Can eCommerce capitalize on cross-border sales opportunities?

Digitalization has made shopping borderless with eCommerce - but are e-tailers maximizing the cross-border business possibilities?
7 September 2021

Online deals for gadgets, games, wine and clothes put “Cyber Monday” sales on track for record levels in the United States, according to an industry tracker. (Photo by Olivier DOULIERY / AFP)

Opportunities presented by the pandemic have seen cross-border eCommerce skyrocket in the intervening year. The loss of brick-and-mortar commerce have been eCommerce’s gain, with new buyers sprouting up in previously stagnant markets, as the world embraced digital commerce – both B2B and B2C – on a heretofore unprecedented scale.

It appears that as urgent digital transformation initiatives swept industries worldwide, prompting ramped-up digital acceptance from merchants and customers, eCommerce merchants were buoyed by a strong rise in cross-border trade. The UK alone experienced a whopping 57% increase year-on-year in outbound trade while simultaneously growing one-month sales in November 2020 by 42%, when contrasted with the same month in 2019, according to data from UK online retail industry association IMRG and leading cross-border eCommerce solutions provider Global-e.

The shift in consumer buying habits over the past year has worked out well for eCommerce, with consumers proving they are willing to spend cross-border, but with this new rise in opportunities comes more intense competition from other online sellers, both international players and homegrown startups who expanded their digital presence in the past year.

At the same time, cross-border sellers need to capitalize on their booming global presence, as consumer expectations have changed in this heavily digitized age. Customers now weigh digital factors including the speed and convenience of deliveries. Like the customers, eCommerce merchants need to make the most of their online conversions by studying transactions data and analytics to ensure their providing a seamless cross-border customer experience that yields return visits and return sales.

Different cultural norms

The Global-e data also shows that in a comparison of shopping behaviors of consumers in EU and non-EU locations, the non-EU markets experienced higher cross-border sales volumes for most of the year. EU markets only overtook the eCommerce cross-border sales lead during the Black Friday and Cyber Monday sales events in November 2020 – this showed that there was demand for UK products among EU citizens during peak sales periods, but not as much the rest of the year-round.

Why aren’t EU sales strong all year? The answer could be different expectations in different countries. Despite being neighbors, most EU member states speak different languages. Hence if the eCommerce platform is only available in English, cross-border shoppers with options on their hands might not be hard-pressed to purchase from a site that they can’t fully comprehend.

In much the same way, different regions have different online payment preferences which have taken hold. In the Netherlands, for instance, more than half (59%) of e-commerce transactions take place with payment transfer app iDEAL. In Italy on the other hand, the most popular payment options are PayPal followed by prepaid card service Postepay.

Even with all the right product SKUs, not having the preferred payment option or not featuring the local language translations of territories that you want to enter, could clip a potential cross-border sale before it even happens.

Cross-border eCommerce regulatory requirements

To prevent fraudulent transactions in an increasingly digitized and borderless age, payments regulations and identity authentications are often intentionally troublesome and requiring additional steps. This is for the protection of all parties, with additional verification like two-factor authentication (2fa) often required.

In Europe, cross-border merchants need to be appraised of the Strong Customer Authentication (SCA) requirements under PSD2, which mandates that any online transaction over €30 (US$35.60) in the European Economic Area (EEA) requires 2fa. Operating as a cross-border eCommerce merchant in Europe will require an intimate understanding of the SCA guidelines.

Unfortunately, users unfamiliar with the more secure multifactor mechanisms might feel challenged by the extra steps in the transaction process, including 2fa and steps like inputting a One Time Passcodes (OTP). Too much friction could see buyers abandoning carts, but fortunately new updates to the 3D Secure system, 3DS 2.0, is touted to increase the data flow between merchant and issuer to streamline the payment process by tenfold what it is right now. Besides easing on the payment friction and improving conversion rates, 3DS 2.0 is also pegged to reduce fraud levels over time.

Prioritizing mobile

Digital transformation efforts are here to stay, but the true revolution is happening on mobile. In many parts of the world, mobile devices outnumber other connected equipment like laptops, creating the largest gateway to digital connectivity for much of the developing world.

Mobile devices have the highest eCommerce use in some parts of the world, but the highest rates of cart abandonment are also on mobile (86.65%). Merchants targeting cross-border traffic would be wise to fully optimize their eCommerce platforms for mobile, including the entire payments journey on their platform.

Poorly optimized pages can result in elements like wrongly-sized payment forms and receipt slips, which can be off-putting if not sized for mobile screens and might lead to dropouts at the crucial payments page.

And finally, e-sellers would be equally wise to consider allowing payments from mobile payment methods and e-wallets, such as Apple Pay and Google Pay. Better yet, working with an established payments partner with a wide selection of the most in-demand payment options from the get-go can help when planning market expansions, including counsel on which markets to explore based on payment ease, informing the business’ strategic roadmap and helping maximize both customer retention and conversion rates.