Enterprise Ecommerce / How to Sell Online

Cross-Border Commerce 101: The History, The Lingo, The $900B Opportunity

Sergio Villasenor / 6 min read
Table of Contents

    In 1994, Jeff Bezos founded Amazon in Seattle, Washington, USA. Since, the landscape of commerce has forever been changed.

    Bezos gave way to a plethora of technology advancements that have accelerated market disruption, causing increases in consumer demand, competition and emerging technologies. 

    He and his company changed the way we buy and sell online. But Amazon isn’t the only company to have altered the ecommerce landscape in this way.

    Below are key dates in global ecommerce history that have transformed the relationship between people and product; making the occasional shopping experience a 24/7, global, cross-border experience:

    • 1994 – Amazon founded
    • 1998 – PayPal & Tencent both founded
    • 1999 – Alibaba founded
    • 2000 – Google AdWords launched
    • 2003 – Taobao founded
    • 2004 – Facebook founded
    • 2005 – Amazon Prime launched and YouTube founded
    • 2006 – Twitter founded, YouTube Ads launched
    • 2007 – FarFetch founded, FlipKart founded
    • 2008 – Push notification technology launched
    • 2010 – Instagram, Pinterest, Shoprunner, SnapDeal, Stripe all launched
    • 2011 – Bootstrap Mobile-First CSS Framework, Snapchat, WeChat all launched
    • 2012 – Facebook Ads launched, IBM Watson founded
    • 2013 – Beacons, RFID, Twitter Ads all launched
    • 2015 – AR, Instagram Ads, VR all launched
    • 2016 – Apple Pay, Android Pay, Snapchat Ads, Voice Commerce all launched
    • 2017 – Drones launched

    As commerce transformed at each one of these pivotal points, so did the method in which merchants and consumers connected, transitioning from physical, in-store driven relationships, to those that are initiated and fostered online and globally across multiple channels.

    Today, consumers around the world can shop your website, price compare on marketplaces, schedule to test your product in-store or over a video conference line, and connect via social media, all within the same day.

    And guess what? They love it!

    “Our US customers don’t always want the same things our Australian customers do, so this helps us better differentiate our marketing efforts,” says Kristy Withers, Founder of Incy Interiors.

    “The good news was that we were basically able to just clone the site and go live in both markets without any lag time. It was extremely easy, and it makes our lives easier on the back end of things. It’s just a better overall user experience for all of our customers, too.”

    The International Expansion Playbook

    What if you are ready to invest in international expansion and localization to own a brand new market long before your competitors?

    That’s what this guide will teach you to do.

    200%+ Increase in Cross-Border Revenue by 2020

    Merchants who extend product offerings to international customers boost sales by 10-15%. And, this type of cross-border commerce is projected to grow at twice the pace of domestic ecommerce –– growing 25% annually through 2020.

    This will take cross-border annual sales from $300 billion to $900 billion.

    With 2020 right around the corner, brands looking to optimize on the international potential need to act –– fast.

    So, let’s start from the very beginning and answer a few basic questions.

    What is Cross-Border Commerce?

    Cross-border commerce is the online selling of goods to consumers in different countries.

    Where in the World is Ecommerce Growing Significantly?

    The adoption and penetration of ecommerce in international markets are key indicators of whether you should invest efforts and resources in specific countries.

    How are adoption and penetration calculated?

    WeAreSocial in collaboration with HootSuite and GlobalWebIndex calculate market adoption and penetration for cross-border commerce based on the percentage of the national population that had bought something online in the past month.

    Outside of the United States and Canada, here are the top 5 countries in terms of “Active Ecommerce Penetration:”

    1. The United Kingdom – 76% of the population
    2. South Korea – 72% of the population
    3. Germany – 72% of the population
    4. Japan – 68% of the population
    5. United Arab Emirates – 62% of the population

    In many countries, mobile commerce makes up a much more significant portion of online sales. Here are the top 5 countries for mobile commerce (again not including the U.S. or Canada):

    1. South Korea – 55% market penetration
    2. United Arab Emirates – 47% market penetration
    3. Thailand – 41% market penetration
    4. China – 40% market penetration
    5. Singapore – 40% market penetration

    To alter these numbers a bit, let’s take a look at the top countries with the fastest growing mobile commerce consumer base, accounting even for the U.S. and Canada:

    1. Indonesia – growing 155% YoY
    2. Japan – growing 101% YoY
    3. Philippines – growing 85% YoY
    4. India – growing 68% YoY
    5. Mexico – growing 64% YoY

    As more and more emerging markets are exposed to new technology and easy internet access, ecommerce will begin to grow in those areas as well.

    What Are My Cross-Border Commerce Options?

    The Quick and Easy Way

    First things first, you can easily allow for international sales by:

    • Flipping the currency switch on your ecommerce backend: This will use a browser’s IP address to show them their own currency. On BigCommerce, the exchange rate is calculated for you daily.
    • Creating a country or region-specific shipping zone
    • Assigning a carrier to that zone

    Here is how all of that works on BigCommerce:

    Add currencies.

    Adding shipping regions.

    Here’s what it looks like for the consumer:

    What you’ll notice, however, is that consumers will be billed in the home-country currency and language translations are not immediately available.

    In order to make those two final aspects occur, you will need dedicated region-specific websites.

    Why does it work this way? Localization…

    Understanding Localization

    Localization is the altering of marketing strategy, images, site copy and even product variations to best meet the needs of a geographical region and the culture of its people.

    This is often needed because culture, consumer behavior and customer expectation differ by region.

    The most successful international sites are region-specific for that reason –– updating product imagery and writing copy that engages the regional audience, rather than using home-country ideas that often fall flat abroad.

    We’ll dive more into this later in the guide –– but you can jump ahead here if you’d like.

    The Region-Specific Way

    That said, there are two primary options of selling across borders if you are serious about dedicating time and resources to increasing sales in a new geography.

    1. Localized, Branded Websites
    2. Marketplaces

    To decide which option may be best for your brand and to succeed globally, both options require that your brand understand the consumer behavior and mentality in the regions you are expanding to.

    According to Pitney Bowes, globally, 45% of shoppers make most or all their domestic purchases through a marketplace, compared to 24% through a retail site.

    The splits were similar for international purchases: 46% via marketplaces, and 22% via retail websites.

    That data might point you in the direction of choosing a marketplace to launch internationally, but it is also important to understand exceptions by market.

    For example, in Australia, Canada, France, Hong Kong and South Korea, a marketplace-exclusive product offering should be avoided. Local buyers have shown strong preferences for websites over marketplaces in those areas.

    In all, depending on where you are launching your international presence, you may want both a marketplace and a webstore presence.

    Pro Tip

    Similarly to U.S. buyers, consumers in developed countries and areas like these use websites to evaluate a brand’s trustworthiness before buying, either onsite or on a marketplace.

    Key Cross-Border Commerce Terminology

    Before we go much further, as we travel through cross-border commerce, it is important to understand key terms that will be discussed.

    • 3PL: 3PL stands for “third-party logistics” and is a provider of outsourced logistics services. Logistic services encompass anything that involves management in regards to how resources are moved to the areas where they are required.
    • APAC: APAC stands for Asia Pacific (abbreviated as APAC, Asia-Pac, AsPac, APJ, JAPA or JAPAC) and is the part of the world, in or near, the Western Pacific Ocean. The region varies in size depending on which context, but it typically includes much of East Asia, South Asia, Southeast Asia, and Oceania.
    • Cross-Border Commerce: The online trade between a business (retailer or brand) and a consumer (B2C), between two businesses, often brands or wholesalers (B2B), or between two private persons (C2C), e.g. via marketplace platforms such as Amazon or eBay.
    • Digital Wallets: A digital wallet refers to an electronic device that allows an individual to make electronic transactions. This can include purchasing items online with a computer or using a smartphone to purchase something at a store. An individual’s bank account can also be linked to the digital wallet.
    • Ecommerce: Commercial transactions conducted electronically on the internet.
    • Final Mile Delivery: The last mile is a metaphor used to describe the movement of goods from a fulfillment center to their destination. In other words, the last mile is the last leg of your product’s trip before it arrives on your customer’s doorstep.
    • Localization: The adaptation of a product or service to meet the needs of a language, culture, or desired population’s “look-and-feel.”
    • M-commerce, or mobile commerce: The buying and selling of goods and services through wireless handheld devices such as cellular telephones and personal digital assistants (PDAs). Known as next-generation eCommerce, mCommerce enables users to access the Internet without needing to find a place to plug in.
    • MENA: The term MENA is an English-language acronym referring to the Middle East and North Africa region. The term MENA covers an extensive region, extending from Morocco to Iran, including all Middle Eastern Mashriq and Maghreb countries.
    • O2O (Online-to-Offline): A website or mobile advertising that entices someone into making a purchase in a physical establishment. Groupon is the premier example, offering discounts for venues such as restaurants and theater tickets.
    • Social Commerce: Social commerce is a subset of electronic commerce that involves social media, online media that supports social interaction, and user contributions to assist online buying and selling of products and services. More succinctly, social commerce is the use of social network(s) in the context of eCommerce transactions.
    • Tariffs: Taxes on imported goods.
    • Total Landed Cost: A landed cost is the total price of a product once it has arrived at a buyer’s door. The landed cost includes the original price of the product, all transportation fees (both inland and ocean), customs, duties, taxes, insurance, currency conversion, crating, handling and payment fees.

    Now that you have a general understanding of cross-border commerce basics, the next chapter will walk you through the risks and rewards you should know about before you launch.

    The International Expansion Playbook

    What if you are ready to invest in international expansion and localization to own a brand new market long before your competitors?

    That’s what this guide will teach you to do.

    Want more insights like this?

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    Sergio Villasenor

    Sergio Villasenor

    Founder + CEO, Elliot

    Sergio Villasenor is the Founder and CEO of Elliot, a software that simplifies global commerce. In the last decade, he’s guided some of the world's leading retail brands in powering their omnichannel strategies. He pioneered an agile, omnipresent approach and methodology that provides brands solutions with measurable business impact. Some of those brands include: Anastasia Beverly Hills, Buscemi, J Brand Jeans, John Varvatos, Juicy Couture, Rag & Bone, the Frye Company and more than 30 others.

    View all posts by Sergio Villasenor

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