Last modified: 22. May 2019
International e-commerce, while not a new phenomenon, has become more pervasive and sophisticated in recent years. In 2017, 1.66 billion people worldwide purchased goods online, according to Statista. During the same year, global e-retail sales amounted to US$2.3 trillion, and projections indicate that figure will grow to $4.48 trillion by 2021.
With data verifying that international e-commerce has been growing, combined with the increase in localized requirements, e-commerce providers must continue to innovate to ensure they take full advantage of opportunities outside their home market.
Standard cross-border solutions may work for mid-tier and low-tier sellers, but they are no longer viable for tier 1 merchants. To grow internationally, merchants must focus their e-commerce operations on hyper-localizing the experience — from becoming an expert on tax laws around the world, to reducing avoidable authorization declines through superior customer experiences. It may require strategic partnerships to get the job done, especially given the additional hurdles that are part of foreign e-commerce transactions.
Hyper-Localize the Experience
When selling products outside a home region, merchants must be aware of cultural intricacies. It can be something simple like differentiating messaging with American vs. British English. In these cases, it can be beneficial to partner with a translation service provider (ideally a locally based provider) to navigate the nuances of the local language and develop copy that will have the most impact in that region.
In China, for example, localized language and shopping experiences are essential to gain the trust of Chinese shoppers. Similarly, 60 percent of Canadians prefer .ca websites. It is vital to offer a fully localized experience for shoppers from Canada, including both English and French languages, and supporting local transaction currencies and payment methods.
Another benefit of establishing strategic local relationships is that it gives merchants a window into the nuances facing consumers in particular markets. For example, local experts can provide insight into particular high-volume shopping days — like Single’s Day in China, Boxing Day in the UK and Black Friday in the U.S., among others — to assist development of a strategy to reach consumers ahead of time. In these instances, merchants can establish themselves in the market and build a customer base that ultimately will lead to profitable returns.
Local insights are also crucial when it comes to regulations for brands selling across regions. If the General Data Protection Regulation has shown anything, it’s that it is imperative for sellers to have deep local knowledge of regulations to account for even the slightest variances. Without it, organizations may encounter serious financial penalties, not to mention reputation loss.
Organizations need to have a well-articulated data policy for legal reasons, as well as for personalization efforts and market research. Be aware that many other countries, including Brazil and India have adopted their own data protection regulations that will be going into effect soon.
Become a Tax Expert
A rising number of countries have been taxing cross-border merchants to grow revenue and level the playing field with local merchants. One of the more significant complexities of selling products and services worldwide is tax management.
Calculating tax correctly can be an arduous process, especially when considering global transactions and shopping cart variability. It is important to be able to calculate taxes on these types of transactions quickly and accurately in order to keep customer satisfaction high.
Recently, the U.S. Supreme Court ruled to overturn what many considered an outdated provision in state sales tax laws. The South Dakota v. Wayfair ruling means that states now can require out-of-state retailers to charge sales tax on online purchases, regardless of where the company has a physical presence.
If a company sells to U.S. customers, it needs to review the applicability of these new tax laws. This is just another one of the nuances associated with maintaining tax and regulatory compliance around the globe, causing massive headaches for brands.
Argentina, for instance, recently instituted a local tax on e-commerce transactions. To mitigate your risk, it’s imperative to remain vigilant about new tax laws affecting cross-border transactions.
Reduce Preventable Authorization Declines
Historically, the number of declines in a cross-border scenario greatly have exceeded in-country transactions, often due to payment routing and nonstandard payment methods. With added laws and regulations unique to individual locations, this has become a more glaring issue to address. In turn, it’s important to develop relationships with banks around the world to reduce unnecessary payment declines.
Domestic regulations and national payments infrastructure can restrict authorizations. In fact, foreign e-commerce transactions are declined 18 percent of the time in the U.S. It is important to offer locally preferred payment options everywhere, as a significant percentage of consumers can’t or won’t complete a transaction otherwise.
Failure to do so can amount to forced cart abandonment, especially when the shopper doesn’t have multiple payment options to choose from. Decline rates tend to be higher on cards that are issued in other regions, thanks to domestic regulations like currency rules.
When showing currency options on a product or checkout page, it is important to include the preferred local currency in the correct format, even if that means including more than one currency. For example, a large number of Canadian expats live in the United States. So, when selling a product in the U.S., it can be beneficial to include both USD and CAD prices.
E-wallets could become the preferred payment method in the U.S. in the next few years, based on some predictions. In India, cash-on-delivery — which allows shoppers to pay for an item in cash when it is delivered to their home — is the most popular payment method throughout the country.
There are certain payment nuances to consider in France, with popular payment methods including Carte-Blue, a debit card that can be used as a credit card. On the other hand, German consumers often prefer to pay by a direct debit from local banks.
If an e-commerce channel is not set up to accept these kinds of payment methods, expect higher instances of cart abandonment. For example, research conducted in Spain indicates that 41 percent of shoppers would abandon their cart if there was a charge for using their preferred payment method, and 39 percent would leave if their preferred method wasn’t available.
Deliver a Unique Customer Experience
Offering consumers local currencies, payment methods, and languages they prefer will signal that the organization has the broad cultural understanding necessary for seamless and successful e-commerce transactions. Providing shoppers with the localized experiences they expect will help keep them engaged and satisfied, not just through the initial buying experience, but for the entire customer journey.
Merchants must think about customer experience as an extension of the company mantra. Focus on maintaining consistency across channels, ensuring quality support services, and incorporating new technologies to stay ahead of consumer buying and shopping habits.
Taking a technology-based approach to customer experience not only can enhance the overall customer journey experience, but also position the organization as a leader in the digital marketplace.
Understanding these nuances from country to country is essential to developing a strong direct to consumer (D2C) channel. During these unsettled times with big-box retailers like Sears, Toys “R” Us and others on the demise, it’s important to establish these direct ties with the consumer. Rather than relying solely on a retailer, a D2C approach gives brands full control over the customer data and the customer experience.
Don’t Do It Alone
For many brands wishing to alleviate the complexity of tax and compliance regulations, as well as gain localized expertise of the nuances in each country they wish to sell, it’s helpful to use a third-party source that can serve as a Merchant of Record / Seller of Record.
Through partnerships, the audit risk on end-consumer transactions related to uncollected or undercollected tax shifts from the merchant to that third party. Whether selling locally, globally, or both, third-party experts can provide top of the line e-commerce management services that free companies from the burden of tax compliance and risk.
Partnerships, in general, play a prominent role in global expansion efforts. Look for one whose knowledge extends beyond “today” and who is able to help grow the business at the remarkable pace of e-commerce.
Reliance on a partner to take on the local payments, compliance and tax requirements is helpful in global expansion. While it certainly is possible to manage all of this internally, it requires costly resources to get it right. Rather, keep the team focused on what it does best: creating great product and customer experiences, and understanding the customer while outsourcing the “risk.”
To successfully go global, merchants also must go local — providing familiar experiences that meet the expectations of customers, wherever they may be in the world. With more shoppers than ever purchasing from overseas brands, it’s imperative to offer localized languages, payment methods and currencies — and sellers that do so will experience higher conversions and improved customer satisfaction.