This is the first in a series of articles on international e-commerce.
International e-commerce has grown dramatically in recent years, and the trend is likely to continue. That’s a real opportunity for brands looking to grow.
Accenture reports a compound annual growth rate of nearly 30 percent from 2014 to 2020 for cross-border e-commerce. According to Forrester Analytics, cross-border purchases will make up 20 percent of the worldwide e-commerce market by 2022. Another report, from IPC, moves that statistic up a couple of years to 2020.
At the same time, e-commerce has grown rapidly in India, Southeast Asia and Latin America, and still has plenty of room to grow. Stephanie Pandolph reports at Business Insider that e-commerce penetration rates in these regions hovers at only between 2 and 6 percent. E-commerce companies in developed markets need to recognize that such markets present tremendous opportunities for them to reach new customers.
To meet the future as it comes, brands doing e-commerce will need to map the international landscape of consumer privacy and regulations, taxes and remittances, and cross-border logistics and reverse logistics.
Consider Tim Parry’s words at Multichannel Merchant: “No one ever said the world of global e-commerce was simple to navigate. But those retailers who embrace cross-border e-commerce will, in fact, rule the world.”
This series will dive into all of these considerations for brands currently operating internationally as well as those looking to do so in the near future. The shifting landscape of cross-border e-commerce presents both a challenge and opportunity.
With the right mindset and armed with the right tools, however, brands can avoid becoming overwhelmed by the challenges — and instead take advantage of the e-commerce opportunity ahead of them.
Why Customer Data and Privacy Protection Are Important in International E-commerce
The popularity of cross-border e-commerce is on the rise. According to Forbes contributor Mitch Barnes, over half of surveyed consumers in 24 countries across six continents had shopped from an overseas site within the past six months. At the same time, consumers are being more vocal about their desire for data and privacy protection.
At the center of increasing international e-commerce is the consumer. Reporting after the World Trade Organization Public Forum last year, Consumers International’s Anna Glayzer writes that the “interrelationship between consumers, civil society, business and governments is at the heart of the controversy surrounding proposals for new WTO rules on e-commerce.”
The same can be said for any new regulation on data and privacy for e-commerce consumers, including GDPR (more on that in a minute).
“Trust is essential for the successful expansion and use of e-commerce platforms in developing nations,” says Fen Osler Hampson, director of global security and politics at the Centre for International Governance Innovation. According to CIGI’s data, consumer trust is eroding in certain markets. For example, Hampson points to Japan and Tunisia, where in both countries less than 60 percent of consumers said they were willing to put their trust in internet companies. The trust is stronger, however, among people in China, Indonesia and India, where 90 percent of consumers expressed trust in internet companies.
According to B2BAdda founder Yogesh Bhatia, the lack of trust is based in consumers’ fear of data being “misused or being shared with other entities,” and even the potential for fraud. This is confirmed by Irish Tech Times’ writer Eimear Dodd, who reports that half of Internet users said a lack of trust is the major reason for avoiding online shopping.
Pamela Hyatt at TradeReady.ca summarizes the importance of privacy to consumers: “Fraud and deceptive marketing are two of the biggest threats to the e-commerce market because they undermine consumer confidence. If consumers are not confident, they do not buy.”
All of this highlights that built-in data and privacy protection for customer data is about building trust. A DHL report highlights trust as one of the barriers e-commerce players will have to overcome for cross-border trade: “Trust building among an international audience is not an easy or quickly solved task for e-tailers,” the report underscores.
Big Change: The Impact of GDPR on International E-commerce
The European Union recently implemented a significant piece of legislation called the General Data Protection Regulation. Any cross-border e-commerce shop is sure to feel the ramifications of this law. But what does it actually mean for data, fraud and privacy concerns?
The GDPR is the latest example of how regulations are starting to respond to the consumer drive for data and privacy protection. The 2018 law, which went into effect in May, replaces the previous data protection law from more than 20 years ago. The law impacts how businesses are allowed to handle customer information, as well as the rights of customers to access their data and know how it is being used.
Writing for Wired magazine, Matt Burgess summarizes the impact of GDPR for many customers and e-commerce shops. “GDPR alters how businesses and public sector organisations can handle the information of their customers,” Burgess writes. “It also boosts the rights of individuals and gives them more control over their information. There are new rights for people to access the information companies hold about them, obligations for better data management for businesses, and a new regime of fines.”
The long and short of GDPR is that e-commerce shops will need to reconsider their approach to customer data.
Where to Go From Here: Customer Data, Fraud and Privacy Practices to Consider
It’s important to realize that the introduction of GDPR (and the prevailing sentiment it speaks to) does not mean you must stop collecting customer information. As Eric Davis writes at Practical E-commerce, “Without cookies or some form of session identification, e-commerce as we know it would not exist.” That said, the landscape of data and privacy protection is certainly shifting.
GDPR and other customer data protection trends don’t have to spell out disaster for your e-commerce business. Below are a handful of things to consider in response to increasing privacy concerns from customers:
Be Transparent in Your Marketing
Let consumers know upfront how their data are being used. This includes behavioral data (e.g. what pages they click through on your site), transactional data (e.g. how much the average customer spends) and demographic data (e.g. where your customers live).
Marketers can also choose to feature more user-generated content, creating an authentic connection between their brand and their audience.
“User-generated advertising, such as influencer marketing or sponsored content on consumer-facing sites, has the potential to grow exponentially,” notes Mavatar CEO Susan Akbarpour. “The consumer-centric nature is aligned with the needs and trust of today’s shoppers and advertisers because it puts the consumers in the driver’s seat.”
Get Ready for Data Mapping Activities
GDPR will require some specific actions from many cross-border e-commerce companies—but you can choose to get ahead of the requirements by being proactive with the way your brand treats international privacy protection.
Linkilaw notes that one of the best ways e-commerce shops selling cross-border can respond to the GDPR is by taking on data flow mapping exercises. “GDPR wants you to walk the information lifecycle to identify unforeseen or unintended uses of the data and ensure the people working with the data are consulted on the implications,” the agency notes.
Linklaw suggests a handful of questions to ask during these exercises, including how personal data is collected, who is responsible for the data, where the data is stored, who has access and how the system interface works.
We’ve already seen the shifting sentiments of e-commerce customers in the sections above, but it bears repeating: Some online shoppers are expressing weakening trust in e-commerce businesses due to privacy concerns. Conner Forrest at TechRepublic reports that nearly half of respondents to a 2017 consumer survey said they don’t trust online shopping at all.
More than anything, these trends and regulations in data protection highlight how international e-commerce shops must be diligent and detailed in cross-border interactions.
For example, Craig Witt of MotionPoint in an article on DigitalCommerce360.com notes that building trust among global online shoppers takes a separate kind of strategy. “Retailers seeking success in new markets must not only translate their websites, but also build brand awareness in these regions and convert website visitors with localized, trustworthy tactics,” Witt concludes.
By taking these steps, international e-commerce companies can make sure that they not only comply with new privacy regulations, but also build trust with customers from all over the globe.
Check back in for the second part of this five-part series on International e-commerce. Next up: Taxation and remittances.
Scalefast provides e-commerce technology and services for global brands.Favorite