What are the hurdles to international e-commerce?

Discussion
What are the hurdles to international e-commerce?
Nov 01, 2019
Tom Ryan

A new study finds global e-commerce will top $3 trillion for the first time in 2019 as more than half of online shoppers have purchased goods outside their country. Yet half of the leading U.S. online retailers don’t currently ship outside North America.

The 2019 survey of retailers by Internet Retailer for global payments company BlueSnap and fraud prevention firm Kount found fraud and payment processing were the two primary concerns preventing U.S. retailers from capitalizing on the opportunity. 

Sixty percent of respondents cited “currency and payment processing” as one of their “primary obstacles” to international e-commerce. The study noted that retailers are concerned about the complication of accepting payment methods that are not common in North America. Consumers in Germany, for example, frequently pay for online orders upon delivery, while Chinese consumers often pay for web purchases with Alipay and many Brazilians favor Boleto Bancário.

Sixty percent as well pointed to “fraud prevention.” A third think that international expansion is too risky because of fraud. 

Other notable barriers landing on the “primary obstacles” to international e-commerce list include custom duties, 52 percent; local regulation and laws, 50 percent; fulfillment, 43 percent; language, 36 percent; and customer service, 27 percent.

Encouragingly, the path to profitability was less of a worry, 21 percent; and generating demand was chosen by only 18 percent. 

Indeed, demand from international consumers didn’t seem to be a concern:

  • In 2018, U.S.-based retailers in Internet Retailer’s rankings of North America’s Top 1000 retailers by web sales sold $147.3 billion to consumers in other countries.
  • Sixty-seven percent of U.S. retailers surveyed somewhat or strongly agreed with the statement that selling online across borders “is a critical source of our ecommerce growth in the future.”
  • Fifty-two percent concurred with the statement that international ecommerce “is suitable for us because we have many international customers and followers of our brand and products.”

Yet another challenge for most retailers was found to be the fact that Amazon already accounts for 44 percent of those international sales in 2018, largely because of its first-mover advantage.

DISCUSSION QUESTIONS: Do you see more benefits or risks for U.S. retailers seeking to capitalize on international e-commerce? What are the obvious and less obvious hurdles?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Attitude and politics are the scourge of global e-commerce."
"You need to target the specific countries that have the largest potential addressable market for your products, and take them one at a time to overcome the inevitable hurdles."
"Dealing with multiple currencies, payment laws and rules, languages, and multiple transportation carriers makes international commerce very complex and overwhelming."

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6 Comments on "What are the hurdles to international e-commerce?"


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Ian Percy
BrainTrust

Never mind selling and shipping stuff to Europe or Asia, getting stuff just to Canada is almost impossible. A lot of my fellow authors don’t even bother to try and send books there. It’s just not worth the cost and hassle. With both postal and courier systems.

Then there is the currency problem. As a dual citizen we were shocked by the apparent inability of banks here to deal in a foreign currency. It’s like they’ve never heard of Canada and are surprised to learn you can drive there. With Canadian banks one can set up a USD account with ease. In most places you can get actual USD currency. Certainly not reciprocal in the U.S.!

At the core of this issue is the reality that most countries don’t get along with each other – sadly that is especially so when it comes to getting along with the U.S.! So many Americans put a Canadian flag sticker on their luggage or wear Canadian swag when they travel. Attitude and politics are the scourge of global e-commerce.

Lisa Goller
BrainTrust

Perfect topic as we kick off the “Cyber November” sales season. To adapt to slower domestic sales growth and store closures, U.S. retailers need to consider expanding abroad.

Working with trusted global partners who know their local market gives retailers relevant insights that reduce risk and costs. Local expertise can help U.S. retailers counter complexities like language, regulations, mobile pay and supply chain efficiencies.

And it can pay off. For instance, cross-border e-commerce in China helps U.S. companies and brands sell more on Black Friday than on Singles Day (November 11), the biggest retail event in the world, because Chinese consumers desire the prestige and quality of products “Made in the USA.”

Neil Saunders
BrainTrust

There are plenty of barriers to overseas e-commerce.

First and foremost is a lack of brand recognition. Most consumers recognize domestic retailers and will make these their first port of call when shopping online. However not many people overseas will think, or even know, to look at the websites of foreign retailers.

Second, despite free shipping becoming more relevant, overseas purchasers often have to pay more for delivery from overseas than they do domestically. That’s offputting. On top of that, there are sometimes various customs or duty charges which have to be paid.

Third, many retailers which are primarily domestic do not push overseas selling because of concerns over fraud, shipping, and profitability. That further weakens the overseas opportunity.

David Naumann
BrainTrust

International e-commerce has some big hurdles and big benefits. Dealing with multiple currencies, payment laws and rules, languages, and multiple transportation carriers makes international commerce very complex and overwhelming. Fortunately, there are some companies that do all of this research and optimize the processes. If I were a retailer, I would leverage one of these providers instead of trying to reinvent the wheel.

The benefits of selling internationally are obvious – incremental sales!

Ralph Jacobson
BrainTrust

You need to target the specific countries that have the largest potential addressable market for your products, and take them one at a time to overcome the inevitable hurdles, like customs, fraud, logistics expenses, etc.

gordon arnold
Guest
There are an astounding number of opportunities for those willing to pioneer their way into off-shore emerging and established markets. The problem is you can not Google or Amazon success formulas. One must go into this with patience and careful exploring. Even with the import restrictions that may or may not hamper trade, there are ways to get things done. The key is to discover what the median income foreign markets can afford and are eager to buy. There are few companies of any size exploring opportunities and investing to test markets with any level of product(s). A long trip to another country will yield many answers as to what is not available yet, necessary and affordable. The age of information is showing the world that good enough is no longer good enough. Options made available will produce results at a profit if we are willing to listen and learn. The biggest obstacle is communication. There is a need to test the connotative, denotative and definitive content of any and all advertising materials as they… Read more »
wpDiscuz
Braintrust
"Attitude and politics are the scourge of global e-commerce."
"You need to target the specific countries that have the largest potential addressable market for your products, and take them one at a time to overcome the inevitable hurdles."
"Dealing with multiple currencies, payment laws and rules, languages, and multiple transportation carriers makes international commerce very complex and overwhelming."

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