The future of ecommerce is cross-border.
As retailers and markets mature, the opportunity for domestic growth is becoming limited. On the one hand, successful retailers are reaching market saturation at home. On the other hand, consumers are becoming more comfortable buying from retailers based in foreign countries. The combination makes looking to other lands for new customers good business.
Of course moving into new, unknown markets is difficult. It means learning about new cultures, new buying habits and new rules and regulations. It means new security and fraud concerns, given that most merchants have little transaction history with the new customers they are looking to attract.
But none of that can be a deal-killer when it comes to expanding internationally. Why?
Global ecommerce is exploding. Ecommerce spending worldwide last year was about $2.9 trillion, according to Internet Retailer. By 2022, just three years from now, digital consumers’ spending will double, reaching $5.8 trillion online, 451 Research says. That growth will be about six times the rate of increase for in-store sales, by the way.
Most shoppers are buying cross-border
And more and more of that shopping is happening across borders. Market researcher Nielsen studied a six-month period in 2016 and concluded that 57 percent of shoppers bought something from an overseas retailer in that time. You can assume the percentage is higher today. In China alone, nearly one-quarter of ecommerce spending is spent on cross-border purchases. By 2020, that will be 40 percent, according to international ecommerce experts Flow.
Download the Best Practices for Cross-Border Commerce E-Book
All of which is tantalizing, but not very helpful when it comes to figuring out just how to take advantage of what appears to be a customer-acquisition bonanza.
So, some help. Signifyd, along with other leading ecommerce experts including Magento, Akeneo, DHL, Vertex and Worldpay have collaborated on “Best Practices for Cross-Border Commerce: The Right Strategy for Every Market.” The e-book guides retailers through cross-border concerns around fraud prevention, product information management, shipping and delivery, tax compliance and management, and localized payments.
As a merchant expands globally, describing products and maintaining one source of truth becomes more difficult. Shipping, obviously, is more complex and keeping consumers informed of their package’s progress is harder. Taxes are hard enough with only one country (and many local jurisdictions) to keep track of. How about throwing in a few new countries? Payment preferences and possibilities vary, sometimes widely, by country.
And fraud. Fraud looks different in different countries. The amount of public information and data available to build an understanding of customers is different in each jurisdiction. A single retail enterprise entering a new market won’t have transaction data with the customers now arriving at its digital sites.
Facing a perceived increase in risk, some merchants simply write off whole countries or take unnecessary precautions. But interestingly, the risk of cross-border fraud is about 0.9 percent, the same as the risk of domestic fraud. So, retailers are unnecessarily erecting barriers between themselves and paying customers.
Merchants are missing out on cross-border ecommerce opportunities
“In terms of actual fraud rates, domestic and cross-border are the same,” Signifyd Vice President for Growth Marketing Indy Guha told Magento as it researched the e-book. “But fear of fraud in cross-border transactions is dramatically higher. So, the retailer puts in steps — account verification, payment-type limitations — to make sure no bad guys get in.”
But that checkout friction, Guha added, means good order get declined. In fact, he said, the rejection rate is nearly twice what it is domestically.
As “Best Practices” points out, the answer is to turn to big data and machine learning fueled by a massive transaction data base across thousands of merchants in hundreds of countries.
By tapping into a resource like Signifyd’s Commerce Protection Platform, retailers find that their new customers are already known from previous transactions with other retailers. Such a system also allows retailers to spot opportunistic operators who engage in unauthorized cross-selling — buying a brand’s products in parts of the world where they are less expensive and selling them into international markets where the items are priced higher.
Sometimes, even for enterprise retailers, the hesitancy to sell across borders or into certain countries, comes down to the fear of the unknown. The latest e-book from Signifyd, Magento and other Magento partners, eliminates a good part of the unknown and opens up the world to retailers everywhere.
Download the free cross-border strategy ebook here >>
For those wanting to learn more about cross-border commerce, Skye Spear, Signifyd’s vice president of North American sales and partnerships, will be presenting “Finding Cross-Border Success: How to Identify Your Next Market in an Uncertain World,”on May 15 at Magento Imagine.
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