Why Do Only 3.9% of US Small Businesses Trade Internationally?

A recent infographic by international payments company, WorldFirst, asked: “Are American businesses falling short when it comes to cross-border ecommerce?” And, it would seem that the answer was yes, as their infographic found that just 3.9% of small American businesses sell cross-border, compared to 8% of European small businesses.

With the total value of worldwide cross-border ecommerce expected to hit $424 billion dollars by 2021, it seems that small American businesses are missing a trick. Especially, when you consider that 70% of the world’s purchasing power is located outside of the US.

So why do so few US small businesses trade internationally? We don’t have the answers – we want to know what you think!

A short history of cross-border ecommerce

A few years back, if a seller wanted to sell internationally, they had to do all the work. From listing their products on each of a marketplace’s global sites, to working out the logistics of getting the product to the buyer, and handling customer service. There was no big helping hand from the marketplaces, but international sales trickled in naturally anyway.

Over time though, this has changed, with Amazon and eBay working hard to make it easier for sellers to trade internationally.

Amazon has a number of programs which utilize their global network of Fulfillment Centers to help sellers offer their products internationally. A good example is FBA Export, where Amazon ship your stock from their US Fulfillment Centers to overseas buyers. They also have a number of EU fulfillment programs, such as Pan European FBA, which help overseas sellers reach European buyers.

Likewise, eBay’s Global Shipping Program has made cross-border trade easier for eBay sellers. All they have to do is ship their products to a domestic warehouse and eBay ship the order overseas.

It’s not just Amazon and eBay though. In fact, there are now a whole host of international marketplaces trying to attract established foreign sellers.

So why has the take up by US companies not been better?

There could be a number of reasons why more US business don’t sell their products internationally.

Perhaps, for some businesses, selling internationally just isn’t worth the bother? If you don’t believe you are going to get many sales from foreign buyers, there’s not much point putting a lot of effort into it.

There could be a good basis for that opinion. International sellers have to compete with local sellers. If you are offering a product that’s already available overseas, you are unlikely to be able to beat local competitors on shipping speed or price.

The rules and regulations of selling cross-border may also play a part, as some marketplaces have stringent rules for international sellers. They might require a local bank account, a company registered in that country, and local-language customer support.

You then have to make sure that you are complying with all the local laws. If you’re selling into Europe for example, there are EU product regulations, VAT and customs duties – all of which can be a real headache.

And, that’s without even considering currency fluctuations. Do these make it too risky to export goods overseas?

Perhaps, underpinning all of these reasons, is a general fear among American businesses of trading outside the US? It’s a huge domestic market after all, so why not play it safe and just do business domestically?

This is just me speculating though, so I’d love to know what you think!

Why are so few US businesses selling internationally? What are the main reasons for it? Are you a US business that does sell cross-border? Let me know in the comments below!