ECOMMERCE

Learn all about the possibilities and challenges of cross border eCommerce

What is eCommerce?

eCommerce is an abbreviation for „electronic commerce” and describes the trade of products or services through the internet or other computer based networks.

eCommerce includes sales as well as marketing and distribution of products and services. OWE services support “eCommerce of goods” (managing & shipping physical goods and their digital twin). Nowadays business is done by using multiple digital sales channels. Computer, smartphone, apps and tablets represent just a view examples.

A lot of companies choose cross channel solutions to successfully position themselves on the market and give their customers the opportunity to connect with them via different channels. The customer is king – no matter which device customers prefer. It´s called “omni channel order management” – merchants provide multiple webshops using multiple digital channels, either managed by themselves or integrated into a marketplace.

Cross-border eCommerce

International eCommerce is called cross-border eCommerce, when consumers buy online from merchants located in other countries and jurisdictions. Digital communication enables consumers to shop globally and purchase products and services across their border, e.g. driven by special offers, cheaper prices or simply because the product or service isn’t available in the consumer’s own country. Consumers are able to compare prices worldwide, select a web shop independent of its location and transfer payments digitally. For a country there is “inbound eCommerce” (goods ordered from local eMarchants by customers of other countries) and “outbound eCommerce” (goods are orders from eMerchants of other countries by local customers).

Cross-border eCommerce is THE growing eCommerce market. It is expected to grow at a average rate of 23% per year until 2020, compared with a growth of “only” 12% for domestic eCommerce.

Challenges of cross-border eCommerce

International expansion through cross-border eCommerce can only be realized after online merchants have overcome a number of challenges.

Note: Every market is different. The eMerchant has to fulfil different expectations and demands based on customer and cultural differences. Marketing strategies will have to be customized to reach a different audience in a foreign market and a different infrastructure might require local logistic and delivery services. A “One size fits all” approach might prove to be a pitfall. Returns free-of-charge may be common in Germany, but are unheard of in Southern Europe. Eastern Europe likes cash-on-delivery, whereas hardly nobody uses this service in the UK.

Consumers prefer to pay in their local currency. Global expansion requires multi-currency conversion and settlement in currencies defined by major card schemes, including interchange rates. When sending abroad customs borders have to be crossed – therefore customs and landed costs are challenges which have to be managed. Different countries result in different laws (from data protection to liability law), in different VAT rates and in different terms & conditions. Furthermore, cross-border shipping is much more expensive than domestic shipping.

OWE is well-positioned to support when expanding to new markets.

Global marketplaces & platforms

Marketplaces currently experience a boom and their relevance will certainly keep rising. Already today, the online retailer Alibaba reaches a revenue as high as the GDP of Finland.

Keep in mind that there is no “global marketplace” – Amazon may be dominant in Europe and the US, but is not the best option if you want to sell in China or in emerging markets such as South-East Asia, India or the Near East. Flipkart is the most visited site in India. Rakuten is No.1 in Japan, souq is the leading shopping platform in the Arabic world, Lazada (owned by Alibaba) dominates the South-East Asian countries etc.

Many webshops are build based on existing IT platforms. Platforms such as Magento, Shopify, PrestaShop and many more host millions of webshops, providing a webshop frontend for shopping and a backend for managing inventories, payment and shipping.