The web and social media have all but erased international borders when it comes to information. Equipped with Facebook, Twitter and other platforms, people worldwide can share their knowledge more instantly and effectively than ever before.
And the Internet is also blurring the borders of commerce by offering retailers of all sizes a way to tap new customers and markets without the level of risk involved with building an infrastructure of brick-and-mortar locations.
But e-commerce can get complicated when it goes overseas. Some products can’t be sold in certain markets; payment preferences differ; and with taxes, trade duties, customs and shipping issues, actually getting the product to the customer can be a big problem.
“Each market has its own prohibitions and restrictions, and it can be very complicated,” Shea Felix, global product manager for Mountain View, Calif.-based logistics software specialist Endicia, told Retail Dive. International sales “require a lot more patience and time.”
Growth markets worldwide
About 7% of U.S. retail e-commerce sales resulted from overseas markets last year, according to eMarketer, or about $20 billion, and that that total is expected to grow to reach 16% of U.S. retail sales by 2020. So far, luxury retailers and department stores have benefited the most, but smaller retailers can take advantage of international sales, too.
Since the web eliminates borders for shoppers in all but the most restrictive regimes, companies should check their existing website traffic for international interest. Strong traffic from a certain country or region may indicate that it’s a good market for an international push.
According to ChannelAdvisor’s Agile Cross-Border Trade (CBT) e-commerce strategy, marketers can use international marketplace sites such as Amazon, eBay, and Etsy while still shipping from their home markets to gauge existing demand. Later, they can localize their own web and checkout experiences for international customers.
The first hurdle in cross-border e-commerce is often linguistic differences. People are more comfortable shopping in their mother tongue, and comfort is key to a successful e-commerce sale. For U.S. retailers, English-language markets such as Australia and Canada are a good start.
Translation is often not enough; shoppers also expect “native” customer service. “Responses are slower in French from national brands than they are for local brands,” Marie-Claude Ducas, a Quebecoise journalist, told eMarketer. “Slow responses, in any language, show less attention or care toward the customer, and this eventually turns an active client away.”
Retailers must be prepared for fluctuations in currency markets, and also accommodate local payment preferences. While many international shoppers have credit cards and use PayPal, consumers in some markets prefer other methods. Consumers in China, for example, don’t use credit cards often, favoring web-payment services such as Alipay.
Germans prefer to pay for their e-commerce purchase with bank drafts, and retailers selling in Italy should be ready with an Italian bank account for clearance. Brazilian shoppers favor cash-on-delivery or layaway-like installment payments. “A credit card may work, but you may be surprised,” Felix says.
Shipping and logistics are the biggest hurdles for retailers wishing to sell internationally without physical storefronts. Certain products lend themselves to international shipping better than others.
“If you can get a product that is high value and low weight, it’s a good product to ship,” Felix says. “If you have a pair of shoes that sells for $100 and weighs a couple of pounds, push that product. Very heavy or dense things take more research into shipping.”
Foreign countries may ban items, place limits on specific imports, or require clearance on a separate set of regulations. While Canada is a powerful trade partner and an excellent market for health and beauty products, for example, the country restricts some common cosmetic ingredients, effectively stopping American formulations at the border.
“Every country has its own restrictions,” Felix says. “I just talked to a gentleman who wanted to sell paint gun supplies in Brazil, and that’s restricted. You can’t bring leather goods into Italy—that’s restricted.”
Beauty products do well in Latin America, he notes, but creams and powders often raise red flags in shipping because of how they look on’ X-rays. “Apparel and small electronics do very well worldwide,” Felix says. “Apparel is an easy one to clear.”
Taxing goods and patience
Value-added tax (VAT) rates vary, along with who’s responsible for paying them. Brazil has one of the most restrictive systems, Felix says; with no minimum value require to trigger a tax on imports, duties on a particular product can often double price paid.
“If you send a pair of Air Jordans that are $100, you will also be charged $100 in taxes.”
Taxes, clearance, and even a faulty address can also make shipments unpredictable.
“If you knew that it takes 30 days to get there, but it always gets there, you could plan around that,” Felix says. “But when some things take 30 days, some take 40 days and some never arrive, it’s discouraging.”
In Brazil, for example, Endicia helps companies work around such problems by using the U.S. Postal Service (USPS) to ship packages to Miami, where a logistics partner helps clear goods with customs and relabels packages to suit local delivery services. “It’s hard to create a customs form that satisfies every country in the world,” Felix says.
“Retailers see the opportunity in international sales,” he adds. “They know that they can make more money on a per-shipment basis, but on the logistics side, they are not really educated about which service to choose.”