How to Manage Cross-Border Trade Without Massive Investments

Cross-border trade doesn’t have to break the bank. Here are four preliminary requirements for international expansion and how to execute them.

October 3rd, 2018   |    By: Sree Menon    |    Tags: Strategy, Success

Many retailers are looking to establish an international e-commerce presence, whether sourcing goods from abroad or selling goods in a new country. Research from Pitney Bowes found that an impressive two-thirds of consumers have made an international purchase, and almost a third do so once a month or more. DHL has predicted a 25 percent increase in cross-border retail volumes between 2015 and 2020, amounting to a hefty $900 billion market.

It’s natural for retailers to try to cut out a piece of this pie, but my experience at eBay and Tophatter has taught me that it typically requires a substantial investment. Establishing cross-border trade takes trial and error — getting it right almost always requires making lots of mistakes along the way.

Obstacles to International Operation

First, even the simplest tasks can be tough. You’ll need to translate your marketing materials into new languages. Technology can help, but the results aren’t perfect. Plus, no amount of tech can ensure your messaging appeals to the cultures you’re targeting. Even within one country, culture can vary drastically, so don’t expect to get away with the same materials all over the world.

Cross-border trade also requires you to navigate the various laws and regulations established by the governments you’re dealing with. Understanding the rules and regulations of each border you cross is paramount, and one oversight could cost a lot of time and money.

Logistics are also difficult to nail, but they’re vital to your success. Consumers in markets around the world have become used to fast, free shipping. They’ll be dissuaded from purchasing by extended shipping times, and unforeseen delivery delays can cause customer satisfaction to plummet. If you want to see return customers, airtight logistical strategies are key.

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While new investments are unavoidable when starting a cross-border enterprise, many of the preliminary pain points can be taken care of with some research. Before taking on the global market, improve your odds by following these steps:

1. Select a location, but be calculated and cautious.

Deciding your next location is about precision. It’s impossible to invest in Europe, Asia, and Africa tomorrow, so choose a country rather than a continent — a country like India or China is stop No. 1 for many venturing into cross-border commerce. China, for instance, acquired 42 percent of the global e-commerce market in just a decade, but you still need to decide where to start. China has dozens of huge cities with different business focuses; narrow down the field and establish your international presence one or two cities at a time.

2. Consider a culture that best suits your business.

Though many large companies are global, culture still means a lot in business. Across cultures, you’ll see vast differences in languages, communication mediums, food and clothing preferences, holidays, and spending habits. There are also differences in the workweek and professional etiquette that are important to know for business meetings. If you’re going abroad, brushing up on your knowledge of local culture will help make a good impression when you meet potential business partners.

3. Don’t neglect essential research.

Expanding your operations internationally costs money, and you don’t want to squander your investments by overlooking the importance of basic research. For example, many American retailers have never heard of the 11.11 Global Shopping Festival that occurs annually on Nov. 11. Chinese retailer Alibaba has helped the festival, now in its ninth year, become the largest online shopping day in the world, with sales exceeding $25 billion. Do some research, and you’ll be surprised what you never knew.

4. Pinpoint important policies in other countries.

Being aware of customs and cultures will help you interact with customers, but you’ll also need to navigate dealings with foreign governments. It’s critical to get an idea of the taxes and fees your business will incur before you open your doors. Brazil, for example, has seven cumulative income taxes, and your items can’t be delivered until they’re paid. Even if an area has a huge market of customers you want to reach, it may not make financial sense for you to do business there. Know before you go.

You don’t have to be Amazon or Alibaba to succeed in cross-border e-commerce. Take a focused approach and do your research instead of making hasty decisions. Staying quietly within your current boundaries may be easier, but pursuing a cross-border presence gives you the opportunity to grow in ways you never thought possible. Don’t expect overnight success, but start now and you’ll be amazed by what you can accomplish.

About the Author

Sree Menon

Sree Menon leads Strategy & Global Sales Operations at Tophatter, a marketplace that is reimagining discovery commerce for the mobile era. Sree has more than 20 years of experience in sales and operations and has leveraged her expertise at companies such as eBay, Dell, and GE.

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