As advanced technology continues to create a more connected world, e-commerce follows, ultimately allowing for more international trade. Innovative merchants and corporations know that expanding their e-commerce operations to various regions and countries can bring big profits and exciting rewards.
For businesses interested in cross-border selling, there’s no need to be nervous. We’re here to walk you through the process of developing a successful e-commerce strategy and help you solve any problems, risks, or challenges that might come up along the way.
New Developments in E-Commerce
With so much commerce moving online, there have been massive developments in e-commerce. Indeed, e-commerce levels have continued to rise. Currently, e-commerce makes up roughly 22% of sales. For merchants, it’s been interesting to see how spending habits have fluctuated over the past few years, and while some shoppers have returned to their previous buying patterns, internet-based sellers should still see growth.
When we’re dealing with cross-border e-commerce, we usually see higher restrictions from the government. For example, in the U.S., merchants need to research and understand the different sale thresholds of varying states. Similarly, sales tax rates differ from state to state, with some having no sales tax.
In contrast, businesses working within the European Union need to understand the centralized status of VAT. Naturally, Brexit has affected the U.K. and its VAT regulations, while sellers hoping to break into the Canadian market need to understand that if their sales exceed 30,000 Canadian dollars, they might need to apply for federal registration.
While these regulations might seem like an unnecessary set of hoops that sellers must jump through, the fact is that these economies are also protecting their domestic e-commerce, essentially ensuring they receive their piece of the cake. For example, in Germany, companies that don’t register for VAT might find that their shipments are delayed or even refused entry. These challenges are just one of the many risks of international expansion.
Risks of Expanding E-Commerce Operations
International regulations put more pressure on the seller. However, even with the added headache of staying on top of global regulations, you can still expand your client base and increase global sales by selling across borders.
Even though regulations are tightening around e-commerce sellers, there have been some exciting developments in the industry. With technological advancements, merchants can better manage the sale of products and services around the globe. Certain tools can make the geolocalization of strategies easier. Merchants can utilize pricing adjustment platforms to monitor competitor prices and scope out market prices around the world.
While it might seem overwhelming when you’re dealing with tax laws and customs duties from multiple different countries, you don’t have to calculate those numbers alone. Working with a reliable partner such as a merchant of record can help ensure you get the tracking and shipping tools you need. After all, any decent seller must be able to communicate with their clients and customers around the world. Thankfully, a merchant of record can make this chore quick, easy, and replicable no matter your desired market.
Unfortunately, the EU is a highly regulated market for all sellers, including e-commerce merchants. However, for those merchants looking to expand into a European market, there are a few challenges that businesses need to keep in mind. Within the EU, there are many different issues to consider, so companies need to conduct thorough research and market analysis before beginning to sell in the region. For example, shipping costs throughout the EU differ drastically depending on the area in which you’re operating.
One of the e-commerce risk management strategies we often suggest to new merchants is to consider shipping into the Netherlands. Not only does it have one of the largest ports in the region, but it also offers deferment of VAT payment, making the Netherlands one of the cheapest import countries.
Another challenge for e-commerce merchants is transportation and shipping costs within the EU. Not only can it be expensive to ship throughout the region, but each country also has different shipping regulations and customs duties. The EU also has strict regulations for ingredients and high standards for product quality; you’ll need to ensure you’re following all local rules and regulations on any imported product.
As an e-commerce seller, it’s essential to understand the data protection laws in the EU, which tend to be stricter than in the U.S. and other markets. Ensure your e-commerce websites and social media platforms keep your consumer data safe.
Strategies to Mitigate Cross-Border E-Commerce Challenges
There’s a lot of information to analyze and process when you’re looking to sell internationally. Luckily, we’ve put together a list of some e-commerce risk management tools and strategies:
1. Analyze your key market
To get the most from your e-commerce plans, make sure you choose the right platform for your product. Similarly, choose local payment options that are fast and inexpensive for consumers. Research your market demographic, as well as the best advertising options.
2. Understand the logistics
When shipping globally, you must have efficient, cost-effective, and reliable shipping options. Ensure you’re aware of local shipping costs and processes, keeping your distribution network strong.
3. Use a merchant of record
A merchant of record is an intermediary party that acts as a white-label distributor that can assist e-commerce businesses with the gritty daily details of shipping globally. It can provide an established distribution network and current tax and customs information. Using a merchant of record is an excellent option for smaller e-commerce companies that might need more resources for a large-scale global shipping operation.
At Go Global Ecommerce, we have the skills and resources necessary to assist any e-commerce business that’s interested in selling internationally. We work directly with payment providers, assisting new and established e-commerce sites as you take your business abroad.
With our vast global network and years of experience, Go Global Ecommerce handles all the complexities involved in international e-commerce operations. Our cost-effective merchant of record model and partnerships with entities worldwide help shield your brand from risk, provide market growth, and open up e-commerce opportunities worldwide. Contact our team today to learn more about e-commerce solutions for global growth.