Covid-19 has changed ecommerce. The pandemic prompted the need for globalization and for sellers to use a global reach to increase engagement, brand authority, competitive advantage, and see real revenue growth.
We’ll help you navigate the world of cross-border selling with actionable tips in this article. We recommend you also watch the webinar that this article is based on.
Why expand your business internationally?
More than 32% of consumers across 40 international countries made cross-border purchases in 2020, according to Digital Commerce 360. And 51% plan to do so in 2021.
Global ecommerce is projected to grow from $3.7 trillion in 2021 to $4.9 trillion in 2024, according to Statista. That is a huge increase.
Jason Stuckey, GM for Linnworks North America, says, “We talk about global ecommerce and the reality is that prior to covid, global ecommerce really wasn’t there. It really wasn’t strong. In the US in particular only about 4% of sellers sold cross border before the pandemic. It’s important for sellers to pay attention because cross border opens them up to a larger audience and more sales, but you need to be prepared for it.”
What markets should you consider selling to?
It can be overwhelming when choosing the international markets to start selling to. Here are some tips on how to start deciding.
Toby Hay, Managing Director for e-Commerce Marketing, FedEx Express Europe, says, “Asia-Pacific is the largest ecommerce segment on the globe."
This is largely thanks to the huge China domestic market, according to Hay. Nothing is slowing down in the Chinese domestic ecommerce market.
The emerging markets of Japan, India, Philippines, South Korea and Malaysia are all markets that have significant relevance from an ecommerce perspective and from an ecommerce cross-border perspective, according to Hay. “These are definite markets to look at if you are going to Asia. There’s a strong demand for European goods that is driving ecommerce growth.”
These are the highest-growth markets over the last year: Italy, Spain, Czech Republic, Norway, and increasingly Turkey and Russia are becoming strong growth countries for ecommerce.
What action steps can sellers take to start growing internationally?
Stuckey says, “If you do not have marketplaces in your strategy, you need to have marketplaces in your strategy.”
The key advantages to using marketplaces are:
They already have an audience. Marketplaces come “preloaded with an audience,” according to Stuckey. Marketplaces are like virtual shopping malls that drive traffic to your store.
Great for testing a new market. Marketplaces allow you to make a very low investment in a market and test it out to see if it’s something you want to put more resources, time and energy into.
Help with outsourcing logistics. Logistics companies such as FedEx are starting to provide much more robust solutions for markets that allow you to deliver your products that meet the demands of marketplaces.
Take action on customer data. It’s important for sellers to find marketplaces that provide consumer data that can be actioned. Maybe you test out selling in Italy on a marketplace and make the decision to invest in your own brand presence and your own website in that area if it succeeds.
Mark Aldous, Head of Presales EMEA at Linnworks, says sellers need to make sure they have a centralized tech stack that connects to marketplaces to manage all inventory levels in one place. This way, your team doesn’t need to learn every single detail of running orders and inventory in each marketplace. Instead, sellers can work with a global solution to help with that.
When it comes to shipping, Aldous points out you do not want to work with too many different partners to get your product from your own warehouse or suppliers for international environments. This can cause a headache.
Instead, it’s important to simplify your logistics and work with a global freight partner that will connect you to as many international markets you want to work with.
The alternative approach is to work with local 3PL (third-party logistics) partners who sit in the country for you, Aldous says that 3PL partners will do the final dispatch. The advantage to using a 3PL partner is that the customer gets the order quickly and is not paying international shipping rates. This creates a more positive experience for the customer.
The rules and regulations around international selling.
Regulations around international selling are why everyone starts their ecommerce journey on a domestic stage. Domestic is easier, you are closer to fulfillment, and the costs are more controllable. But there are big prizes on going cross-border. You just need to get yourself well planned and prepared.
Here are some tips on being prepared to sell cross border from a regulatory standpoint:
Register for an Economic Operators Registration and Identification number — EORI number. This is used by customs and authorities to monitor shipments and make sure that any imports and exports are correctly allocated to your VAT process and for allocating duties and taxes. This is critical.
Work out the contractual terms with your 3PL provider. If you work with a 3PL rather than directly to the customer, you need to know at what point you hand over the goods to them. This is set around International Commercial Terms laid out by the International Chamber of Commerce. This includes:
Where the goods will be delivered
Who arranges and pays for transportation
Who is responsible for insuring the goods
At what point does ownership transfer to the buyer and who handles customs procedures and who pays the duties and taxes
Know how to classify and describe your goods. This ensures smooth transportation and smooth processing through the clearance process as needed. Make sure to have a harmonized code and good description of goods - what they goods are, what they are made of and what they are used for. All of that needs to be put in the commercial invoice along with the value and country of origin to ensure you get smooth transportation the first time and every time.
Understand the VAT changes in the EU starting July 1. The new ecommerce VAT (value-added tax) in the European Union is designed to simplify the collection, reporting and payment of VAT. These changes affect how businesses import their products internationally into the system. There are two new schemes coming in July: The OSS (the One-Stop-Shop) scheme and IOSS (the Import One-Stop-Shop) scheme. It is important to understand these and define which scheme you will use.
For more information on growing your business with cross-border selling, watch our discussion with:
Toby Hay, Managing Director for e-Commerce Marketing - FedEx Express Europe