Global e-commerce is projected to reach an astounding $1.5 trillion this year, with the rise in cross-border trade (CBT) helping to fuel this growth. According to PayPal and Nielsen’s Modern Spice Routes study, the most popular online shopping destinations for CBT in 2013 were the US (45%), the UK (37%), China (26%), Canada (18%), Australia (16%) and Germany (14%).
CBT offers you a vast opportunity to grow your e-commerce business — but only if you do your research and focus on regions that will suit you in terms of finance and complexity. With so many global opportunities out there, you also need to identify the best marketing channels to use when venturing abroad.
At our recent Catalyst EU event, Hakan Thyr, ChannelAdvisor’s director of partnerships, EMEA, shared 10 tips for retailers looking to expand internationally. We’ll recap those tips in this two-part blog series.
- Plan For Returns
Returns are a frequent concern for sellers entering new markets abroad. Sometimes simply having a robust returns policy in place isn’t enough, and you may need to make case-by-case adjustments. In some situations, you may want to consider offering partial refunds instead of returns. When selling long-distance, for example, return postage may be prohibitively high, and refunding orders could actually be cheaper. Also, don’t forget to consider regional differences when it comes to returns. Some countries, for instance, require free returns on all purchases.
- Be Vigilant With Fraud
When expanding to new regions, one area not to overlook is fraud. This problem is rife in some countries, so take the time to educate yourself on what regions have more prevalent fraud rates. If you’re considering selling into countries known to experience large volumes of fraud, be vigilant. Watch for any billing/shipping address and IP address discrepancies. If you suspect fraud, ask for further information. Depending on your comfort with risk, it may be better to avoid countries where you think the fraud rate is too high.
- Don’t Overlook Tax
Don’t fall into the trap of ignoring tax requirements in different regions. Many sellers, for example, assume that VAT rates are consistent across Europe. Each EU country has a distance-selling threshold, and you need to understand your sales for each of these regions to understand your VAT requirements. For example, if your stock is located in the UK, and you’re selling to consumers based in other EU countries, you may have to register for VAT in those countries where the sales have exceeded the distance-selling threshold (this can vary from €35,000 to €100,000, depending on the country).
You may then also have to start charging VAT at the rate that applies in the customer’s country and remit those taxes to that country’s tax authority. We recommend signing on with a qualified tax professional before embarking on international selling. The tax situation in some countries is highly complex – in the US, for example, taxes vary by state. ChannelAdvisor partners with Meridian and Accordance, which can provide tailored advice on overseas taxes.
- Speak The Lingo
If you’re new to CBT, starting out by selling into countries where customers speak your native language can be a good way to test the waters without dealing with language barriers. Once you’ve established demand for your products in countries that don’t share your language, you can use a computer-based translation service, or you can outsource translation to an expert. Mix translation methods based on conversion rate and margin to see what works best for you. Start with your top-performing products initially and work from there. Make sure you translate the small print as well as item specifics so that everything is clear to customers.
- Respond to Customer Queries Quickly
International customers can be suspicious about buying from foreign sellers, so allay their fears by providing excellent customer service right from the start. Respond as quickly as you can to queries to build up trust and credibility. And bear in mind that foreign-language customers tend to prefer email or live chat, so consider outsourcing to a foreign-language customer service team.
Next week, we’ll be back with five more tips on how to take your business across borders. In the meantime, download our Globetrotter’s Guide to International Expansion eBook for more CBT tips and tricks.