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Cross-Border E-Commerce: Tips for Internationalization

by Editorial Office

More and more consumers around the globe are shopping online: Last year, e-shoppers generated sales of EUR 1.14 trillion worldwide – an ascending trend. Many companies want to benefit from these promising sales figures and internationalize their business. We tell you what to pay attention to in order to be internationally successful.

The global e-commerce demand is already huge, but there is no end in sight to this growth. On the contrary: According to a Statista forecast, sales are believed to double in the coming years. As soon as 2022, an amount of approx. EUR 2.35 trillion is estimated to be generated in the B2C e-commerce market with physical goods – great prospects for companies.

Global E-Commerce: successfully overcoming obstacles

The internationalization of business has never been easier than it is today. Via the internet, sales platforms such as Amazon, Alibaba and Co, as well as due to the opportunities of external fulfillment or dropshipping, companies can embark onto their global e-commerce journey relatively easily. However, there are some obstacles that can be overcome in advance with the help of a solid strategy.

Knowing the market and the target group

Before companies start planning individual steps, they should carry out a detailed market and country analysis. The more detailed the knowledge about the new market and its consumers is, the more stable the foundation of the appropriate strategy will be.

  • How strong is the purchasing power of local consumers?
  • How advanced is the internet penetration?
  • How high is the density of e-shoppers or mobile shoppers?
  • Which segments are in demand?
  • What growth potential is left in the market?
  • Are there any cultural peculiarities or special requirements for the products, their presentation, service etc.?

Companies should answer these questions in order to explore the potential of the “desired country” in advance and subsequently focus their own measures on the market and the target group.

Knowing the framework and legal conditions

When companies have identified the potential for themselves, it makes sense to know the legal and cultural frameworks for e-commerce in the selected country. Even though the EU states are often regarded as „one market“ due to the free movement of goods and payments, the requirements for a successful market entry are quite different. For example, VAT rates in the various EU countries vary between 17 and 27 percent and the payment preferences of online shoppers are also quite diverse.

For companies wishing to enter the cross-border e-commerce market, detailed knowledge of cultural and legal conditions is crucial for success.

In-house online shop or marketplace integration?

When internationalizing their businesses, retailers must also decide which channel they want to use in order to sell their products. Opening your own online shop is often costly and time-consuming. Especially for companies that are just starting out into global e-commerce and want to test whether their product can be successfully sold abroad, integration on a cross-border e-commerce platform is less complicated and less costly. The advantages: Cost transparency, a manageable risk, a large reach and design guidelines – adapted to the still new market.

For companies that are already successfully operating their own online shop, the use of a so-called multistore shop system can also be a good alternative. Depending on the shop software, country-specific requirements such as currency, special characters or weight and length dimensions can be controlled automatically, as can country-specific taxes and customs duties, etc.

In-house logistics or external fulfillment?

Depending on the company’s own capacities, firms should also consider how the goods are to be transported abroad and to the end customer. There are several options:

  • „in-house” shipping from the home country
  • External fulfillment “direct shipping”
  • Complete external fulfillment
  • Development of a distribution set-up in the target country

For companies that still find themselves in the market entry process, there are quite a lot of pros for the so-called direct shipping model. With this model, existing resources in the company’s own country are used and an external logistics service provider handles cross-border warehousing, transport, customs formalities and delivery to the end customer.

Regardless of which method retailers choose, it can make sense to consult or cooperate with a logistics service provider. The specialists know the global markets and frequently advise on all questions relating to customs and tax matters.

Knowledge is the key

The internationalization of one’s own business seems easier today than ever before. Nevertheless, companies should gather detailed knowledge about their new l environment and develop a solid strategy. Knowledge is the key! After all, only companies that are aware of the peculiarities of the respective market and consumers can overcome potential hurdles in advance, proceed in a cost-sensitive manner and successfully position themselves in the new market.

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