Crossing Borders in Retail: Right Strategy Key to Success
18 Dec 2017 Crossing Borders in Retail: Right Strategy Key to Success
(This article was originally published in Businessworld – link)
Digital proliferation and increasing adoption of social media have all but erased international borders when it comes to information. Equipped with Facebook, Twitter and other platforms, people worldwide can share their knowledge more instantly and effectively than ever before.
The internet is also blurring the borders of commerce by offering retailers of all sizes a way to tap new customers and markets without the level of risk involved with building of brick and mortar location.
While recent report suggests that Cross Border shopping will make up 20 percent of ecommerce in 2022, yet the whole process can get a bit complicated. Some products can’t be sold in certain markets; payment preference differ; and with taxes, trade duties, customs and shipping issues, getting the product to the customer can be a big problem. Once in the market, cross border ecommerce growth is limited by perceptions of undue financial risk, constrained resources and underdeveloped marketing activities for Emergers and other segments.
Retailers must be prepared for fluctuations in currency market, and accommodate local payment preferences. While many international shoppers have credit cards and use PayPal, consumers especially in South Asian market prefers other methods. While in India, cash payment is still the most preferred mode, some of the Europeans countries such as Germany prefer to pay for their e-commerce purchase with bank drafts.
Shipping and logistics are the biggest hurdles for retailers wishing to sell internationally without physical storefronts. Unless you are exclusively selling digital downloads, you will have to develop a strong logistic process. Effective logistics has repeatedly proven to be a strong competitive advantage for online, as well as offline retailers. The costs associated with cross border logistics can be the tipping point for your ecommerce business. But it is not just about the costs. It’s also about how the retailers manage the returns. Several ecommerce businesses work on the premise that their role ends once they can prove that they handed over the goods to the logistics provider. If your delivery logistics are complex, imagine the complexity of reverse logistics. Given the costs, customs duties, and documentation, many e-commerce players may not be able to provide reverse logistics in cross border situation.
There are several strategies that retailers can adopt to be profitable through cross border business. Engaging with third party expertise to optimize the logistics and the delivery value chain is one of them. Due to the continuous downward pressure on prices in the online world, relationships between delivery partners and e-retailers must strengthen to meet customer needs and expectations in a mutually beneficial and profitable manner.
Moreover, International retailer needs to choose a partner who can facilitate online international access and provide ‘trust’ to consumers. This is particularly important in terms of payment services and fraud protections. Additionally, the partner needs to provide support which expedites international payments and paperwork including customer clearance.
In a global economy, facilitating seamless and cost effective cross border sales is of clear strategic importance to enterprise retailers. Cross border retail is expected to grow twice as fast as domestic sales, so retailers that have overcome the bumps in the road to cross border retail are already enjoying serious competitive advantages.
Planning to set up a cross-border business? We can help.