With the rise of global connectivity and the increasing demand for online shopping, international e-commerce has become a key growth opportunity for businesses of all sizes. However, expanding your e-commerce business internationally can also be complex and challenging.
In this blog, we’ll explore the benefits and challenges of international e-commerce, provide tips for overcoming common obstacles, and share best practices for successfully selling to customers around the world. So, whether you’re a new business looking to expand globally or an established e-commerce brand, join us on this journey of exploring the world of international e-commerce.
What is Global E-commerce?
Global e-commerce, also called international e-commerce, is the process of selling and shipping a product to a customer residing in a different territory. International e-commerce acquires all features of traditional e-commerce, with a broader area of fulfillment and reach. Negligible changes are required in marketing and business operations, but shipping and logistics are the main differentiators in this case.
With Forbes predicting a market capital expansion of US$ 1 Trillion, one can fathom the opportunities international e-commerce offers. However, a global presence does require a lot of effort, resources, and time.
How Big is the Global E-commerce Market?
The e-commerce resolution officially kicked in with the onslaught of COVID-19 in 2019. By 2021, the total number of international e-commerce websites had already doubled its past figure showing a substantial growth rate every year.
Subsequently, a report published by Grand View Research shows that the value of the e-commerce market was able to touch US$ 10.36 Trillion in 2020. As per the current growth rate, IMARC has forecasted a growth of US$ 55.6 Trillion by 2027, showing a CAGR of 27.4%. RetailDive cites that around 58 % of all purchases will be facilitated through e-commerce by 2023. It briefly highlights a good growth opportunity, despite the vast competition.
Setting Up Your Global E-commerce Strategy
Creating an international e-commerce strategy is similar to establishing a traditional e-commerce strategy. However, it does have to undergo specific subtle changes. Some of the factors that sellers should take consider are as follows.
- Shipping and logistics: With the addition of several layers of transportation phrases, shipping and logistics are considered the differentiator. While weighing the options for an international e-commerce shipping company, breaking down the individual shipping cost to different regions is always advisable.
- Marketing: Marketing and advertising is based on a bidding system, with prices varying per currency and competition. Since one needs to pay in a foreign currency, estimating an average conversion rate is always necessary. Furthermore, weighing the competition and considering the highest bid for the stocked products is the safest process to ensure profit maximization.
- Financial analysis: With an overall idea of a given territory’s shipping and marketing cost, proper fund allocation is required. A thorough financial analysis will allow a brand to zero in on an estimate, thus allowing them to price its products accurately.
Establishing Your Global E-commerce Platform and Integrations
Here are the steps required to ensure the best possible outcome when creating an international e-commerce platform with the required integrations.
Pricing is one of the most crucial aspects of a business while expanding borders. For a particular territory, one must first understand the gap in the pricing for a specific product or industry. This allows an e-commerce brand to position itself in a reasonably competitive market.
Once the price segment is identified, a brand must do a thorough financial analysis while considering the new prices for international e-commerce shipping and marketing. With two estimates from two different processes, an e-commerce brand can now redetermine its price and margins. You can choose the higher limit of products from the acquired data.
Payment integrations vary depending on the territory. With several options, one must consider the commission rates per order while judging the efficacy of the service provider based on its previous use cases. Looking for a native payment integration system for maximum efficiency is always advisable.
3. Customer service
Customer service is the least affected department when there is no change in language. However, an international expansion requires a company to opt for a phone subscription system in the targeted country. In case of a difference in language, one can always hire a dedicated customer service agency and align them with the e-commerce international shipping partner in the chosen location. Compared to creating an in-house team to overcome the language barrier, involving a third-party customer service provider is more cost-effective and time-saving.
4. Shipping and logistics
An international expansion requires a proficient transportation cycle in place that can ensure cost savings, with better visibility and control over the goods in transit.
Owning a shipping and logistics system might seem lucrative, but they also require the highest upfront cost. The stigma of low visibility and lack of control has international shipping for e-commerce, but with the rising competition, the mentioned issues have ceased to exist. Even with several global shipping e-commerce service providers, you should consider the efficacy of the CRM system and several other factors before making a perfect choice.
7 Top Global E-commerce Trends to Watch
International e-commerce is predicted to show a staggering 27.4% increase within the next three years, IMARC. The APAC region is expected to contribute 18.5% of the growth, highlighting considerable growth potential. Most of these figures are based on data and upcoming trends, improving the customer experience to the next level. Some vital trends to know are
1. Mobile shopping and social commerce
As websites are slowly taking the backseat, mobile shopping has gained massive traction since COVID-19. Outerbox adds that more than 79% of the users made a purchase from their device in the last six months. The international e-commerce traffic from cellular devices has been determined to be 2.47 times higher than that of a desktop, attributing to 56% of sales in 2021, as per Wootsuite.
With nearly $3 generated from a phone purchase out of every $4, website optimization for a better mobile viewing experience is higher than ever.
2. Cross-border buy now, pay later adoption
A new form of credit-based purchase named ‘buy now pay later’ took the market by storm in March 2021. Universally abbreviated as BNPL, this concept is a form of short-term financing that allows a user to buy a product based on credit without using a credit card. As per the report by C+R Research, the young reign of the BNPL has already witnessed a staggering growth of every 2 out of 5 people using it. Even though cross-border BNPL is considered a luxury for small to medium businesses, one must always keep an eye out for upcoming opportunities.
3. The metaverse and interactive shopping
Traditional commerce has always been preferred over e-commerce compared to the product trail. Customers have always shown an affinity for trying a product before buying it, especially for wearables and accessories.
However, with the prediction of interactive shopping coupled with the metaverse, businesses can expect several changes. Product trial and error, which seemed to be a far-fetched concept for e-commerce brands, is now possible. With the only disadvantage of e-commerce being taken care of, the early adopters of interactive shopping can expect higher engagement.
4. APAC and China’s E-commerce growth
The international e-commerce growth of US$ 13 Trillion has been severely boosted by APAC and China, with a combined contribution of US$ 63.8 Billion, states report published by Statista. As per the current data, an estimated 46.5% year-on-year growth is expected.
While being the forerunner for e-commerce, closely followed by APAC with a year-on-year growth of 18.5%, one can leverage a considerable growth potential. BusinessWire’s report shows that as of 2025, APAC e-commerce is predicted to double its sales with an estimated market cap of US$2 Trillion.
5. Language localization
Language barriers have posed a fair threat to businesses looking to expand their borders. An immediate solution is to hire a local, but such an inclusion creates more evident follow-up problems. However, with machine learning and Artificial Intelligence (AI), smarter chatbots are being created daily, allowing one to deal with the mentioned issue effectively. Furthermore, to deal with such a barrier in shipping and logistics, it is always recommended to outsource from a company that can effectively deal with the language barrier. This also supports better control at lower costs.
6. The wholesale industry is going online
As per Economic Times, the D2C market has shown a steep rise with a record figure of US$ 0.3 Billion over the past years. With a huge upside potential and lucrative growth opportunities, the wholesale industry is gradually embracing e-commerce. As more wholesalers take up space on the internet, e-commerce brands are more likely to get better options allowing them to improve the quality of their products at a lower cost.
Four areas to investigate before international expansion
1. Start with operations
The success of any organization always depends on its operations. As the backbone of an e-commerce brand, weighing the current capability of the operations department is a must. Furthermore, one should have a hiring plan based on the expected demand.
2. Weigh product demand with international supply
Every industry has been plagued with high competition, which allows new entrants to make well-rounded decisions. While entering an international territory, a brand can access data to identify product demand beforehand. Deducing this specific information might allow an E-commerce brand to pre-determine the amount of potential ROI that one can leverage.
3. Look for a competitive vacuum
Every region has a diverse crowd with specific buying potential. Due to the availability of the required data, an E-commerce brand can weigh the potential of each pricing segment while considering the USP of their future competitors.
4. Determine the scope of expansion
The demand in specific price segments, the USP of future competitors, pre-planned brand positioning, and an overall market cap in the predetermined segments are required. Once the mentioned factors are identified and calculated, you can make further enhancements. Since many companies are already operating in the chosen price segment, they can estimate certain other variables, such as the lifetime value of a customer and retention rates. When two of these factors are included in the equation, one can easily weigh the scope of expansion and profitability. Therefore, an e-commerce brand can make a well-rounded profitable decision.