Everything you need to know about cross-border selling

Businesses always tend to outgrow the local market, and when that happens, they look for a new audience base that is waiting for them across international borders. By 2022, cross-border selling is predicted to make up to 20% of eCommerce.

The pandemic has changed everyone’s shopping habits and thus changed eCommerce. The Covid-19 pandemic prompted the need for globalization and for sellers to use a global reach to increase engagement, brand authority, competitive advantage, and see real revenue growth. In this blog post, we will help you navigate the world of cross-border selling.

Why should you start selling internationally?

Recent statistics show that more than 32% of consumers across 40 countries made cross-border purchases in 2020, and 51% plan to do so in 2021.

Global eCommerce is projected to grow from $3.7 trillion in 2021 to $4,9 trillion, according to Statista, which is a huge increase.

What markets should you consider as a seller?

There are a lot of international opportunities where you can expand your business and it can be overwhelming.

The managing director for eCommerce Marketing at FedEx Express Europe, Toby Hay, says that Asia-Pacific is the largest eCommerce segment on the globe.

This is largely thanks to China’s domestic market, according to Hay – nothing is slowing down in the Chinese marker- he said.

The emerging markets of Japan, India, the Philippines, South Korea, and Malaysia are all markets that have significant relevance from an eCommerce perspective and from an eCommerce cross-border perspective. There is a strong demand for European goods that are driving eCommerce growth in these markets.

The other markets with the highest growth registered over the last year are Italy, Spain, Czech Republic, Norway, Turkey, and Russia.

How can sellers start growing their business internationally?

If you are planning on selling internationally, then getting your products on marketplaces is a must!

Here are the advantages of using a marketplace:

  • Marketplaces already have an audience- marketplaces come “preloaded with an audience”, they are basically like virtual shopping malls that drive traffic to your store.
  • You can easily test a new market – Marketplaces allow you to make a very low investment in a market and test it out to see if it’s something you want to put more resources, time, and energy into
  • You get help with outsourcing logistics. Logistics companies such as FedEx are starting to provide much more reliable solutions for markets that allow you to deliver your products on time and meet the demands of the marketplaces.

When selling on multiple marketplaces it is essential for companies to have a centralized system that connects the marketplaces to manage all inventory levels in one place. This way, your team doesn’t need to learn every single detail of running orders and inventory in each marketplace. Instead, sellers can work with global solutions to help with that.

When it comes to shipping, you don’t have to work with too many different partners to get your product from your own warehouse or supplier for international environments. This can cause a huge headache.

Instead, it’s important to simplify your logistics and work with a global freight partner that will connect you to as many international markets as possible.  An alternative to this would be working with local third-party partners who sit in the country for you and do the final dispatch. The advantage of using a 3rd party partner is that the customer gets their order quickly and doesn’t have to pay any international shipping rates. This creates a more positive overall experience for the customer.

Here are a couple of rules and regulations around cross-border selling

Regulations around cross-border selling are why everyone starts their eCommerce journey on a domestic stage. Domestic is easier, you are closer to fulfillment, and the costs are more controllable. But there are big prizes ongoing cross-border, you only have to plan ahead and get yourself and the business prepared.

Here are some tips on being prepared to sell cross-border from a regulatory standpoint:

To start with cross-border selling, you will have to register for an Economic Operators Registration and Identification numberEORI number. This is used by customs and authorities to monitor shipments and make sure that any imports and exports are correctly allocated to your VAT process and for allocating duties and taxes. This is essential.

Also, you will have to work out the contractual terms with your 3rd party logistics provider. If you work with a 3rd party logistics provider rather than directly to the customer, you need to know at what point you hand over the goods to them. This is set around International Commercial Terms laid out by the International Chamber of Commerce. This includes:

  • Where will all the goods be delivered
  • Who arranges and pays for shipping
  • Who is responsible for ensuring the goods
  • At what point does ownership transfer to the buyer and who handles customs procedures and who pays the taxes and duties

You will also have to know how to classify your goods-in order to ensure smooth transportation and processing you have to make sure to have a harmonized code and good description of goods. You need to specify what goods they are, what they are made out of, and what are they used for. All of that needs to be put in a commercial invoice along with the value and country of origin.

Understand the new EU Value Added Tax changes starting from the 1st of July- These changes affect how businesses import their products internationally into the system. There are two new schemes coming in July: OSS (the One-Stop-Shop) scheme and the IOSS (the Import One Stop Shop) scheme. It is important to understand these and see which scheme you will use.