Cross-border ecommerce has never been hotter. The big online marketplaces of eBay and Amazon have been leading the charge, driving growth by pushing their sellers to trade internationally.
Many of those sellers have had great success trading across borders, becoming prolific exporters while suffering few of the headaches experienced by more established businesses. Or so it seems at first.
While ecommerce technology has adapted quickly to cross-border trade, the worlds of logistics, regulation and taxes are stuck in the past. Many international sellers have been tripped up by a bewildering combination of rules, classifications, policies and providers.
With a major global ecommerce event ThinkGlobal Retail just around the corner, I decided to ask over thirty sellers, consultants and service providers about the biggest challenges they had seen with cross-border ecommerce. This is what they said.
There’s a lot to think about.
The biggest challenge is having the proper systems and processes in place to maximize sales in international markets. When selling internationally you’ll need to have listings in each country’s respective language, priced to sell in that market, and the right logistics network to guarantee fast delivery times to the customer.
Carlo Silva, CEO, 2nd Office
Conversion can be a big problem for online retailers targeting overseas customers. Localization in terms of language and currency will help but the retailer also needs to look at factors like payment methods, shipping options and local customer service. Providing clear and highly visible instructions on the cost and timescale of shipping goods overseas, taxes, insurances and customs restrictions will help build trust and drive purchases.
John W. Hayes, Marketing Strategist, iContact Email Marketing and Best-Selling Author
So do your research…
The biggest challenge an international seller faces is deciding if they can compete in foreign marketplaces. Sellers worry about which products will sell overseas, the competition they face from local sellers, the potential sales revenue and cost of selling that item, including various hidden costs inherent to that region.
To be successful, sellers should examine total sales for products across international domains, and compare that to the number of sellers competing in that market. If an opportunity exists, researching competitive prices and shipping costs for others who sell from their region will tell them if selling in a foreign marketplace is sustainable.
Lucan Mcrandall, Product Manager, Terapeak
Choosing the territories to sell their products in is a key challenge. If you’re selling clothing, for example, it’s a case of looking at where imports from your country the most. If you’re selling higher-end items like jewelry, automotive or sports equipment things are more complex and you need to see where your products have a market. One you’ve selected the market, you then need to make sure you’re meeting your legal obligations to trade with that country.
Darren Ratcliffe, Managing Director, RedStar Creative
…and make sure it’s right for you.
Even though we do not target international, 9% of revenue comes from international sales. The biggest problem we find with selling across borders is the cost of shipping. 90% off all our items come from China and the same products we sell are available all over the world. Why would a customer in the USA pay $70 for shipping from Australia when they can get it shipped within the USA for $10? It is impossible to compete.
There are so many opportunities locally where we can compete on shipping, that we find our time is best spent on those.
Neil Waterhouse, Author of Million Dollar eBay Business From Home
Consider cultural differences…
Even the most experienced retailers face new challenges when they begin selling across international borders. While eBay and Amazon offer platforms in many different countries, retailers will quickly discover that their success is limited if they recycle existing product information on international platforms. In order to be successful abroad, retailers need to understand their target audience and identify major cultural differences. Sellers should begin by investing in professional translation and by analyzing consumer behavior in their target country. Understanding what motivates international customers and which services they expect from serious businesses can make or break a retailer’s international expansion strategy.
Carsten Brassel, UK Country Manager, plentymarkets
The biggest challenge is failing to understand the trading differentials in new markets. Using China as an example, there are many segments to consider including consumer culture, buyer behavior, social interaction, payments, shipping, product presentation and localized language. Planning and a long-term investment strategy are required for success. Attending conferences like ours and networking with others helps avoid common pitfalls while identifying opportunities.
Phil Leahy, CEO, ThinkGlobal Retail & PeSA Internet Conference
Logistics and tax issues often present challenges for international selling but cultural differences can be a larger hurdle. It’s important to have someone who understands the local language and culture to consult with you from the very beginning. They should not only help with listings, but also with the products you offer and the prices you set. Simply pushing product feeds through a translation service to foreign markets is often not enough. A strategy considering the nuances of each market is often more successful. Working with someone who has an intimate knowledge of the market you are trying to penetrate can give you a competitive advantage.
Paul Johnson, Co-Founder, Seller Labs
…speak the local language…
In my mind, a key challenge when retailers are selling in foreign marketplaces is delivering quality translations in the native language. Good translations are vital because they need to be in the right tone of voice, be very accurate, deliver the benefits of the product or service and obviously make sense to the customer. If the translation is word-for-word then the chances are that it won’t make sense and you will encounter customer issues and product returns.
I would always advise on finding an native speaker who is an experienced translator to provide the service because they understand how people shop in that country and how to explain the important points in the right way. They don’t have to be expensive but could be worth their weight in gold. Never use Google translate!
Matt Thorpe, Internet Marketing Consultant, Grasshopper UK
Language is naturally one of the biggest challenges, the solution is to describe the product with an “international language”. What language can both a German and a Brazilian customer understand? Images! For example, instead of writing “In the box: iPhone, cable, charger”, add images showcasing all the different parts included in the package.
Victor Levitin, CEO, CrazyLister.com
International customer support can be extremely challenging, especially when faced with language, time-zone and cultural barriers. Having staff that speaks the right language in the right time-zone is not always a feasible option. Instead, try a few of these workarounds: 1) Set the right expectation by displaying service hours in your time zone and in GMT; 2) Use browser translation plug-ins to translate incoming messages, keeping in mind that the translations aren’t perfect and don’t take cultural nuances into account; and 3) Use language-appropriate canned responses. Have the responses to frequently asked questions translated by a professional service.
Jodi Gaines Pereira, Co-founder, ReplyManager
…or just stick to what you know.
Don’t get carried away with translation. Yes, Europe is a big opportunity, but with so many different languages this poses so many problems to go with it (translation is a big one, so is VAT). Why not keep things as simple as they can be? The United States and the United Kingdom are either side of the pond. Australia is an emerging market, especially with eBay. Go simple, go English. That’s been our motto for over a year and a great way to start out.
Matthew Ogborne, Co-founder, UnderstandingE.com
Learn about international shipping…
The internet retailer must have cost-effective solutions that provide end-to-end service from collection, to processing, to delivery, to end consumer. We find it critical to offer a tracked DDP and DDU (Delivery Duty Paid and Delivery Duty Unpaid) solution to the consumer. To do that, you must have the right multi-carrier software solution integrated with your shipping partner to provide seamless transition of data and physical packages.
Robert DiVincenzo, President and CEO, Globegistics, Inc.
More and more carrier and transport solutions are appearing every day to assist in moving packages such as consolidated freight services and ‘label at source’ solutions, not to mention distribution options out of China, Hong Kong and Singapore. Retailers will need to adapt faster than ever to new shipping services and opportunities, as their ability to sell internationally continues to grow. They will need to look beyond their own country and comfort zone, and investigate solutions to really capitalize on opportunity!
Nathan Huppatz, Co-founder, ReadyToShip
When shipping your items internationally, remember the volumetric weights that may not apply to your domestic parcels. They can come back and cost you a fortune internationally. A cricket bat isn’t always 1.5kg… it is around 5kg volumetric weight and will be charged as such. Check those weights and charge accordingly.
Elizabeth Hitchins, Freelance Consultant, KidsonTalks
…or use a fulfillment service.
Consumer demands are increasing with many expecting free or low-cost delivery, and no one wants to wait 3 weeks for their goods to arrive. This can make it difficult to compete with local retailers who have faster delivery times and lower shipping costs, and creates a headache for retailers who want to grow internationally. Investigating good local outsourced fulfillment partners who can pick/pack and ship products for next day delivery will help retailers address this challenge.
Alan Wilson, Founder, Expandly
The biggest challenge has got to be in logistics, and items not getting to their destination. eBay’s Global Shipping Program can help with this if your product is suitable. You post it to your domestic GSP hub and then eBay do the rest sending it tracked end-to-end to your buyer.
GSP doesn’t deal with returns, so you have to handle them yourself. There are companies dealing with this problem, by consolidating returns or providing an alternative resale method without returning the product to the retailer – take a look at Zigzag Global.
Jane Bell, eBay Specialist Consultant, eBay Anorak
Amazon marketplace order fulfillment across international borders can create delivery delays, unhappy buyers and complaints to Amazon. When performance metrics are adversely affected, account restrictions might result. To reduce the need to reply to multiple “Where’s My Stuff” messages from buyers and having to locate lost packages, consider using Fulfillment by Amazon (FBA). You will offload the concerns about timely order fulfillment and protect your reputation as a reliable seller in the marketplace.
Chris McCabe, CEO & Founder, ecommerceChris, LLC
When shipping a package from the US, it’s hard to meet the delivery-time expectations of international consumers cost-effectively. For example, online shoppers in the UK are generally willing to wait 2-3 days for a package to be delivered (while in the US, 5-6 days is acceptable). But to get the package delivered cost-effectively from the US to the UK, it takes much longer than that. The only way to overcome this is to build an outsourced warehouse presence (3PL) in the international country. You’ll save money, meet the delivery time expectations and be enable to compete far more effectively.
Chad Rubin, CEO, Skubana, Managing Director, Crucial Vacuum.com
Make sure that you’re legal.
One of the biggest challenges retailers face when selling across international borders is dealing with customs and duties. It’s hard to know as a retailer (and a customer) what extra fees your products will be subjected to from each country. This always create uncertainty for both parties. Pitney Bowes has a really great Duty Calculator that can help you figure out exactly how your products will be taxed when crossing into other countries. They also have some really great country specific resource guides that can help you prepare to go international.
Richard Lazazzera, Founder, A Better Lemonade Stand
In terms of selling on Amazon, sellers need to ensure that they are intimately familiar with policy variations between the North America and the UK/EU marketplaces. Listing policy differences abound, from selling knives to selling hair re-growth and teeth whitening products. It will always be the seller’s responsibility to verify compliance with Amazon policies and understand local laws within each marketplace prior to listing items on Amazon. If the Seller Help pages do not provide adequate information, Seller Support teams may provide additional guidance.
Chris McCabe, CEO & Founder, ecommerceChris, LLC
Shipping regulations do not allow UK sellers to send products like hair colors and perfumes by air, potentially reducing sales. As well as the IATA international regulations, each carrier has their own rules. Road transport is an alternative for some destinations, but it’s slower and can be more expensive for small shipments.
Prabhat Shah, Founder, DayToDayeBay
Currency issues aside, we also find that many online sellers have problems with VAT. Depending on a merchants product, volume of sales and risk appetite their VAT compliance needs will vary. In order to address these issues, we recommend our clients to a select number of specialists in the area. With good research into each market and some prudent measures in place, you will ensure you are compliant.
Luke Trayfoot, Strategic Partnerships, WorldFirst
Selling internationally on eBay and Amazon can seem daunting. Sales and tax reporting on individual channels is a key area of worry, as the tax man likes to see everything clearly broken down! Don’t be tempted to run all sales through a single marketplace account; clear and concise reporting can be more easily achieved by keeping your channel processing split down by country.
Karl Ciz, Director, StoreFeeder
I have two major challenges when selling across borders. The first is when the purchaser does not read the description – specifically where we are not responsible for customs fees and taxes. Then Amazon makes you responsible for customs fees – even though this cannot be pre-paid.
The second challenge I face is selling cross-border on Amazon. They send out invitations to sell in other countries, and then proceed to make you jump through paperwork hoops to allow you to sell in other countries. The different Amazon companies do not coordinate, with the main Amazon US marketing folks encouraging you to sell internationally while the European ones could care less.
Jack Phillips, President, Jax Music Supply
Even getting paid can be a challenge.
Often the issue is payment methods. In some countries people have radically different ways of paying online, and diverse attitudes about the security of online shopping. It is critical that your ecommerce software allows you to customize payment options on a country-by-country basis.
Tim Ash, CEO, SiteTuners
One of the biggest hurdles to international online trade is fraud prevention. Credit card payment systems cannot confirm all payments from all countries. In the United States you get AVS address verification (shipping the item to the same address as the credit card statement) and without this you often leave yourself open to chargebacks and general fraud.
You can ask for international payments via wire transfer, or use a third-party solution which accepts the risk for a percentage fee. Service like PayPal and other services often provide some sort of international payment verification.
John Wieber, Partner, WebMoves Inc.
Returns are inevitable.
Paying for return postage time and time again because a customer changes their mind can have a significant impact on profits, especially for small businesses selling high-value, low-margin goods. Because the expense is only ever incurred after the sale, many retailers fail to factor it into their costs when looking to expand overseas, leading to lower profit margins and cash flow issues. These issues can be reduced by using local fulfillment houses or PO boxes in the destination country. However, until postage prices drop for international shipments, return costs will always cause an issue for smaller retailers.
Joshua Price, Lead Consultant, The Marketplacer
The biggest challenges with cross-border trading are threefold, they are customs, fees and international returns. A percentage of items will be lost or damaged in customs. Fees vary from country to country and many times those fees are passed on to uneducated buyers. And return shipments can be a long and expensive process. Mitigating these issue with a good process will make your CBT headache-free and much more rewarding.
John Lawson, Author, Speaker, Educator, Founder of The Ecommerce Group
Exchange rates keep on changing.
One of the biggest challenges when selling internationally is currency exchange rates. For example, I buy my private label products from Chinese factories and use a third-party logistics company to transport my goods from China to the United Kingdom. The shipping company charges for their services in RMB. When the product sells in the UK I’m paid in GBP. The Chinese logistics company branch in the UK charges for the shipment in GBP converted to RMB and then paid by me in USD. It’s confusing and can be challenging. To multiply the complexity, the exchange rates change all the time. Sometimes the conversion rate is your best friend and sometimes it’s your worst enemy.
Brandon Dupsky, CEO, eCommerce Money for Nothing
Foreign currency remains one of the most overlooked challenges in cross-border trade, and left unmanaged it can wipe out overseas profits and even end up costing you money. Online sellers need to convert currency whenever they buy stock overseas or receive international sales proceeds, so there are three simple steps they should take to manage their risk exposure. Firstly, lower costs by securing a “wholesale” exchange rate when they buy abroad. Secondly, open an overseas e-tailer bank account to avoid marketplace exchange rates. And thirdly, use a forward contract to lock in favorable exchange rates and create certainty in cash flows.
Deepak Goyal, Head of e-tailing, Currencies Direct
So make sure your numbers add up…
The biggest challenge is understanding the additional margin required, and controlling local pricing to reflect the additional costs. The real key is to be able to set up margin controls for each different market based on cost price and known “additional” costs for each channel. This allows a retailer to automatically re-price thousands of listings across dozens of channels when a cost price or the expense of CBT changes. CBT can drive significant additional revenues – but it is margin management that will drive additional profits.
Alex Ogilvie, Managing Director, Seller Dynamics
The additional costs and effort associated with cross-border trade can make the difference between profit and loss. The cost of sorting out an order gone wrong can be significant. Understand the market and establish appropriate back office processes around payment, fraud risk, regulation, shipping, returns and customer communications.
To ensure profitability, the key is to accurately account for the full landed cost of your goods and to ensure that the sundry costs of serving overseas customers are attributed correctly, including the inevitable cost of mistakes. Without visibility you run the risk of being no more than a busy fool.
Henry Morland, Chief Product Officer, Brightpearl
…and get help if you need it.
The biggest challenge is figuring out which solution providers are appropriate to support key business processes needed in international marketplaces: customs clearance, shipping, 3PL, order fulfillment, reverse logistics, currency exchange, legal, etc. I have seen too many sellers expand internationally without proper outside support, only to be blindsided by an issue that surprised them. Start simple: sellers should start by addressing these issues by asking the marketplace what other international sellers are doing, and figure out which solution providers should be consulted.
James Thomson, President, PROSPER Show and Managing Director, Marketplace Accelerator