There is no doubt that technology has made the world feel smaller, connecting distant corners of the planet through a complex web of commerce and communications platforms. If you’re a successful U.S.-based e-commerce seller, you may have cracked your domestic market niche, but you’re acutely aware of the global math: there are over 7.5 billion people in the world, but only 325 million of them live in the United States.
Market research firm eMarketer projects that global e-commerce sales are predicted to reach over $3.5 trillion by 2019: Are you leaving a mountain of untapped commercial potential on the table by not going global?
Why go global?
If the potential scale of the global e-commerce market doesn’t compel you enough, don’t despair, because you’re not alone: according to eMarketer, only 1% of the over 30 million US companies sell their products or services internationally. This means 99% of businesses are overlooking some of the most powerful arguments for selling to markets outside the United States:
- Add rocket fuel to your sales volume. International consumer markets are growing at an eye-popping pace. In China, the number of consumers who regularly shopped online increased by 14% from 2014 to 2015, on top of dramatic rises in disposable income. In Europe, online sales rose 12% to top 509 billion euros in 2016. In Latin America, e-commerce sales are projected to grow 22% by 2018, with Argentina, Brazil, and Mexico leading the pack. Even in Canada, growth in online sales is projected to rise over 12% by 2019, with a whopping 54% increase in per-person spending!
- The cachet of American brands abroad. Many people the world over are drawn to the perceived “cool factor” of products that come from the United States. What does this mean for U.S.-based e-commerce sellers? Potentially, bigger markups and higher profit margins, as the draw of American products translates to higher prices. And if you have a particularly strong brand in the U.S., you can bolster it even further by extending its luster to international markets.
- Defying the calendar. In the U.S., most e-retailers salivate over sales numbers from Black Friday until Christmas Eve. With global expansion, peak sales cycles can be extended. If you have a seasonal business that derives a large chunk of its revenues in say, the summer, you can effectively double your prime selling season by selling in the southern hemisphere as well, where summertime occurs while the northern hemisphere braces for winter.
Challenges of going global
When running a long-distance race, one must be very strategic in considering all the factors, large and small, that may mean the difference between reaching the finish line or expiring, thirsty and breathless, at the halfway mark. When it comes to selling on e-commerce marketplaces, here are some of the key factors you need to bear in mind in the race to globalizing your sales potential:
- Fulfillment and shipping. Getting products to your clientele is a little more complicated when shipping internationally. Not only must you consider the logistics of shipping to different countries, but there can also be significant country-by-country variances in costs, customs, and duties, which can ultimately make a big dent in your bottom line.
- Customs and duties. Do you recall how annoyed some U.S. customers get when they see sales tax assessed on their online purchase? Now imagine the mind-boggling complexity of a customer encountering an ever-changing landscape of customs, duties, and taxes that vary market to market. Plus, making sure you’re complying with customs laws in a variety of jurisdictions can be a regulatory minefield.
- Language and cultural differences. Many big brands have paid the price of making literal translations from English to a foreign language. Language, including nuances in regional dialects and colloquialisms, is precise and exacting. You’d be well-served to work with local market experts to make sure your key sales and marketing messages are translating accurately. Otherwise, you may see your sales sink faster than the Titanic.
- Payment methods and currencies. Selling internationally requires e-commerce businesses to support local payment and currencies options, which vary by country. Leveraging marketplaces and their payment gateways is a practical way to approach selling in other countries, as these platforms offer solutions to tackle currency conversion for any foreign earnings generated.
Multiple opportunities and challenges: the online marketplace solution
- Online marketplaces and their advantages. Since the dawn of eBay, online marketplaces have allowed customers to buy goods and services from multiple merchants, all under one marketplace “roof”. These marketplaces, from eBay to Amazon, have also provided businesses with a powerful platform to reach new customers, and even go global. If a merchant doesn’t yet have an online presence, joining an established marketplace is a great way to dip their toe into digital waters, all while piggybacking on the marketplace’s established platform, marketing base, and SEO strategy. For merchants who have already built their own domestic digital storefront, online marketplaces can present a low-risk and effective path to going global. In order to address the above mentioned challenges, third party service providers have developed expertise and supporting infrastructure to reduce the friction of selling on international marketplaces, streamlining the process for cross border e-commerce businesses. Business owners need to understand how each of these providers integrates with these marketplaces to ensure a seamless selling experience.
- How to ensure reliable and easy access to cross border transactions. Companies like Payoneer offer an easy-to-use digital platform for fast, flexible, secure, and low-cost payment solutions in hundreds of countries and currencies. They also ensure complete compliance with complex legal, and tax regulations. Once a currency account is set up, foreign earnings can be received safely and quickly from virtually anywhere in the world, and these funds can be withdrawn in local currency. You can also use these platforms to pay your suppliers, no matter where they are on the planet, and support is offered round-the-clock in dozens of languages.
- Fulfillment simplified. International delivery can be another barrier, however, global fulfillment services such as Fulfillment by Amazon (FBA) help fill this void. With services like FBA, e-retailers can tap already mature distribution networks that service dozens of countries, stocking their products in existing warehouse and allowing services such as FBA to handle picking, packing, shipping, and even fulfillment-related customer service.
Chinese businesses have long understood the value of the marketplace model, and the increasing competition to domestic sellers on Amazon U.S. is proof of their success. By tapping into marketplaces all over the world – such as Amazon UK, Lazada in Southeast Asia, Linio in South America, and Cdiscount in France – U.S. businesses can also reach a new global customer base easily, without heavy up-front investment.
Now that you know what challenges you may face, and more importantly, what’s at stake, ask yourself—is this the year we go global?
Payoneer provides online money transfer and e-commerce payment services.Favorite