Cross-border sales are an opportunity for many retailers and brands to grow by utilizing cross-border opportunities. Today, we refute ten common misconceptions about international e-commerce expansion.
Being a market leader in your own country makes cross-border entry easier
A new market means a new game with a new set of cards. Of course, being a major market leader in your home market has given you a lot of experience, knowledge and a solid organizational structure. However, a new market brings with it a whole new competitive environment: a new demand structure, different marketing costs, new consumer behavior and a different shopping and consumption culture.
Translating the webshop is enough
More than half of French, Chinese and German consumers prefer sites in their own language (I). A good translation is valuable for search engine ranking and conversion. However, it is far from the only key to cross-border success. Consumers must build trust with a new seller and will have doubts if your organization does not have a local address and telephone number. Have you thought about the prices? Customs, duties and legal obligations? Is your customer service ready to serve a new audience, do they speak a different language and perhaps live in a different time zone? There is much more to it than just a translation.
Longer delivery times are the most important factor deterring consumers from cross-border shopping
According to Pitney Bowesii(II), longer delivery times are only the third most important barrier to cross-border shopping, after high shipping costs and unforeseen costs including duties and taxes. According to figures published by DHL and Euromonitor (III), the worldwide average for an acceptable delivery time is 6.5 days, with the Russians in the lead with an average delivery time of 12.4 days. The Turks are the most impatient, with only 3.5 days.
Fast delivery is a standard “must-have”
Where long delivery times can be an obstacle to cross-border e-commerce, most international buyers choose ‘free’ over ‘fast’ (IV). Consumers are willing to pay extra, but prefer convenience, such as the option to choose a time slot for delivery.
Successful cross-border sales require so much investment that it is only for the big boys
Of course, opening an office in the local target market, dealing with international returns, hiring employees who speak the local language, all without being able to easily estimate the necessary volumes, requires a substantial investment. However, it is not the only way to expand an online shop. Work with local service providers that offer services such as returns processing, customer service and logistical support that help make international expansion accessible to SMEs.
Offering credit and debit cards is sufficient.
The Chinese use Union Pay and Alipay, the French use Carte Bleu, the Dutch pay with iDeal. Payment preferences differ per country and making a payment is a matter of trust. Not offering local, trusted payment methods can cost you up to 50% of sales.
Foreign retailers can best sell to Chinese consumers by opening a storefront on the Tmall platform.
Although Tmall offers foreign retailers a great deal of convenience and generates a steady stream of traffic, it cannot be ignored that it requires an investment of 30-40K in set-up costs. The high costs cut into your margins. Competition is fierce and only 10 percent of Tmall sellers are actually profitable. Although Tmall is an excellent platform for brand awareness and, at a later stage, traffic, retailers should not be afraid to sell directly to Chinese consumers. This can be done through their online store or through the popular social media platform WeChat, as a catalyst for their successful e-commerce presence.
EU e-commerce legislation is the same for all countries
A great deal of effort has been put into forging all the different sales laws in the European Union into a harmonious whole. The Consumer Protection Directive was launched in the summer of 2014 and has, for example, standardized a large part of the general terms and conditions for returning goods. The use of cookies has also recently been standardized. However, it is not enough to simply translate your general terms and conditions. There are local regulations that determine what should be included in them. For example, in Germany, since 2012, it has been mandatory for sellers to explicitly state that the consumer has confirmed a binding purchase that they must pay for. Legal regulations therefore still differ within the EU and must be carefully studied.
The advantage of the United States is that it is a one-dimensional market.
True, but not entirely true. The advantage of the United States is that it has one official language and one currency. But besides the fact that the United States is a large country, you should not forget the cultural differences, the Spanish-speaking community and the 7500 different sales tax rates, depending on the state, city and sometimes even street.
The United Kingdom, Germany and France are the largest, and therefore the best countries for e-commerce expansion.
The United Kingdom, Germany and France are mature e-commerce markets with a large, growing consumer base and a well-developed infrastructure. That does not mean that these are the ideal markets for the specific sector or products you are selling. An in-depth price analysis shows that marketing costs in Poland and Spain are much lower for many brands. Carefully calculate your margins in the new market. Can you make money with these products? Estonia, Denmark or Poland may sometimes be wiser choices than France or Germany.
(I) Can’t read, Won’t buy, Common Sense Advisory, Inc., 2014
(II) Global Online Shopping Study, Pitney Bowes, 2014
(III) DHL, Euromonitor, published by Statista 2015
(IV) Cross-Border Research 2014, Global Snapshot, PayPal, 2014, & Ystats.com, 2014
