.
Solution
The most appropriate marketing strategy for cross-border eCommerce is to research and understand local trends. With an informed approach to customer behaviors and preferences, eCommerce stores can develop customized marketing strategies targeting each country.
Make sure to prioritize cultural values and local aesthetics while designing your marketing campaigns. Successful eCommerce brands often collaborate with local influencers and deploy social media platforms popular in each country to reach a wider audience.
Also, focus on localizing your content, including website, product descriptions, and advertising materials. This approach makes it relevant and relatable.
Marketing localization and localized marketing are different strategies that you can employ in global business expansion. Source: redokun
While designing your marketing campaigns in international marketplaces, consider local holidays, events, and seasons. A holistic approach to marketing your eCommerce brand in international markets drives sales and establishes a strong presence of your brand globally.
Wrapping Up
Navigating cross-border eCommerce requires strategic planning and a deep understanding of international markets. Besides focusing on global supply chain management, online brands need to address challenges like logistics, payments, customer service, and marketing strategies.
The global market holds tremendous potential for eCommerce brands. With the global expansion strategies we recommended, brace up to conquer international marketplaces with confidence.
