A MARTECH RECORD EGUIDE
Cross-border e-commerce (CBE) has been on the rise in recent years, as more consumers are now willing to purchase products from other markets. This presents a massive opportunity for businesses looking to expand their reach and sell to a global audience.
Many retailers would love to increase CBE but feel constrained by legal, logistics, and budget challenges. One of the best ways to create a cross-border e-commerce revenue stream for your retail business is to use affiliate networks. This post outlines the advantages and challenges of cross-border e-commerce and will show you how to use affiliate to sell products in other countries.
What is cross-border e-commerce?
Cross-border e-commerce (CBE) is the process of selling goods and services online to customers in other countries. This type of e-commerce requires businesses to understand each target market's market dynamics, customs laws, cultural differences, and regulations.
To serve cross-border customers, retailers must find ways to cater to local preferences and needs. CBE can be a great way for businesses to expand their reach and grow their customer bases. However, CBE is not without challenges. Companies must be prepared to deal with issues like language barriers, disparate payment methods, currencies, and shipping logistics. Fortunately, affiliates can help minimize these challenges in many parts of the world.
The benefits of cross-border e-commerce
CBE is a hot topic as more businesses seek to expand their reach beyond their home borders. And there are good reasons for this:
Net-new revenue: For most retailers, sales to overseas customers represent an entirely new source of income for the business. There’s no real risk of cannibalization.
Access to new markets. You can tap into new customer bases by selling internationally. This can be a great way to grow your business.
Improved brand awareness. You can also improve your brand's awareness when you sell in new markets. This can be helpful if your future strategies call for launching stores overseas or opening dedicated online stores to serve other countries.
Why consumers shop across borders
Digital has made cross-border shopping much more accessible. For example, Europeans looking for apparel bargains no longer need to hop a plane to Manhattan for the weekend as many used to do. They can just visit the Macys, Barney’s, or Target websites and start adding to their carts.
There are many reasons why consumers shop across borders. The most common factors cited are better prices, selection, and quality.
The price for equivalent items often varies considerably from country to country. This chart shows the price of a pair of jeans across more than 100 countries. The range is staggering. People in Iceland, for example, could purchase their next dungarees from a United States retailer where the jeans cost three times less than in their nation. Retail costs vary for a host of reasons, from aggressive competition to average incomes and national VAT taxes. But the temptation for little global arbitrage is there for those in Reykjavik. And anywhere else where the “spread” is significant.
Selection is another variable that comes into play. Consider, for example, the number of different tea kettle options in a UK store versus an American one. Or consider plus-sized apparel, common in the US, UK, and Ireland but harder to find in Japan. In these situations, consumers might be tempted to look for options outside their own countries.
Sometimes, consumers can find products in other countries that are unavailable in their own. This is a widespread circumstance in luxury goods. In those instances, cross-border shopping may be the only way to access the desired items. Brands like SSENSE and Farfetch have created gigantic businesses catering to customers globally.
Challenges to cross-border commerce
While CBE has many benefits, it is not without its challenges.
Sales And Click Fraud: No country is immune from affiliate fraud, though its incidence does vary by country. Further, networks and subnetworks in other countries may offer less transparency than American or European merchants are used to. You need to be vigilant in delivering strong partner agreements and monitoring compliance.
Payments: While in the US, VISA, Mastercard, and Amex are the payment kings, that’s not the case in many other parts of the world. In China, for example, payments are usually made through domestic payment apps. In Japan, JCB reigns. To maximize sales across borders, you need to offer appropriate payment methodologies for the regions you are penetrating. That covers consumer payments. But remember too that you will need to make payments to your overseas partners, many of whom will be headquartered in other countries. Ensure you have a way of paying partners in their choice of country and currency before you launch a cross-border program.
Taxes: Every country has its own tax system, and many countries have national and regional sales tax schemes. Usually, these systems require the retailer to collect the tax and deliver it to the national or regional government. There are third-party tech companies to whom you can outsource much of the work. Most offer pre-built integrations with leading online commerce platforms.
Logistics: Shipping something from New York to Rome, Italy, is different from Rome, NY. You need to be able to get goods to the destination in a reasonable timeframe - consumer expectations have risen on this dimension globally. Many companies outsource logistics to third parties to avoid the cost and complexity. Some marketplaces operate as retailer partners and may offer logistics-as-a-service and other benefits for companies trying to avoid significant upfront investments.
Customs Duties: To receive goods from overseas, many countries charge customs duties that must be paid before goods are delivered to the consumer. In the early days of cross-border selling, some companies simply shipped items overseas and had the customer sort out the duties payments. But no shopper wants to purchase without understanding the final cost of goods. If you are serious about cross-border commerce, you need to be able to tell the customer the total costs of goods before they buy and collect those fees whenever possible to streamline the process for the customer.
Language: While some non-native English speakers may be able to navigate your English language site, English-only will limit cross-border demand. Again, many third-party solutions can automatically adapt content to other languages. Most leading European retailers now offer multiple language support. That is less common in the US, where English and perhaps Spanish are the only options. But if you’re an American retailer that wants to sell cross border to people beyond the UK or Australia, you would do well to address language challenges.
Currencies: No customer wants to constantly convert a price to their home currency or make a purchase not knowing the exact conversion rate in use by a retailer. The most advanced sites offer a way to toggle language and pricing to enhance the cross-border shopping experience. Again, third-party tools are available, and partners can also create local sales environments in some cases. A growing number of tech solutions enable the creation of remote selling environments for a limited product assortment.
Cultural Considerations: Societal norms vary, so it’s important to reflect these in how you merchandise and sell goods. Some of the most vivid examples here come from Saudi Arabia. But cultural nuance also matters. There are even issues with expected sizing. A size nine dress in Japan is about the same as a US 4. A US-sized ten men’s shoe is a 44 in much of Europe. Inseams are in centimeters everywhere except in the US, Liberia, and Myanmar.
Customer Service: All customers want to be able to contact your team if they have a problem. If you offer in-country support, you’ll garner much higher customer satisfaction ratings over time. Again, partners and marketplaces can be helpful here in some cases.
Marketing: Maximizing cross-border sales also demands awareness and marketing. People cannot buy from you if they don’t know you exist. Many retailers struggle here because media markets and marketing channel options vary considerably. The differences between marketing in China, for example, and the Western World are growing because the Chinese internet is far less advertising dependent. Further, building awareness can be expensive.
While this may seem like an extensive list, affiliate offers ways to sidestep some of these challenges, which is why it is a popular channel to drive cross-border e-commerce.
Using affiliate networks for cross-border e-commerce
By making affiliate a foundational element of your cross-border selling and merchandising strategy, you can avoid or delay the need to address some of the issues outlined in the previous section.
First, partners can help quickly build awareness by broadly distributing your messages, offers, and branding. They can develop tailored messaging and creative if those customizations are allowed in your partnership agreement. Even if you don’t allow partners to make their own ads, you can ask them for ideas to make your programs more successful.
Some partners can help translate and adapt your content to local languages and vernacular. That can be helpful, especially in the earliest stages of cross-border channel development. Subnetworks are very popular in CBE because they simplify working with tens or hundreds of local sites and mitigate the need to research the media market granularly.
Partners can also help retailers sell on regional marketplaces, another popular channel for driving cross-border sales. While working with marketplaces is designed to be easy, it can be made even more turnkey with the help of performance partnerships. Reputable subnetworks can also help you monitor and punish partner fraud - they know their reputations depend on delivering real traffic and sales.
Partners may also be able to help you with taxes and logistics. Some may have these services built into their offerings, while others will be able to refer you to strong vendors. Working with local experts can help drive results more quickly and avoid fraud and other risks.
Finally, the pay-for-performance nature of affiliate means you can experiment with cross-border e-commerce without heavy upfront investment.
Tips for success in cross-border selling via the affiliate channel
CBE presents many unique challenges, but it can be an extremely rewarding endeavor for those who can overcome them. Here are seven tips for success with cross-border e-commerce:
Benchmark the leaders: Research the best cross-border sellers and see how they did it. Overseas partners can help guide you to the brands that do most things right.
Know your target market: Understand the audiences most likely to shop with you across borders. Their demographic and other characteristics may - or may not - be like those in your home country. Further, recognize that differences in size, lifestyle, income, taste, and degrees of modesty may affect what products you can sell. For example, while US-style mega-appliances are becoming more popular in other parts of the world, European fridges average less than half the size. Your product assortment may not be suitable for many shoppers. Note also that a "strong" opportunity in Finland may be smaller than what would be considered a strong one in the US or UK. Partners can add value here because they understand their markets, success factors, and the partners that can help you drive the best results.
Understand the customer journey: You must thoroughly understand how customers buying from you cross-border make decisions. Did they find you based primarily on price comparisons? Are your would-be cross-border customers variety seekers who want to own things that are not popular in their home markets? Do they have non-standard needs for their home market, like being of well above average height? Affiliate sites can enter the journey in many different stages, just as they can in the US. By understanding the journey, you can define more effective partnership strategies and create more impactful commissioning rules and messages more effectively. Partner discussion can be enormously beneficial here. There are insights they can provide in seconds that might take days to understand without market knowledge.
Conduct pricing analysis: To maximize cross-border commerce, you need to be able to offer an appealing package to online shoppers. Pricing is a crucial element of that package. Partners can point you to competitors or related products so you can begin to determine the appropriate strategy here.
Streamline the checkout process: When you can make cross-border buying have less friction, you can significantly enhance sales. Presenting items in the user language, currency, and sizing, as well as providing insight into the actual pricing of an item, including taxes, shipping, and duty, makes a substantial difference. Partners may be able to provide a temporary solution here with dedicated landing pages. Longer-term, you should find good third-party platforms to deliver a seamless experience across your site.
Provide excellent cross-border customer service: If, as online retailers, you treat customers poorly, they’ll quickly go somewhere else. So, explore ways to deliver strong customer service in markets outside your own. Partners may be able to help here, as do some retail marketplaces. For example, some partners in China may be able to help you provide basic customer service as part of your agreement.
For many companies, cross-border sales have become a significant source of revenue and profit. But like anything else, they require a strategy informed by the key issues, opportunities, and challenges.
Affiliate partners can help eliminate some of the initial costs and complexity. They can help rapidly boost awareness and target your messages and product assortment to those most likely to buy. They bring expert market knowledge that will help you make more of the right decisions. Importantly, they provide a way for merchants to test the waters in different parts of the world without committing to significant upfront investments.
Your affiliate platform or network should have experts on board to help you think through CBE strategies and provide introductions to the right players in different markets. They can also outline their overseas payments capabilities, so you can deliver commissions in the correct currency and channel to maximize partner satisfaction.
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