Cross Border Ecommerce – Everything you need to know
One of the most beautiful things about the internet is that it challenges the idea of a Nation State. Theoretically, one can access data from anywhere on the internet – Your Facebook feed might be stored in a server in Europe while the Gmail that you send might bounce off half a dozen countries before reaching its destined mailbox. It is no wonder that the internet technology has a major role to play in the ecommerce industry.
While the ecommerce industry is based on the ‘sell anywhere’ motif, the legal, technical and logistical issues that arise once we enter the real world from the virtual one constrict the idea of ‘anywhere’. Sellers would then target markets that are in common jurisdictions, with easily available and cost effective logistical support.
With the rise of cross border ecommerce, these walls too are breaking down. In 2012, cross border ecommerce accounted for $300 billion in sales. This figure is likely to reach $1.4 trillion by the end of 2015. Selling abroad is becoming cheaper day-by-day, with online retail giants like Amazon and eBay allowing Indian sellers to list their products in foreign markets.
So, is there really any sense in selling across borders? What are the considerations to do so? Let’s talk more about these issues.
Sell Abroad from India: Cross Border ECommerce
What Exactly is Cross Border ECommerce?
There was a time, only a few years ago, when a person going overseas, especially the US, would be bombarded with requests to buy and bring this gadget or that on their way back home. With the connectivity provided by the internet and the accessibility that is the result of the mobile technology, it has become increasingly easy to become a global consumer.
Cross border ecommerce or International ecommerce is when merchants sell their products or services to consumers located in other countries and jurisdictions. Generally in this case, the consumers and the merchants would not share the same currency or even the same language. This transaction, initiated virtually is then completed by transferring the physical product through various legal jurisdictions, customs, geographies and other factors. The idea is to truly expand the target market of a merchant to its limits.
In an ideal world that cross border ecommerce is incessantly trying to achieve, literally anyone with access to the internet would be able to buy and sell anywhere.
Advantages of Cross Border Ecommerce
So, the first and foremost advantage of cross border ecommerce is that it expands the seller’s market like never before. To use this fact to its fullest extent, a prudent seller would not only recognize but also create new markets for their product. In the current online retail scenario, India’s greatest exports range from spices, condiments, tea, handicrafts like cloth work and woodwork and decorative articles created using traditional processes. Considering the volume of demand that one can envision in cross border ecommerce, finding a market for a niche product thus becomes comparatively easier.
Challenges for Cross Border ECommerce
This type of transaction poses a lot of challenges to the merchants. Firstly, it is important for the seller to have a partner or a beneficiary in the region the sale is taking place, so as to understand the local laws and customs, consumer preferences and cultural differences. Systems would have to be set up in order to tackle with the problems of language and currency. The issue of legality attains special importance since the jurisdiction would first have to be established. Trade laws between countries differ from case to case.
Finally, the issue of logistics arises. Shipping products overseas is far more expensive than doing so domestically, especially because of the customs duties and taxes. It is because of these reasons that most merchants shy away from cross border ecommerce, missing out on the vast market size in the bargain.
Selling Overseas with Online Marketplaces
An easy way out of most of the issues mentioned above is selling overseas through online marketplaces. This is good news especially for Indian sellers because of the recent efforts by companies like Amazon India, Alibaba and eBay to localise a move towards allowing sellers to list their products abroad. With an online marketplace, most of the problems regarding listing, shipping and logistics are solved.
Indigenous products like spices, handicrafts and handmade items already have an established overseas market. We have written about the top five online marketplaces that let you sell abroad before. Countries like China are already taking an active interest in the economic power of cross border ecommerce and crafting policy to reflect it.
To know more about cross border ecommerce, get in touch with Browntape. We are India’s leading e-commerce solutions experts, and we are always happy to help!