If you’re wondering what cross-border eCommerce is, and how it figures into eCommerce businesses that run on the D2C model, you’ve come to the right place.
Cross-border eCommerce involves selling products and services globally through eCommerce stores, websites and platforms. With the global cross-border eCommerce market expectedly valued at $4,820 billion by 2026, D2C brands will need a plan to go global. And that’s what we’re going to talk about in this post.
What Is Fueling Cross-border eCommerce?
Direct-to-consumer cross-border eCommerce has seen a rise in millennial shoppers mid-pandemic. Over 50% of 25 to 34 year-olds have capitalized on the convenience of personalized digital purchases and were found to transact directly with international online brands.
The closure and accompanying reduction to accessing physical storefronts has been a key reason for nearly 46% of shoppers to shop at their favorite brands online. Figures from the Indian Retailer reveals that clothing overseas was ordered by nearly a quarter of global shoppers while footwear, luxury goods, wellness and beauty were next in the list. Of these, millennials and Gen Z shoppers made nearly 3x more cross-border purchases than baby boomers.
Cross-border ecommerce can be used by any seller looking to grow their business, tap into new market opportunities and reach a bigger audience.
The Blockers To A D2C brand's Cross-border eCommerce strategy
Although the ONDC project launched in April 2022 promises to end monopoly in the eCommerce market share, the dust is yet to settle. This means that SME D2C brands could face some challenges to a cross-border eCommerce strategy. These include;
Branding is pivotal to getting the right messaging intent across. And this is where SMEs struggle because the competition multiplies exponentially on a global scale, making it harder to differentiate your brand.
The key to achieving brand equity is to do branding at a country rather than individual level. A government-backed initiative such as virtual fairs can let companies set their booths up and showcase products on a 3D plane. Attendees can interact with the founders from the comfort and convenience of their home while getting a better sense of the company’s products and logistics. The ONDC’s move to decentralize eCommerce can accelerate this process and give market players of all sizes equal footing .
- Return and refund policies
Returns policies are fairly straightforward in the home market, but invite questions when the customer and seller are in different geographies. For example, when a customer overseas wants to send their order back, who will bear the cost of returns? If the order is reported to be damaged, how do sellers verify the origin and reason behind damages, and how does this uncertainty impact customer-seller relationships?
Once clarity is offered on what is and isn’t covered in the returns policy, more growth can be expected from cross-border eCommerce.
- Compliance certification
The operators involved in eCommerce exports and imports must have a thorough understanding of e-transactions, payments, order tracking, shipping and delivery.
A regulatory framework needs to be decided upon, especially when it comes to multimodal transportation. A single document that is acceptable to authorities both locally and internationally should suffice to reduce the checkpoints without compromising on the scrutiny into quality.
If an international customer wants to return the product, what should be done? What will be the cost to bring it back and who will bear it? There is still a lot of conditionality with which the return policies are defined. The moment these loose ends are tied up, we’ll find accelerating growth. That is one of the positives of India.
Components of a D2C Cross-Border Ecommerce Strategy
- Region-specific user behavior tracking
Conduct demographic research in order to create buyer personas relevant to your brand. The advantages of doing this include
- The ability to distinguish and filter buyers by their intent and stage of decision-making.
- Effective marketing after analyzing buying behaviors.
- Catalog diversification to include products that meet your target customer’s preferences and expectations.
- Running personalized ads based on historic purchases and wishlists.
- Studying compliance standards abroad to craft products and services that meet those regulations.
2. Familiarize yourself with regulatory compliance
Country-wise regulations reveal taxes, charges and deductions that are applicable for both forward logistics and order returns. This can help D2C brands avoid financial penalties and reputation damage.
D2c brands will need to confirm if there are items that cannot be sold in the countries they’re looking to expand into. While demand may exist, regulations forbidding or restricting those products from being sold in foreign markets will require you to reconsider your options. Examples of such items that fall under the prohibited category include animal products, weaponry and drugs, while restricted products can include certain fruits and vegetables.
- Pick a reliable logistics management partner
Warehousing and shipping are pieces of the eCommerce puzzle that you have to get right to streamline order fulfillment. In eCommerce warehouse management, you can receive inventory, shelve stocks and fulfill orders. While small to medium sized businesses can outsource fulfillment to 3PL or 4PL companies, larger businesses would typically take care of it in house and have their own distribution centers and warehousing facility. Decide on physical storage and find the right logistics partner to keep accountability clear throughout the chain of custody.
Shipping aggregators can let you compare volume shipping discounts, delivery timeframes, inventory reception and storage. They can also answer your questions on export taxes and delivery limitations and/or restrictions.
4. Outsource your support services as needed
Frustrated customers can dampen your growth efforts because their reviews and ratings would reflect the problems that remained unresolved due to language barriers, connectivity issues etc. Great customer service and post-sales experience are essential to establishing your credibility as a seller. As a first step, put yourself in the customer’s shoes to draw up scenarios that they may face when it comes to their orders. This can help you formulate the correct responses. At the very least, you’ll win their cooperation to work towards a compromise.
If you cannot afford to employ multilingual support specialists and chat agents at present, consider outsourcing customer service to reduce overhead expenses. This way, you can stay lean while expanding into international markets.
5. Test the repeatability of your rollout strategy
Your rollout plan should guide you on pricing, complying with the region’s local laws, sourcing reliable and reachable in-country partners.
A d2c cross-border eCommerce strategy needs to be repeatable to save you time and money. So long as the user behavior and demographic is unchanging, the regions shouldn’t require a different level of effort.
Why Now is the Right Time to Start D2C Cross-Border eCommerce
The Global cross-border eCommerce market size is estimated to reach $1508700 Million By 2027. The rise in eCommerce spending abroad plays a significant role here, with retail sales in the APAC country overtaking larger markets like the U.S. India is now in a position to capitalize on this shift thanks to
- Increased internet penetration.
- A larger disposable income from the middle-class demographic.
- The growth of globalization and international trade.
- Consumers who want brands and products that are unavailable in their home country.
The merchant eCommerce study commissioned by Visa in 2020 should convince you why now’s the time to start a D2C cross-border eCommerce strategy. 87% of eCommerce merchants in the study believed that growth opportunities lay in expanding sales to the foreign market. Two years back, 66% of eCommerce companies sold cross-border, and nearly 88% of executives surveyed foretold that an international presence will play into the company’s success in the next 5 years. All these strongly indicate that eCommerce sellers can grab a large share of the foreign eCommerce pie-chart.
More people are reaching financial stability at younger ages than their parents. This, combined with them being more technologically savvy opens up more opportunities for them to explore, sample and transact.
As technologies evolve to plug language barriers, create frictionless customer experiences, and reduce resolution times, the cross-border e-commerce market will benefit Indian based D2C brands, enabling their revenue to add to India’s economy.