It is, however, a significant investment with complex operational challenges to tackle and unique fraud risks to consider and mitigate.
Between 2021 and 2025, GlobalData estimates suggest the global eCommerce market will achieve a compound annual growth rate of 12%. High growth markets in Asia, South America, and Africa make cross-border eCommerce increasingly appealing for many merchants. International money flows between businesses and consumers are firmly in the trillions and show no signs of slowing down.
The Covid-19 pandemic has been an important catalyst for this growth. Since the lockdowns, more and more customers, including those who had never placed an order online before, became accustomed to online shopping.
For customers already comfortable making eCommerce purchases, their internet shopping behaviors shifted as they felt more at ease with the kinds of purchases they could make, the websites where they could make them, and the methods for purchasing and receiving them.
The overall changes in consumerism caused by the pandemic have made it possible for cross-border shopping to expand enormously. Retailers, independent researchers, and industry experts have seen an increased willingness from shoppers to purchase from other countries.
In the past 12 months, 57% of internet buyers worldwide made at least one purchase from a company in another nation. In one survey, 43% strongly agreed or agreed that increasing their overall online buying during the pandemic has increased their willingness to consider cross-border eCommerce transactions.
With more retailers pursuing cross-border eCommerce, customers have more purchasing options. The most frequent reasons for customers to shop outside of their local market are:
- Improved prices: 55% desire cheaper items from international online retailers.
- Inventory accessibility: 47% look for items they cannot locate locally.
- Broader choices: 31% seek out specialty items from international online retailers.
Challenges in cross-border eCommerce
Cross-border growth is a worthwhile pursuit for eCommerce retailers, enabling them to reach more customers in new areas, increase brand awareness, and grow revenue. But it is a substantial operational initiative that necessitates a major investment. To safeguard the venture’s viability, merchants must address a few key considerations:
1: Navigating challenges of new markets
An eCommerce retailer preparing to enter a new country or region must observe data privacy laws, national trade agreements, and other regulations. The retailer will also have to monitor global supply chains, along with the possible ramifications on costs and capabilities of order fulfillment. In addition, local economic and humanitarian concerns should be fully understood, and how they might affect the region’s cross-border sales.
2: Establishing a localized consumer experience
When entering a new market, a like-for-like translation of your site is all well and good. But without a sophisticated understanding of consumer expectations, few will visit.
The first step – crossing language barriers – must be done sensitively. Translators must deploy domain names, languages, and content marketing that will chime with local sensibilities and dialects. After this, cultural immersion is critical. Marketing materials may need to be revised for local holidays and events; timings for end-of-season sales and promotions vary from place to place. Consumer preferences should dictate your inventory mix – for example, different clothing lines depending on the season or updated ingredient lists based on dietary preferences.
3. Mitigating ever-evolving eCommerce fraud
International expansion comes with a new range of fraud risks to tackle. Fraudsters can immediately mobilize to take advantage of any vulnerability when they find that a business has expanded to a new area. They can also share or sell strategies on the dark web to other fraudsters, exacerbating vulnerabilities that may exist during a merchant’s expansion.
Merchants must also consider their risk tolerance when serving customers. Revenue could be lost from many potentially legitimate customers who get lumped in with the overall “risky” country. But what may appear “risky” in the merchant’s domestic market could be completely legitimate consumer behavior abroad. As a result, out of an abundance of caution, some retailers may consider blocking all transactions from certain countries.
A legitimate consumer who faces onerous additional steps in a transaction approval process is more likely to abandon their cart––but a fraudster will not care how many steps their transaction goes through, as long as it is successful. Higher rates of false declines or chargebacks may be encountered if fraud prevention technologies cannot distinguish between a good transaction and fraudulent activity.
Turn reticence into resolve
While hesitation in the face of increased risk is understandable, merchants can take steps to mitigate risks and unlock their full growth potential. Fraud prevention measures can make or break a cross-border eCommerce strategy. With the right solution that can accurately analyze transaction data on a global scale and quickly adapt to emerging trends and threats, merchants can provide superior customer experiences and secure the benefits of cross-border eCommerce. It is vitally important that both your business – and fraud prevention strategy – are ready for international expansion and that all aspects of the local market are understood.
Get these wrong and it could quickly signal the end of your plans. If you can’t provide customers with what they want, they will find it from your competitors. Get it right and ensure the success of your expansion.