Last updated on April 18th, 2022 -
This blog was written by our partner, Linnworks. They summarize the key ideas presented by Zonos CRO, Daniel Johnson, from his October 6th, 2021 Linn Academy session entitled, “Taking Control of your Cross-border Business.” This post is especially helpful to those with online businesses looking to or already selling internationally.
How to overcome the challenges of operating a cross-border ecommerce business
Operating a cross-border ecommerce business comes with a unique set of challenges and potential concerns. However, it also comes with new opportunities. In a recent Linn Academy session on taking control of your cross-border business, Daniel Johnson (referred to as “Dan” throughout this article), CRO of Zonos, shares his insight on the cross-border market. He has more than 11 years of experience in the cross-border, primarily ecommerce, space. He sheds some light on the growing cross-border market, the issues and challenges cross-border businesses may face, how to prepare and mitigate for these challenges, and how it all translates to providing ecommerce customers with a seamless, positive shopping experience. Dan has seen a lot of different customer buying experiences and the processes that businesses have in place. In the online session, he shares what he’s seen in cross-border retail that has worked well and offers additional guidance and direction on how retailers can take control of their cross-border business.
The current cross-border ecommerce market
In today’s ecommerce world, the opportunity for cross-border business is now pretty well known. Previously, sellers would debate the value of taking on the extra work of cross-border selling and avoided expanding into cross-border markets, sticking with domestic operations only. “Cross border definitely has some challenges and friction points that a lot of retailers don’t experience servicing their domestic market,” Dan says. But cross-border purchasing has grown exponentially, especially over the past few years with the global pandemic. Here are some statistics on this growth:
- 50% of U.S. (United States) shoppers make cross-border purchases
- 70% of online shoppers purchase from foreign sites
- 85% of the world’s purchasing power exists outside of the U.S.
There’s a lot of opportunity to sell your products internationally, and online shoppers are looking for it. This growth is available to all, “regardless of the country you’re based in or the countries you’re looking to sell to.”
Overcoming cross-border ecommerce challenges
Cross-border ecommerce presents new issues to address. However, planning ahead and understanding exactly what is required can help mitigate problems down the line. Below are some of the most common challenges that cross-border ecommerce retailers face and the potential issues that businesses should be aware of. When surveyed, more than one-third of retailers mentioned these common cross-border concerns for a business:
- Navigating customs compliance (the top issue for retailers)
- Tracking their deliveries once the product crosses the border
- Managing delivery expectations of customers in another country
- Managing all of the risks once the goods are across the border
- Creating a seamless customer experience for their customers abroad
Offering landed cost transparency
“Part of the reason there are many challenges is that everywhere in the world is different,” Dan says. “This is especially true of the costs associated with shipping a product across the border.” The cross-border expert stresses the differentiating rate of tax, duty, carrier fees, and shipping in each destination country. This is just one of the many variables, however. These costs all impact the total landed cost, which is vital for the retailer and customer to know.
Cross-border retailers need to understand the taxes and fees required when goods cross a border. “There’s a lot more that goes into these fees as opposed to just duty and tax,” he says. In the past, a frequent cross-border consumer may not have been shocked by additional fees upon delivery, but this expectation is different now. Customers expect to know the full landed cost of their purchase. Customers do not want surprise bills showing up because the retailer didn’t include every element of the total landed cost. It’s vital as a growing cross-border ecommerce business to be fully transparent and upfront with costs so customers know the final price and when to expect delivery.
Otherwise, it can lead to shoppers abandoning their cart or avoiding the business altogether, losing out on the value of a lifetime customer. Retailers invest time and money to build great websites, products, and experiences, but not having full transparency will negate that effort. He shares that 39% of buyers not only abandon their cart but avoid the retailer if there is not full transparency. If the retailer doesn’t have a delivery date during the check-out process, 43% of online shoppers will avoid them entirely. His advice is to show customers the delivery options, estimated arrival dates, all the fees, and final cost upfront; this is essential in building trust and ensuring repeat, long-term customers.
In today’s online customer experience, this is preferred and expected. Dan says there are two primary reasons people buy online: price and convenience. However, when a customer receives surprise fees and unexpected costs after purchasing the product, even if the price is still the best price available, the customer will not be as satisfied. Cross-border retailers will have this issue when selling cross-border unless they plan accordingly. The customer may also refuse the package at the time of delivery. Package refusal costs the business support resources, returns, destroyed or lost merchandise, and shipping costs. Many times, the cost of returning goods is greater than the value of the items, so it is a complete loss. Taking surprise costs out of the equation for your customers is going to save labor and time for your team, in addition to a better customer journey.
Welcome buyers when they land on your website
It’s essential to reduce and eliminate any friction points throughout the buying journey. One suggestion Dan has is welcoming buyers as soon as they land on your website. Then, depending on which country they are shopping from, you can let them know whether or not you can accept their order and what the products cost in their currency. Inform the customer immediately when they come to your website whether or not you accept orders from their country. Provide them with other pertinent information as they shop, such as how much they can spend before duty and tax is applied, managing the buyers’ expectations upfront. Greeting customers in their language with the information they need to make a buying decision without surprises creates a positive shopping experience that leads to higher sales.
Keep an up-to-date international shipping policy
Whether there’s a welcome message or not, there should always be a regularly updated, informative international shipping policy easily accessible on the website. It’s imperative to review the shipping policy often to ensure accuracy. A good shipping policy is key to managing expectations. An international shipping policy will be separate from the domestic shipping policy. Include whether or not the cost of customs, duty, and taxes are refundable on the shipping label. It’s crucial to clarify refund policies since many cross-border shoppers have had negative experiences due to a lack of transparency and not fully understanding the process.
Offer multiple shipping options
Another step to creating upfront and seamless international shopping experience is offering multiple shipping options for customers at checkout. Retailers can even provide a guaranteed service to consumers, where delivery is guaranteed as long as the product ships during a specific timeframe. If you’re offering multiple shipping options, it is important to be thoughtful with what you offer, limiting the low-cost options or postal options based on the item value. Dan believes it is imperative to understand and display the total landed cost for consumers. He says displaying the total landed cost to customers and giving them all of the information they need when placing their order creates trust required for a lifetime relationship with your customer. Don’t let customers be surprised by additional fees. He adds that there are many tools available for retailers to help accomplish this and better understand import taxes, duties, and extra cross-border costs.
Understand the international consumer experience
Another recommendation is for retailers to run through their website’s international buying experience, asking themselves, “Would I buy this product from this retailer?” Asking friends and family to go through the international shopping journey and provide honest insight and feedback is also a helpful strategy. It’s important to review experiences and processes annually to ensure you are up to date on all requirements. “Things change regularly in cross-border ecommerce,” says Dan. For new cross-border retailers, he suggests leaning on peers — other cross-border retailers and partners — for guidance and assistance. A lot of people want to help you succeed, he says. Watch the previously recorded virtual session on cross-border business to learn more.