Decoding the Cross-Border eCommerce Puzzle

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.

What earlier used to be majorly a B2B affair, now due to eCommerce, has quietly enveloped the B2C segment too.

Retailers and manufacturers in Malaysia have struggled with cross-border selling for a very long time. While local eCommerce in Malaysia is facilitated by home infrastructure, logistics, and laws, it’s the cross-border trade that suffers because of many debilitating factors.

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.

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 that 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, and 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.

What sells more; what sells less?

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.The magic here is to find the right products at the right price points.

But the question is, what is the right price point? The answer can surely be determined by considering the costs for end-to-end procurement, storage, delivery, fulfillment, marketplace fee and the buying parity of the country you are selling in.

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 the fiefdom of a select class of eCommerce behemoths and brand manufacturers. Technology exists, that 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.

Having said that, there are challenges that eCommerce giants, brands, and online sellers need to surmount, without which, opportunities can turn into nightmares for both sellers and consumers.

Challenges in Cross-Border eCommerce

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:

Foreign Laws and Regulations

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, labelling and discounting, and taxation. Businesses shy away from cross-border eCommerce considering the complexity, effort, and time involved in resolving these regulatory issues.

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.

Solutions to enhance Cross-Border eCommerce

Cross-border eCommerce players have technology to thank 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 in Malaysia can now sell across borders and fulfil orders seamlessly!

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