Solving for Cross-Border Commerce Complexities

Jacquelyn Kyle, Senior Director of Strategy and Corporate Development, Digital River
2 December 2021 | 202 Shares

Source: Digital River

Global e-commerce continues to grow and undergo transformation as the pandemic brings a massive shift in consumer habits and a sustained surge in online shopping across the world. As globalisation continues to rise, cross-border commerce – the online selling of goods to consumers in different countries – has become a core growth driver for e-commerce brands big and small. However, this growth comes with significant obstacles and complexities for brands that hope to sell everything, everywhere.

International Trade

Source: Digital River

As e-commerce evolved over the years, barriers such as the safe movement of money were gradually overcome. Encryption of internet traffic and cybersecurity measures taken by merchant banking services and foreign currency exchange shops meant that commercial trade online became safer and more trusted by global consumers. But even after all these years of consistently evolving e-commerce mechanisms and improvements, there are still significant hurdles facing brands that want to sell their goods and services overseas. That’s partly due to buying preferences changing and expectations rising – for example, the rise of subscription services and unique payment types that vary by region.

Localisation is key

First and foremost, it’s important to speak to the buyer in their own language and be aware of cultural complexities. This will require you to update your product imagery, copy, promotions, and more on your website to engage local audiences. If the content doesn’t look familiar to customers and meet their expectations, there’s a much higher chance of abandonment.

Next, be sure to offer local currencies. Consumers are more likely to make a purchase when they see a product in a currency they are comfortable with, regardless of where that product originates. It’s also crucial to offer preferred payment methods that are local to each market. These payment methods vary from region to region, and the payments space continues to evolve with methods such as buy now, pay later growing in popularity. Don’t limit yourself to a strategy that only includes one option, such as a credit card. Consumers expect payment options that use local payment networks, their own banks, and mobile methods.

Keeping up with compliance

Brands selling cross border need to adhere to local compliance requirements, tax laws, and data protection regulations. These rules and regulations are constantly changing and can be difficult to keep up with. For example, a US retailer with a Russian customer, a European customer, and a Californian customer must adhere to three discrete sets of data governance, manage differences in local taxes, and more. It is crucial for sellers to have a deep knowledge of local requirements to account for even the slightest variances. Failure to understand the nuances in local regulations could result in serious financial penalties and bad publicity.

Logistical challenges for physical products

Selling physical products across borders comes with even more logistical challenges and requirements. Brands must register with appropriate authorities as an importer or exporter and follow accompanying regulations based on where physical products are being imported or exported. Separate geographies have separate stipulations around customs duties, terms of trade, and more. When brands want to sell their products into every corner of the world, the complexities add up. Staying compliant is easier with the help of a global partner who has the expertise needed to successfully sell physical products cross border.

Subscription models: complicated but worth it

Subscription billing models are more popular than ever and are being adopted by brands across industries and around the world. The subscription model offers a lot of value but requires brands to solve various complexities if they want to be successful. Unique compliance issues impact nearly every aspect of the subscription experience.

Subscription providers have it particularly challenging when complying with regulations because of how they store, manage, and use customer data. They must secure authorisation from consumers opting into subscription agreements, and it’s crucial to have sound policies and controls around customer notifications, billing cycle renewals, and stored credentials. When planning long-term, subscription leaders need to consider how partnerships and technology investments today can improve scalability down the road.

Reduce complexities with trusted partners

All this said, cross-border commerce is complicated. And it can be risky, too. Even if you have an in-house compliance team, it can be nearly impossible to keep up with the sheer scale and complexity of the ever-changing global regulatory environment at the local, state, federal and international level. Furthermore, customer expectations are at an all-time high and shoppers demand seamless, secure experiences no matter where they are in the world.

Brands should consider finding partners with deep global e-commerce expertise that not only have the geographic footprint to successfully facilitate cross-border transactions and help your brand stay compliant, but also the technology tools to scale as your operations grow. Partnering with experts allows you to focus on what your company does best without having to worry about the risks associated with selling products into new markets.

The team at Digital River provides the necessary guidance and the capabilities needed to get existing and new systems working together quickly. The company’s mix of global e-commerce expertise, local selling entities, and merchant of record business model is unique and set up to help you succeed. To learn more about how Digital River can help you seamlessly expand into new markets around the world, download our cross-border commerce checklist.