The obstacles that e-commerce businesses with a global presence have to overcome are becoming more complex in the face of emerging technologies, the shifting political climate, and ever-fluctuating economy. But selling internationally shouldn’t hinder a business.
Actually, global expansion should extend a company’s customer base and success. Here we explore the five most common challenges associated with selling across borders and what international businesses can do to work through these obstacles.
Challenge One: The Currency Problem
One of the most prominent challenges is the currency obstacle when it comes to selling cross border. When different markets use different currencies, e-commerce businesses must be sure to display local currencies on their site, so the experience feels local for the audience in that market.
When local currency is not accepted, this causes the customer to calculate with exchange rates, which is cumbersome and frustrating. To avoid a poor user experience—and potentially lost customers— businesses need to leverage an advanced cross-border e-commerce platform that can provide the flexibility to display prices in different currencies for each appropriate market.
Businesses that have this level of control over their currencies have seen their onsite conversion rates and overall international sales increase. Sustainable apparel company Outerknown saw impressive results: the company achieved over 100% increase in global sales after leveraging a cross-border e-commerce platform that provided them with the ability to localize their prices in the appropriate local currencies.
In addition to displaying the local currency, e-businesses must have the flexibility to round the prices in those local currencies to match local consumer expectations. Consumers in some markets, for example, might respond better to prices that end in .99 or .95, whereas in other markets the norm may be to present prices as whole numbers.
Challenge Two: Taxes And Duties
Taxes and duties are shrouded in legal and government jargon—no matter the market you’re in. The challenge for businesses selling cross border is multifold: they need to abide by the tax regulations in each market while making the user experience seamless. Additionally, classifying products on an e-commerce site is critical for calculating the relevant duties and taxes.
Not properly classifying products can have a negative downstream impact on the customer experience. If products aren’t appropriately classified (also known as product harmonization), packages may get held up in customs offices, where customers have to physically show up to retrieve their packages often paying additional fees they had not been aware of.
This requirement can deter customers altogether, causing them to refuse the package and souring their attitude towards the e-commerce brand. It’s crucial for businesses selling cross border to look into software solutions that can calculate and provide accurate duties and taxes.
With such information, global sellers can display duties and taxes for their customers on their websites, so those consumers will know precisely how much they will need to pay at checkout, instead of being surprised later and having a negative experience.
Challenge Three: Preferred Payment Methods Not Accepted
Consumers in different are used to using the use of different payment methods to purchase items. Frequently, consumers run into the issue of not being able to check out because their preferred payment method is not accepted on the website.
This obstacle results in the customer leaving the site and the retailer losing sales. Global online merchants need to have an understanding of which payment methods are accepted in the regions they target. For example, carte bancaire is one of the most popular payment methods in France, while boleto bancário is the preferred method in Brazil.
Cross-border technologies that can facilitate and manage several payment methods have emerged over the last several years to assist here, and they help solve an important pain point for retailers and consumers alike.
Challenge Four: Direct International Shipping Is Cumbersome
Not only is it cumbersome, but it’s also expensive. International shipping is either too slow, unpredictable, or pricey. Worse, customers are often left in the dark and don’t know when they will receive their goods. A confusing or inaccurate delivery window results in poor customer experience, leaving them guessing.
This is a particular problem for the end consumer around important holidays where timeliness for order receipt is incredibly essential. Furthermore, the cost of international shipping can be prohibitive for the consumer. For the retailer, the unit economics might not work to ship into specific markets. However, there are ways to offset these costs.
For example, the online retailer might decide to offer free shipping in certain target markets where they are able to absorb the costs. In other markets where free shipping is more expensive, the retailer may decide to offer tiered shipping with a minimum order value threshold to help offset the cost. In markets where the spending power of the consumer is higher, the brand might be able to charge more on shipping compared to other markets.
Either way, the retailer needs to have the flexibility to optimize their shipping strategy for cost and speed. Modern software solutions can allow these retailers to do just that by giving them control over shipping methods and which ones are offered to consumers in each market.
Challenge Five: Returns
Without a solution to facilitate international returns, a global seller could risk ruining that last moment in building a relationship with their customer. Customers get turned off if they can’t easily return or exchange an item, which can mean losing those customers or others through word of mouth. Again, some markets may respond to returns different.
In markets where there is a higher tolerance for paying for returns, clearly stating a return and restocking fee might be acceptable to those consumers. In other markets, free returns may be a blanket expectation, so retailers need to think critically about these differences in market expectations and consider which return strategy will work within their business model.
In today’s digital age, the customer experience is king, and global sellers should look to software options that can easily process and manage returns, reverse logistics, and any associated customer service support necessary.
With the digitalization of modern business, international selling has become more complex than ever before. Yet, as technology has complicated the process of selling cross border, it has also emerged as a tool to make it more seamless. Global businesses would do well to explore the software-based solutions on the market to facilitate their customer demand.
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