Frank Van den Berg 3 September 2015

Categories Ecommerce

Dismantling 10 Myths On Cross-Border E-Commerce

We will ‘de-mystify' ten common misconceptions about international ecommerce expansion.

Selling cross-border for all companies seeking to explore new markets and achieve growth by seizing opportunities abroad. Today, we will ‘de-mystify’ ten common misconceptions about international ecommerce expansion.

 

Being A Market Leader In Your Own Country Makes A Cross Border Entry Easier

 

Entering a new market is  like starting to play a new game with a different set of cards. Of course, being a market leader in the domestic market has equipped your company with experience, know-how and a solid organisational structure. However, a new market brings an entirely new competitive environment, a new demand structure, other marketing costs, new buying behaviors and a different shopping and consumption culture.

 

Just Translating The Webshop Is Enough

Over half of French, Chinese and German consumers prefer buying on sites in their own language[i], and a good translation is valuable for search engine ranking and conversion. However, it is far from being the only key to cross-border success. Sellers need to build up trust with consumers and anything out of the usual will raise questions with them. They will be concerned if your company does not offer a local address or phone number. Have you thought about pricing? Customs, duties and legal requirements?  Is your customer service ready to serve a new audience, speaking a different language and maybe living in a different time zone? There is a lot more to think about than just translation.

Longer Delivery Times Are The Most Important Factor Keeping Customers From Shopping  Across Borders

According to Pitney Bowes[ii], long shipping times only come third in the ranking of barriers to cross-border buying, ranging behind high shipping costs and unforeseeable fees at time of delivery, including duties and taxes. According to figures published by DHL & Euromonitor[iii], the global average of acceptable delivery delays is 6.5 days, with Russians leading the list with an average of 12.4 days and Turkey being the most impatient with 3.5 days.

 

Fast Delivery Is Standard And A ‘Must-Have’

 

Whereas too long delivery time scan be a barrier to cross-border e-commerce,  the vast majority of international buyers would choose ‘free’ over  ‘fast’[iv]. Consumer are willing to pay extra- but rather choose for convenience, such as the ability of choosing a time-slot. The most important asset for an online retail is reliability: Don’t overpromise when it comes to deliveries and try to inform your clients accurately. If here are changes to what the client was originally told, inform the client timely, e.g. via sms or email. Being reliable and pro-active  improves your customer experience and reduces incoming calls in customer service.

 

Successful Cross-Border Selling Requires So Much Investment That It Is Only Profitable For Big Players

 

Sure, opening offices in your target markets, handling international returns, hiring native speaking staff without being able to foresee exact volumes requires substantial investment. However, it is not the only way to expand an online shop: Working with local service providers offering modules such as returns handling, customers service and logistics support make an international expansion scalable and accessible to SMEs by reducing upfront costs and risks significantly.   

If You Offer Credit And Debit Cards You Will Be Fine

The Chinese use Union Pay and Alipay, the French use Carte Bleue, the Dutch pay with iDeal. Payment preferences differ by country and payment is a question of trust. Not offering the locally trusted and preferred payment methods can cost you up to 50% of sales.

 

Foreign Retailers Can Sell To Chinese Customers Best Opening A Storefront On The Tmall Platform

 

While the Tmall platform offers foreign retailers a lot of convenience and generates a steady inflow of traffic, don’t forget you need to invest between 30- 40k just for set-up. The high fees will eat into your margins. The competition is high, and only 10 percent of Tmall merchants  are actually profitable. While Tmall might be a good address to enhance brand awareness and traffic at a later stage, retailers should not be scared of selling directly to Chinese consumers via their own online store or using the popular social media platform WeChat as a catalyzer for their e-commerce success.  

E-Commerce Legislation Is The Same Throughout The EU

There has been a lot of effort to harmonize distance selling law in the European Union. There is EU e-commerce law applying to all member states alike. For instance the Consumer Protection Directive has been launched in the summer of 2014 harmonizing the conditions for returning goods ordered online, and also the use of cookies has been harmonized recently. However, just translating your legal terms and conditions is not sufficient at all. There are local rules defining what needs to be in there. Many countries also have installed specific, local regulations applying to distance sellers, and it is vital to be aware of them. In Germany, there is a law since 2012 demanding sellers to explicitly state on the buying button that the consumer is affirming a binding purchase which he has to pay for. Legal requirements are thus still differing across the EU and need to be closely analyzed.

The USA Has The Advantage Of Being A Single Market

True- but untrue. The US has the advantage of a single official language and currency. But next to the fact that the USA is a huge country , don’t forget the cultural differences, Spanish-speaking communities and the  7500 different  sales tax rates, depending on state, city and sometimes even on the street.

 

UK, Germany And France Are The Biggest, Ergo The Best Countries For E-Commerce Expansion

 

The UK, Germany and France are mature e-commerce markets that have a large and growing online shopper pool and a well-developed infrastructure. That does, however, not mean that these are the ideal target markets for your specific sector or products. An in-depth price-analysis shows that marketing costs differ significantly per country. Assess carefully how this will affect your margins. Can you make money there with your products? It may turn out that Estonia, Denmark or Poland are a smarter choice for you than France or Germany.