The Cambridge dictionary defines cross-border as something happening between different countries or involving people or businesses from different countries. When it comes to cross-border e-commerce, the term generally defines international online trade or online retail export. It entails the sale or purchase of products via online shops across national borders. Buyer and seller are not located in the same country and are often not ruled by the same jurisdiction, use different currencies, and speak different languages.
International ecommerce is called cross-border ecommerce, when consumers buy online from merchants, located in other countries and jurisdictions. Online trade between consumers and merchants which share one common language and border or which make use of the same currency are not always perceived as cross-border by consumers. EU neighbors which speak a common language, united by SEPA, are just one example.
Cross-border ecommerce can refer to online trade between a business (retailer or brand) and a consumer (B2C), between two businesses, often brands or wholesalers (B2B), or between two private persons (C2C),e.g. via marketplace platforms such as Amazon or eBay.
In 2012, Cross-border eCommerce sales reached $300 billion-, while global online trade is expected to soar to $1.4 trillion by 2015, presenting multi-channel retailers with limitless business opportunities for international expansion. In China and the US alone, half a billion online shoppers surf the web each day for the best deals. Global acquirers can help retailers with innovative solutions to overcome challenges posed by serving a diverse audience with varying consumer expectations, in multiple languages, solutions which can make cross-border ecommerce domestic and truly profitable. India Contributes less than 1% in Cross Border E commerce worldwide. However with latest digital initiatives cross border e commerce is growing at a rapid pace from India and looks like a sustainable and high growth sector.
The internet enables consumers to shop globally, by purchasing products and services across their border, driven by a common language, a common border, special offers, or simply because the product or service isn’t available in the consumer’s own region. The increasing popularity of tablets and smartphones, allows consumers worldwide to compare prices, connect with other consumers via social media, to discuss products and services, to select a web shop independent of its location and to transfer payments via their PC, laptop, mobile phone or tablet at any place, anytime, anywhere.
Not only consumers, Merchants and Payment Service Providers profit the opportunities, presented by global ecommerce; banks have come to realize, that offering acquiring services to successful stakeholders engaged in online trade, can be more profitable than selling banking products. Online Retailers, Card Processors and Payment Service Providers have hardly been affected by the economic crisis; on the contrary, these stakeholders have risen like a phoenix from the ashes, in an age when international expansion through global online trade has become big business.
International expansion through cross-border ecommerce can only be realized after online Merchants have overcome a number of challenges.
A solid partner in the targeted region can help the Merchant analyze and understand local business customs, consumer preferences and cultural differences, which affect decisions around inventory management and product marketing. Marketing strategies will have to be customized, to reach a different audience in a foreign market and a different infrastructure might require local logistic and delivery services. A “One size fits all” approach might prove to be a pitfall. Consumers often have high expectations around logistics and timely delivery and shipping costs are important drivers determining consumer preferences. Merchants which offer free or cheap delivery attract more consumers.
After geography (common borders), language is another important driver. Common language and culture reduces the barriers and saves the retailer high transaction costs involved in adapting websites and promotional copy. However, in order to reach an international audience, the retailer will have to invest in translations and in local proofreaders, who understands local terminology and culture. Multilingual customer support is crucial for customer loyalty.
Consumers prefer to pay in their local currency. Global expansion requires multi-currency conversion and settlement in currencies defined by major card schemes, including interchange rates. Banks in other jurisdictions have to be compliant with local legal requirements. Global payment solution providers with regional partners in the card payment sector, partners which have acquired expertise in the technical, innovative and legal aspects of online sales, can help merchants to manage transactions over one secure payment gateway.
Even though credit card payment remain preferred payment method worldwide accounting for 58% of all non-cash payment transactions in 2012, new payment methods have become popular in different regions. Boleto bancario in Brazil, COD in Germany, IDEAL in the Netherlands, Paytm in India, Googlepay worldwide etc. and in some countries payments are only collected after the products have been delivered. In some countries, disappointed consumers have the legal right to send merchandise back within a specified period of time. The merchant has to manage logistics, including chargebacks.
Notwithstanding the above challenges, global online trade is expected to grow to $1.4 trillion by 2015 and cross-border ecommerce has already surpassed $300 billion; testimony to the fact that the digital highway provides retailers with unprecedented business opportunities for international expansion.
Source : ecommercewiki , crossborder-ecommerce.com