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A Guide to Cross Border Transactions — Putting Global Sales Within Your Reach
As a business owner, you have big plans for your e-commerce sales. And you know to reach your revenue goals you have to think bigger than you ever have before. To achieve your goals you need to stretch beyond your own borders and start working globally. The only problem is, how do you get started?
The idea of selling to other countries isn’t a new one. But for many e-commerce businesses, it can remain somewhat elusive. Selling globally is big business, and you may be interested in getting a piece of the international pie. A 2014 McKinsey Study estimated “global online traffic across borders grew 18-fold between 2005 and 2012, and could increase eightfold more by 2025.” The same study finds 1.8 billion consumers spending $30 trillion cross borders on an annual basis.
In other words, global sales is big business.
Selling cross borders and internationally is a whole new operation and requires a new series of questions to be asked. Questions such as how does someone in another country use their own currency to pay or how do I deal with international regulations?
Today we want to help answer some of these questions about the world of e-commerce and cross-border sales. And you never know, your e-commerce sales could soon be ready for international success.Interested in learning more about the financial benefits of offering a cross border installment payment solution like Splitit? Click here.
Advantages to Selling Cross Borders
Selling internationally opens up the door for additional revenue for your business. This part is easier to understand — the more potential shoppers you’re in front of, the more likely you are to sell more products. But there are other benefits beyond potential revenue. If you’re unsure if cross border e-commerce is a good idea for your business, consider these advantages when selling to other countries:
- You become a resource for your shoppers because you offer products they may not be able to find in their own country.
- You can offer better customer service, and more loyal shoppers, because your price might be lower than the same product they can buy domestically.
- As your sales increase and you continue to provide great customer service, shoppers from all around the world can leave positive reviews thereby encouraging others to shop with you.
These are only a handful of positive aspects of e-commerce cross border sales. With the COVID-19 impacting countries around the globe, shoppers are looking for options to shop without leaving their homes as much. Statistics continue to show online shopping purchases have surged during the pandemic, and there’s no evidence of it slowing down anytime soon. This means now may be an ideal time to add cross border e-commerce sales to your portfolio.
Challenges of Selling Cross Borders
As lucrative as being an international seller may be, it’s critical to understand the challenges you may face. There’s a reason why it’s not easy for everyone to venture into cross border shopping. As you explore your options, keep the following challenges in mind.
- You need to optimize your website. Your foreign customers will need to view your website in their language.
- Shipping Costs. As you can imagine, shipping costs can get out of control when selling internationally. It’s best to work with a third-party company who understands shipping cross borders to help you through this challenge.
- Taxes and Duties. Taxes and duties are extremely important to take into account as you’re dealing with cross border e-commerce.
- Currency conversion. Selling cross borders means you have to understand the details of currency conversion. Fortunately, Splitit’s installment plan can be offered across the globe, no matter where your home country is or your customer’s.
- Greater chance of disappointing the customer. Between a website that isn’t optimized properly, too high of shipping costs or errors in taxes, the odds of a poor customer experience are increased with cross border sales.
The good news is, each of these obstacles can be overcome. It takes additional planning and attention to detail to get started in cross border sales, but it can be worth it once you’ve put your plans in place.
Getting Started in Cross Border E-Commerce Sales
If you’ve decided despite the challenges you would still like to pursue cross border e-commerce sales, you likely want to know how to get started. As you can see from the above list of challenges, it’s not as easy to start selling internationally with the flip of a switch. But there are basic steps you can take to get you headed in the right direction.
Do Your Research
Before you open up your e-commerce business to everyone in the world, it’s important for you to do your homework. You probably did this before you began your online shopping business, but it’s good to get back to the basics when it comes to cross border selling.
It’s important to understand emerging e-commerce markets. Could this be India or China for you? Or would your products be better suited to begin sales in the U.K. or Canada? Consider this information from Statista, showing which countries are more likely to purchase cross borders. Some countries are more inclined to purchase abroad than others and you might be able to use this to your advantage.
Similar to your business now, understanding your target demographics and geographic components will also help you. Plus you need to identify your competitors in cross border markets, the same way you do with your domestic sales. By doing your research up front, you’ll have a better grasp of your e-commerce strategy.
Pick a Strategy
While it may be tempting to want to set up sales to the entire world to increase your chances of selling products, you will be better off starting slightly smaller. This could help you narrow down your strategy. The research you conducted first can help you select which e-commerce market might have the most demand for your product.
Picking a strategy also means deciding how you will update your website to sell globally. You can redevelop your website, which takes additional time and money, to work with your target markets. Or you can use your existing website and update your currency and translation options for your shoppers. Another strategy for your site is using a third-party to help you with your sales.
As you continue your research and narrow down your strategies, don’t forget to use your government agencies as a resource. There are agencies that can help you with target markets, market intelligence – even help you research incentives for selling in other markets.
Understand the Taxes and Duties
As mentioned earlier, a crucial aspect of selling cross borders is understanding the role of taxes and duties. And honestly, this is where many businesses begin to get frustrated since dealing with legal issues can be challenging. Once you’ve identified your strategy and which markets you plan to target, you can focus on knowing the taxes and duties for the markets.
Taxes and duty charges can affect the price of your item and your shopper will be responsible for these charges. Not all countries require you to pay a duty on goods so this could be a factor as you decide on your target e-commerce markets. This is also true of customs and regulations on e-commerce goods. You can use a site like the World Customs Organization to help you navigate the world of global regulations.
Know How Shipping Impacts Your Market
Shipping is the number one concern for shoppers when purchasing cross borders. A study conducted by PayPal on global e-commerce sales found 3 of the Top 4 concerns for shoppers purchasing internationally were centered around shipping concerns. This includes the cost of shipping (25%), concern the delivery time was too slow (24%) and not receiving what they pay for (24%). If shipping time and costs is a major barrier to a purchase, then it’s important to address it up front for your shopper.
A reputable shipping company can help you with all the details. Companies like UPS and FedEX are equipped to help you handle customs, documentation and other aspects of shipping. Offering information such as estimated shipping times, online tracking services and additional charges are simple ways to keep your shoppers informed throughout the purchasing process.
As you work through your shipping details, you’ll want to define your shipping policies, such as free shipping or minimum purchase for free shipping. Plus you’ll want to determine your return policy so your shoppers understand how returns are processed.
Update Your Customer Service Policies
Once you’ve identified how you will handle shipping, return, payment methods and security, you need to communicate as much up front to your customers as possible. The more your shoppers understand your policies, the better the customer experience will be. You can do this by updating your website with banners or FAQs for example.
Another consideration is with your customer support. Don’t forget to update the customer support hours — perhaps even expanding the hours so you can be available for international calls. Whatever your customer service policy is, your shopper will need to know as much as possible before they make a purchase with you.
Update and Optimize Your Website Before Launch
To get to a point where you are ready to launch an e-commerce cross borders business means you’ve done your research and put in a lot of hard work. Now it’s time to make sure your effort pays off by optimizing your website. Web-site optimization is important for multiple reasons, whether you sell domestically or internationally. It improves your cart conversion, your average order value (AOV) and makes for a better customer experience overall.
Optimizing your website for international sales means your shoppers can read the web pages in their language, the prices are displayed in their currency and all your shipping and return information is highly visible. It means reviewing your site-speed to make sure it’s fast enough for shoppers. It includes making your payment methods, such as Splitit, easily seen throughout the checkout process. Your customer service hours and promises (such as free returns and customer support) needs to be prominently displayed.
Optimizing your website also means making sure you’re mobile ready. Your shoppers are continuing to increase their purchases through their smartphones. For instance, one study by Statista shows 80% of shoppers in Indonesia purchased an item through a mobile transaction within the past month. If your cross borders market has shoppers who make mobile transactions, then go ahead and optimize your site for mobile to increase your success.
Consider an Initial Test Run
Selling cross borders takes time and research to get started. If you’re concerned your e-commerce business may be overwhelmed by international sales and shipping, then consider a test run. There’s no business rule book that mandates you must start right away with several countries. You can always begin with one market, and expand as you are more comfortable.
If you decide to try a test run instead of a full-scale launch, don’t forget your analytics. Pay attention to the trends you see such as cart abandonment or average shipping times. These are all items you can improve upon as you look to expand your presence in other countries.
How Splitit Supports Global Payments
Offering your customers an installment plan such as Splitit, is not only one of the most convenient, budget-friendly payment methods for your shopper, but it’s a major win for your business too. Splitit allows your shoppers to pay monthly for their purchases over their selected period of time. And because it works with your shoppers existing credit card, there’s no applications or credit checks to get them started.
Here’s where it gets even better for you as an e-commerce owner. If you need an option for payment plans that works in multiple countries, then Splitit is the only choice, as it is a global solution. This saves you an enormous amount of time. There’s no need for you to set up a different payment plan for your shoppers in North America versus the ones in Europe. Splitit handles it for you, no matter where your shoppers call home.
How is Splitit able to offer this service on such a wide-reaching, global scale? Because Splitit partnersworks with Visa and Mastercard, this means it can work wherever Visa and Mastercard are used. Currency conversion and payment methods are a critical component of cross border sales, and Splitit is able to help you check one important detail off your e-commerce list.
Getting into the world of cross border selling can be overwhelming. And like other business ventures you’ve already endured, there are risks and rewards involved that should all be carefully considered. While cross border sales can be more complex, the payoff can make it worth it for your business. As you move into international sales, you can rest assured Splitit can be your go-to for installment payment plans – no matter what country your shopper resides in.Interested in learning more about the financial benefits of offering a cross border installment payment solution like Splitit? Click here.