It has been a while since e-commerce disrupted the retail scene globally. In recent years, cross-border e-commerce has been the emerging and buzzing theme in retail. Globalization and digitalization are symbiotic aspects that have been leading the world into this new phase of innovation. Consumers are now less restricted with physical borders and more connected through technology. Cross border e-commerce has is cashing in on this trend, offering consumers a wide variety of options to compare goods and services online, and seek the best deals for specific goods and services that are either not available in their country of residence or not available at specific prices.

The development of online ecosystems such as Facebook, Youtube, WeChat and Whatsapp has fuelled this growth by making international communications more transparent and economical for consumers.

Here are some facts and stats that point towards the magnitude of business opportunity offered by cross-border e-commerce

• More than 900 million people have international connections on social media (McKinsey report)
• Global cross-border e-commerce transactions represented 23% or $530 billion of total e-commerce transactions in 2017, supported by 540 million shoppers
  • CAGR of 25% is expected through 2022 for cross-border e-commerce, which is faster than c.20% growth expected for total e-commerce transactions value
  • Top destinations for cross-border online shopping are – the US, China, UK, Germany and Japan with China being the standout destination for shoppers to shop from; 21% of global cross-border shoppers prefer China as their shopping destination. APAC is one of the most attractive regions for expansion – China, Malaysia and Indonesia are the key target countries (KPMG)
• China leads the cross-border e-commerce market value in APAC, followed by India. The UK leads Europe in transaction value, but most of its buyers are from other European countries. Germans remain reluctant to shop cross-border due to concerns relating to payment security, data security and long delivery times. Mexico is one of the prospective markets in LATAM with 56% of shoppers buying from foreign websites (PayVision)
• The most popular category for online-purchases is clothing, followed by consumer electronics, travel packages and digital entertainment
  • Top reasons for shopping from online overseas websites are – better prices (76% survey respondents), unavailability of desired items in their country of residence (65%) and discovery of different / unique products (59%) (PayVision)
• Amazon, eBay and Alibaba accounted for 56% of all cross-border purchases in 2017, down from 65% in 2016. About 70% parcels were delivered by the post, while 51% consumers received direct mail from e-retailers (IPC)

Driven by the opportunities presented by the market, cross-border e-commerce space has been bustling with activity. Some examples are given below –

1. Comprehensive pilot zones have been established in 22 cities in China in an effort to promote cross-border e-commerce and open up trade
2. Lazada (a leading online seller in SouthEast Asia) launched a cross-border service between Malaysia and Singapore which enables its sellers in Malaysia to easily market their products in Singapore
3. Alibaba acquired Lazada in 2016 and increased its stake to 83% in the company in 2017. Alibaba also invested in Indonesian e-commerce company, Tokopedia in 2017 to facilitate cross-border operations. The company looks forward to expand in Russia by setting up a $2 billion joint venture with a Kremlin-backed fund. Amazon started its operations in Singapore in 2017 and is planning to enter the Vietnamese market.
4. Chicago-based, SEKO logistics acquired a major stake in Omni-channel logistics, a strategic partner, in an effort to expand its cross-border e-commerce and global ecommerce returns solutions
5. After establishing strong presence in SEA, Ezbuy has now expanded to Pakistan and plans to launch a B2B vertical which will help Pakistani businesses to export and import products without the hassle of cumbersome overseas transactions
6. China’s BEST Inc., leading logistics company expanded their operations in the United States to grow its cross-border business
7. Asendia, a joint venture of La Poste and Swiss Post, and Irish postal operator An Post have formed a partnership to boost cross-border ecommerce in Ireland

In spite of the high growth prospects, the  market for cross-border e-commerce remains complicated and is marked with challenges which should not be ignored. Complexity in the nature of international transactions and various customs regulations serve as potential roadblocks which cause delays in the delivery of order. A study by DHL offers ways to overcome these challenges –

1. Offering ‘duty prepaid shipments’ – Seller pays the duties in advance and incorporates the cost in the sale price
2. Establishing pre-clearance process: Instead of declaring each shipment individually at the time of arrival, the logistics service provider can submit the relevant information to the customs authority before they arrive in the destination country. By consistently providing all relevant information to customs in advance, the merchant allows the authorities to either give the go-ahead for the entire batch prior to arrival, or identify specific shipments that require further review
3. Creating a specific channel for e-commerce shipments: Customs authorities can create a specific channel for e-commerce shipments. Instead of handling small e-commerce shipments within the same process framework as large industrial imports, customs authorities can apply a simplified clearance process to e-commerce shipments

Retailers, in the past, have addressed the challenges posed by new business models such as e-commerce itself and have sailed through the complexities. Even now, they are equipping themselves to leverage the new opportunities. Some well-researched changes may be required in distribution, delivery, price and product management to be successful in the new game-plan.

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