While the benefits of running a cross-border ecommerce business are many – from significantly expanding the shopper base to being able to test seasonal merchandise across different markets – it is not without its own challenges.
A good ecommerce website needs to incorporate excellent customer experience (CX) and there are many challenges that become obvious when moving into a new market. Factors to consider include translating a site into multiple languages and facilitating local payment methods – each market is going to throw up its own problems. To give oversight of some of the challenges – and how to address them – here are six key areas to consider when operating a cross-border ecommerce business.
Language
A significant factor to consider when moving into a new market is whether to translate the site or not. It depends very much on the market that you are entering as for example, Scandinavian countries don’t mind shopping in English, but Latin American companies very much expect sites to be translated. Remember that while countries might speak the same language (eg Spanish) they will have different words in different locations for the same items and it is imperative to be aware of this and other local colloquialisms and translate accordingly.
Currency and pricing
Giving the customer an option to shop in their own currency is very important as is offering the possibility of shopping in a currency of their choice. Be very careful of currency signs that are used for different currencies – such as US, Canadian and Australian dollar. A Canadian shopper who thinks the prices on the site are in US dollars (which is often the assumption) will often convert less as a US$100 purchase is more expensive than a CAD$100 one. There are two primary ways of approaching pricing in new markets – in-country pricing and currency-converted price. Which should be adopted depends on how big the market the company expanding into is, and how big the company’s presence there will be.
In-country pricing is a price that is set specifically for that market. It allows the merchant to set a price point based on what the market will bear for that product. This approach has shown to convert better than a currency-converted price for a number of reasons, not least is presenting a stable, consistent price day to day, aligning offline and online prices and displaying the price in a format that is familiar to the shopper including/excluding taxes/charges in the same way as a domestic price.
Currency-converted pricing means applying a currency conversion to a domestic base price for a product. This works well for markets where there’s not enough volume to maintain a local price book. However, it is an inferior shopping experience and doesn’t convert as well as in-country pricing in part due to the fluctuation of price day to day and the need to be able to track and recalculate prices if a refund is due.
Payments – local acquiring
Another challenge that those expanding their cross-border ecommerce businesses will find is that not all global acquiring banks recognize local card schemes and may not honor a payment if they are unfamiliar with the card that was used. The solution to this is to use local acquirers that will recognize these local cards and transactions. In fact, studies show that by using a local acquirer sales completions can improve by up to 60%.
Fraud
Fraud is always going to be a risk but even more so with international online purchases as they can be subject to significantly higher fraud flags than domestic purchases. This affects conversion greatly and the rejection of genuine shoppers means a poor customer experience and decreases trust in the brand. However, using advanced fraud tools such as machine learning and actively managing risk will result in more successful transactions. Other ways to decrease fraud risk is to understand the local markets and card types, as well as common types of fraud. Then you can join the dots on suspicious activity will lead to more accurate fraud management. This means being able to set robust but fair fraud rules, which will improve the customer experience, let more transactions through the gate, and reduce chargebacks – all leading to ultimately higher revenue growth.
Promotions
It is important if running a cross-border ecommerce business that if there are promotions, that local promotions are available for local shoppers. If the site is showing a shopper a promotion for another country it’s going to frustrate them and probably cause abandonment. Make sure to make it easy for the shopper to avail of the offer. If they have to leave the site to get a discount/promo good, they may not come back to finish the purchase.
Duties and taxes
Most of today’s online shoppers know that there are additional fees that can apply when shopping with an international retailer, so they want to know the total cost right away – including shipping, insurance (if required), customs duties and any taxes. However, implementing and displaying a fully landed cost with everything included is not an easy task. In fact, import duties, taxes, and compliance are some of the most common issues brands cite as significantly challenging aspects of implementing a global ecommerce strategy. As a general guiding principle, shoppers should never have to pay anything on delivery – this represents a poor customer experience. A shopper that has to pay extra on delivery is less likely to make a repeat purchase, or even check out in the first place – 60% of shoppers will abandon the checkout because of extra unexpected costs such as taxes and other fees.
Shipping
Domestic experiences influence international shoppers’ expectations around delivery. So while they may not expect next-day delivery necessarily they will expect cheap and fast. Shoppers have shown to prefer predictability over speed so if they know when their order will arrive and it arrives on time, they tend to be happy. This does not mean that shipping should be slow though. It’s important the package arrives as quickly as possible. Providing a slower, cheaper service as well as an express service means the customer can choose the option that suits them best.
