Cross-Border E-commerce Is a Big Opportunity — Here Are the Challenges to Keep in Mind

E-commerce sales have been critical for brands and retailers facing store closures, but a new report by Global-e suggests that cross-border e-commerce is a particular source of opportunity for U.S. brands.

Global-e found that e-commerce purchases from January to May this year were stable compared to the same period in 2019, despite a dip in overall sales as consumers looked to conserve their money. And after a period of recovery in May, the study showed that e-commerce grew 10.2% year-over-year, from Jan. 1 to June 14, 2020.

A substantial proportion of this can be attributed to cross-border commerce, which was up by 42% in May from the previous year, according to the report.

So as the economic situation in the U.S. continues to fluctuate, the Global-e report advocates for companies to invest in a strong global operation to protect revenue streams. Particularly as the U.S. begins to reintroduce safety measures in some states, international sales to markets further along in their pandemic recovery could be useful in maintaining sales. And cross-border sales appear to be robust: At no stage this year did they perform worse than in the comparative month in 2019.

In order to capitalize on this opportunity, Global-e North America CEO Matthew Merrilees has some advice for merchants: In particular, he highlighted the importance of consumer experience and of advanced localization, meaning that the experience should be tailored to each shopper’s home market.

“About 99% of international shoppers choose to pay in their local currency when given the option,” said Merrilees. “Allowing multiple currencies and enabling the ability for shoppers to browse and make payments in their local currency will make a big impact. In many markets worldwide, shoppers prefer local and alternative methods, such as ‘buy now pay later,’ bank transfers and e-payments, over cards.”

However, cross-border commerce does come with unique challenges. For instance, presenting an up-to-date record of inventory is crucial wherever your shoppers may be, but international customers may face barriers such as changes in import regulations and duties thresholds. Overseas markets also may differ in their trend preferences, so an awareness of these shifts is important to keep stock relevant.

Transparency over final purchase costs is also important; international sale totals may vary across countries, due to local taxes and duties. By incorporating these levies into the price presented to the end consumer, merchants can create a more honest and smooth checkout experience. Shipping options and prices should be similarly communicated, particularly if subject to delay.

“As the concern of a second wave mounts, potentially leading to border closures and lockdowns, merchants are advised to make sure that their operations are equipped in the event of further disruption,” said Merrilees. “A multiple-carrier approach, which includes also shipping carriers that operate their own fleets, such as DHL, means that merchants can minimize delays and reduce the impact of disruption.”

Access exclusive content