According to a report by logistics provider DHL, the growth rate of cross-border commerce is expected to be twice that of domestic e-commerce growth.
That is great news for merchants who have a handle on their domestic e-commerce offerings as it shows a trend toward even more potential consumers reaching across the border for goods.
But cross-border commerce isn’t that simple.
First, there are regulatory issues, such as taxes and duties, and when you consider that transactions taking place over state lines are disputed regularly, you can imagine how difficult it might be to find consistency in less developed countries. Then you have regulations and limits on what can and can’t be purchased from a non-domestic merchant and who can and can’t make purchases based on age, etc. Then there are legal issues and unstable court systems.
Second, there is the issue of payment methods and payment processing. Payment mechanisms throughout the world vary from region to region and sometimes from country to country. In countries like Spain, consumers prefer to use credit cards, but that number drops in countries like France and even further in Germany — where Germans prefer to use debit cards. Places like India, China and many countries in South and Central America prefer cash on delivery.
Lastly, logistics and reverse logistics are a very important part of the process. The responsibility to the consumer doesn’t end when the payment for their goods hits their bank account. Consumers consider it the responsibility of the merchant to make good on delivery. Then, there’s cost and passing that cost onto the consumer can make cart conversion difficult at best. Studies show 40% of cart abandonment is generated by frustrations in the check-out process. That will only be exacerbated by high fees associated with shipping, taxes and duty fees.
After reading all of that, you may be thinking to yourself, “Okay, no international commerce for me.” And you can see why third-party distributors like eBay and Amazon are a very popular method of selling goods beyond borders.
But, this industry is driven by progress and development and solutions are on the way.
Logistics companies are streamlining their services to make shipping and delivery services easier to navigate and cheaper to accomplish. Governments and regulatory commissions are working on ways to help consumers in their countries get the products and services they want and need. And payments companies are building partnerships with foreign banks and payment processors that make payment conversions easier than ever.
National Merchants Association has partnered with banks and payment services in Central and South America and Europe and can answer any questions you may have about cross-border commerce.
Contact NMA at (866) 509-7199.