he development of technology means that the borders between the furthest corners of the world are gradually blurring. A good example is cross-border e-commerce, which puts most products from different countries at your fingertips. For many businesses, it represents an incredible opportunity to reach new customer groups and increase revenues.
However, to secure a competitive advantage in the global marketplace, an effective cross-border sales strategy must be implemented. In this article, we'll discuss what exactly cross-border sales is, the benefits it brings to e-commerce sellers, and the challenges that may be involved in trading outside of your own country.
What is worth knowing about cross-border e-commerce?
Cross-border selling is the sale of products or services outside the country of origin. In today's digital age, where online shopping is becoming commonplace, a cross-border strategy opens up huge opportunities for online shop owners to expand their business into new markets.
The cross-border model is one of the most important trends in online trade, which applies to both B2B and B2C companies. According to statistics, the global B2C cross-border market will grow to $7.9 trillion by 2030. By comparison, in 2021, online cross-border trade was worth $785 billion. On the Polish market, this trend is also noticeable - according to the e-Izba report, more and more sellers are considering starting digital cross-border sales or have already made this decision and are trying their hand at foreign markets. Among the surveyed e-shops, 60% declared that they conduct cross-border sales, while another 20% intend to launch cross-border e-commerce within the next 3 years.
These figures indicate that there is great potential for the development of cross-border online trade, which can be a driver for businesses to expand internationally. However, this step needs to be well thought out, because in addition to the many benefits that come with cross-border e-commerce, there are also many challenges that companies need to overcome on the way to transforming their business.
Challenges of cross-border e-commerce sales
To be able to implement the right solutions, it is worth being aware of the specific difficulties involved in implementing the cross-border model. According to the Strix report, companies that are still procrastinating on cross-border expansion perceive challenges related to aspects such as logistical processes, lack of market-specific knowledge, too little experience in selling cross-border, not including cross-border in a long-term business development strategy and market uncertainty.
The pain points identified by entrepreneurs indicate the need to gain knowledge of the requirements of the new market and to adapt logistics, management and long-term strategy to them. These requirements include legal and regulatory aspects, local culture, purchasing habits and preferences, language, marketing and advertising, customer service or pricing policy.
Cross-border e-commerce in a few steps
Are you wondering what elements are key when implementing a cross-border strategy in an online business? According to the report, as many as 20 % of retailers, when asked "What is key to expanding abroad?", answer that local payment methods, the attractiveness of prices, marketing and communication channels to reach customers, credibility of the shop, intuitiveness of its service and communication in the customer's language. Find out how to go through the international expansion process step by step.
1. Market and competition analysis
Before expanding abroad, it is crucial to thoroughly research the target markets. An analysis of demographics, competition, consumer preferences should be the first step. A diagnosis of key cultural differences and consumer behaviour can help to define the potential of the product range that should be offered by the company in a given market. Selecting the right countries based on this data will help optimise the strategy and tailor the offering to local needs.
Factors that can greatly facilitate an agile entry into foreign markets are the selection of products with high-margin potential and minimal logistical challenges. It is important to make order fulfillment as easy as possible for both the customer and the company. It is therefore worth to introduce goods that will have a low return potential and that will enable the scaling of sales and the acquisition of new customers.
2. Cross-border strategy
Choosing a cross-border e-commerce business model is a key decision that influences how you do business in foreign markets. It is then worth considering whether to sell based on your online shop or to opt for a marketplace.
Marketplace vs. own e-commerce
A marketplace is a website where you can find products from multiple sellers at the same time. Examples of such a platform are Allegro, Zalando or Amazon.
At the very beginning of an overseas business, it may be simpler to start selling through local or international marketplace platforms, as this will be much faster and less costly than investing in a new online shop architecture. If this solution proves successful in a particular market, at the next stage of development you may decide to invest in adapting your own e-commerce platform for overseas sales.
Each of these solutions has both advantages and disadvantages. An in-house e-commerce system offers greater control over the brand, flexibility in strategy development and the opportunity to build strong customer relationships. On the other hand, it requires full responsibility for the technical operation of the platform and the acquisition of online shop traffic.
Marketplace platforms, on the other hand, provide a large customer base and technical support, but in return for numerous fees and commissions. Additionally, each has its own policies, which can carry the risk of losing full control of the brand.
Cross-border sales process
Once you have decided on the model you will use to do business in foreign markets, take care to tailor your products or services to local needs and choose the right distribution channel for your goods. Perhaps you want to sell exclusively online, or perhaps through an omnichannel model? Decide where you want to promote your products and what sales route will be most effective to attract potential customers. Also consider where your warehouses will be located and how orders and returns will be handled.
It is also important to define the business partners you will be working with as part of the expansion, such as suppliers, manufacturers, shipping companies, translation agencies or e-commerce or marketing agencies. They will be an invaluable support in the pursuit of your company's ambitious goals.
At the end of this stage, create an optimal pricing policy. Adapt your prices to local conditions to make your product attractive and accessible to local consumers. When doing so, take into account all costs associated with international sales, such as delivery costs, customs duties or taxes. Taking these factors into account is necessary for a business to be competitive but still achieve the desired profitability.
Online shops that want to start selling cross-border also need to adapt to the different currency systems and payment preferences of international customers. A good solution for this situation is to integrate advanced payment gateways that automatically convert currencies and offer a range of payment methods.
3. Tools and technology
When deciding to launch international sales, it is important to ascertain whether your current IT infrastructure allows you to scale abroad. It may be necessary at this stage to adapt the architecture of the current shop to the needs of the cross-border model, integrate with external tools or move to a new platform. Some of the most popular e-commerce platforms on the market include, for example, Adobe Commerce (Magento), Shopify or Shopware.
When choosing the right technology, it is worth paying attention to whether the solution is ready to be implemented straight away or whether the software can be customised to meet the individual needs of the company. For overseas sales, it is worth investing in the Composable Commerce model. This approach involves building an e-commerce platform in a modular manner that provides a high degree of flexibility. Unlike traditional monolithic platforms, which offer a specific set of functions, solutions based on Composable Commerce allow you to create a system from separate microservices, enabling you to tailor it to your specific business needs.
It is also important to complement your technical infrastructure with the necessary data analysis tools such as CRM, PIM, ERP. These will enable the automation of many business processes, such as the management of customer data, product information or stock levels. Not sure what solution your company needs? Get professional advisory from an e-commerce agency.
4. Legal aspects of e-commerce abroad
Due to the logistical and operational requirements involved in getting products to market, one of the key challenges is compliance with country-specific legislation. Consumer law, data protection, tax regulations, customs, as well as intellectual property rights form the legal foundation that should be taken into account when expanding abroad. In addition, compliance with the General Data Protection Regulation (RODO) in European markets and other local data protection regulations in countries outside Europe is essential.
5. Marketing strategy
One of the key elements of positioning a shop in international markets is to create an effective marketing strategy. For this to be possible, it is necessary to understand the specific characteristics of each country, including the shopping habits of customers, their activity in the various sales channels and to analyse the competition. These activities will enable personalisation of communication and adaptation of the offer to local needs. So how do you promote your brand's presence in a new market?
An effective marketing strategy involves using a variety of methods and channels to reach potential audiences, including social media, email marketing campaigns, influencer marketing or local media. This requires defining advertising platforms, promotion rates and researching local marketing agencies.
It is also important to take care of the design of the online shop, adequate translations of product descriptions. These should reflect the local language and culture of the country in question, which will significantly increase the credibility of the brand and make consumers more likely to return to the shop for more products.
Benefits of international expansion
The benefits of the cross-border e-commerce model are numerous, both from the entrepreneur's and customers' point of view. For potential consumers, it certainly means universal access to attractive and competitively priced products. What does this look like from a business perspective? Among the most important advantages of the cross-border e-commerce model for businesses are:
- Access to a global market,
- Diversification of revenue streams and price flexibility,
- Ability to sell internationally without the need for large amounts of capital,
- New sales channels and reaching new customer groups,
- Increased revenues,
- Increased competitiveness.
If you are looking for a business partner to support you in creating a long-term cross-border e-commerce strategy, please contact us. Our team will be happy to answer your questions and guide you through the entire transformation process - from platform selection to sales development and scaling.