eCommerce is reshaping the global retail market since the turn of the century’s booming of online shopping trends. Internet access has reached all corners of the world while smartphones have quickly become an intrinsic part in the lives of billions of people. In this case, eCommerce has opened up a whole new shopping world, providing hundreds of millions of consumers with access to much greater assortment and value opportunities. eCommerce is also a platform for retailers to satisfy consumer’s increasing demand for convenience.
According to Digital Commerce 360 study, since retailers make shopping easy through eCommerce, consumers worldwide spend nearly $3.46 trillion online in 2019. Meanwhile, global retail sales through all channels hit approximately $21.00 trillion by the end of 2019.
In another study by Descartes, there is likely an increment in 2020 with annual growth rates of 20 percent. Expanding at about twice the rate of domestic sales, cross-border eCommerce is expected to represent 22 percent of total online sales.
For eCommerce retailers, the statistics above can indicate good sentiments. The more consumers rely on eCommerce, the more revenue retailers can get. However, tapping into the global potential of eCommerce business need some investment in additional infrastructure to facilitate international sales. Besides, retailers that do their homework upfront are more likely to avoid common pitfalls and address potential problems proactively.
Therefore, to properly evaluate the feasibility of entering a new market, a retailer must have a good understanding of regional nuances, advice Descartes. By fully equipping yourself across these areas, you can make intelligent decisions about which markets to enter, provide visibility on cross-border shipments, as well as ensure that the right information gets transmitted at the right time to customs authorities.
A- Consumer preferences
Retailers must offer in-demand products and popular payment processing options, such as Paypal and Stripe. The best way to pinpoint demand for specific products in a region is to carefully study the market and identify which products are currently sought after and how. There is an alternative for this which is to learn by trial and error which could be costly and time-consuming, however, the investment might worth the price.
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Every region will have several dominant online markets with each market will have its own rules, specialities, preferences, culture, and payment processing system. Thus, retailers should clearly understand these features before starting to sell products through a site. In some regions, it might make sense to offer products in multiple marketplaces while in other regions, retailers could start selling through one online venue. That said, be smart and do a survey before expanding the business.
C- Customs requirements
Understanding trade regulations is crucially needed when retailers want to go global. It should be done to ensure a consistent flow of goods and prevent costly fines. Here are some steps business owners must do.
- Find out how well goods are moving across a given border. If the customs authority is overwhelmed by a large volume of goods, retailers should take into account the longer processing times.
- Understand import restrictions, packaging requirements, and the product safety compliance/inspection regime.
- Identify any applicable trade agreements. It can influence a retailer’s choice of products and where they are sourced from.
D- Taxation system
Taxation is quite complicated as different regions provide different taxes. For example, sales to the UK must include that country’s VAT tax in the price. While in the U.S., many states do not allow retailers to list prices that include sales taxes. That said, understand how each country regulates its taxation. Without doing research on this, you can unknowingly apply extra taxes/duties to shopping carts, increasing the price of products and thus, become less competitive.
E- Checkout system
Consumers want to always know the accurate final cost. This is a retailer’s homework to do a detail calculation so there will not be misinformation. Miscommunication or wrong information can rate bad for your eCommerce. In order to calculate the correct duties and taxes, you should always get a recent information stream seamlessly into your eCommerce platform. Get professional or experts to review your ever-changing duty rates can also be a good solution.
Lastly, retailers must understand that they are liable for transactions to sanctioned entities and individuals. By inadvertently breaching sanctions, a retailer can be subject to costly fines and negative media coverage.
However, sanctions are so challenging for retailers because sanctions are not always obvious. It is always revised and updated by the government. Despite these challenges, retailers should include denied party screening to ensure that customers do not appear on a sanctions list. Pre- and post-sale are also important to reduce risk because sanctions list can change by the minute. Additionally, depending on what regions you are selling your goods into, you should always consider implementing eCommerce systems that can manage the sanctions list.
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