Selling internationally is the new gold. When a business is thriving in a market, there will be an increased demand for products or services in other regions in the world. Hence merchants need to increase their presence, expand sales to more markets, and seize the opportunities available abroad.
The global market is an incredible opportunity for revenue growth, but it comes at a price. Several challenges affect global market businesses' growth. Thus, there is a need for solutions to simplify the global market transition process and curb the challenges faced by business owners.
What is a market in ecommerce?
A market is a geographical region or group of customers that share the same business settings like currency, inventory model, price lists, warehouses, payment options, shipping options, shipping carriers, etc. It allows the distribution of goods or services produced and intended for consumption by customers. A merchant will be in charge of defining the market's business settings, including the business model, inventory model, and price list.
Businesses can manage more than one market in a different geographic region where their customers are. This allows for even more distribution of goods and services across borders. More sales will also result in increased revenue.
Challenges with selling internationally
A lot of factors affect merchants from selling effectively in multiple markets. Different countries have their own trade rules, which will influence success or downfall. Factors like foreign government regulation, exchange rates, subsidies, transportation regulation, payment laws, volatility, custom duties, taxes, cultural differences, language barrier, etc., can affect merchants from participating in global commerce.
Selling internationally will require merchants to serve markets in multiple geographical regions. Although each market might deal with the same goods or services, the business model and business logic will differ across regions. Each markets' business logic will base on the business rules, regulations, and patterns of the region it is located in. While the benefits of selling internationally are irresistible, the challenges that come with it can be complicated.
Here are some common challenges businesses trying to expand globally face:
Content and localization
Customers tend to interact more with platforms that serve them in their local language. According to a survey conducted by CSA, 72.1% of consumers spend most or all of their time on websites in their own language, and 72.4% of consumers said they would be more likely to buy a product with information in their own language. Failure to localize content will lead to low conversions, engagements, retention, and in turn, revenue.
Localization is not just about translating content to other languages your customers natively speak. While several languages exist, there are also several sub-languages, dialects, and interpretations to some words. Hence more work needs to be done first to analyze existing data, understand the right place(s) to expand globally, and if the expansion will yield desired results. Localization must match the language and cultural regulations of a specific market in a specific country.
What is perceived as funny in one culture can be offensive in another. Localization should consider cultural and custom differences in the region you plan to start a market. Understanding a market is the starting point of localization. It includes understanding their payment preferences, product preferences, buying culture, and customs in that region. To localize your business effectively, it needs to be appealing to customers living in the region.
Post-sales support is often overlooked when it comes to localization. According to a survey by CSA reasearch, 74% of customers are likely to make repeat purchases if post-sales support was offered in their native language. One significant way customers constantly interact with your business is via customer service. Although the English language is widely spoken in most parts of the world, most people prefer to speak to support personnel who are fluent in their native language. This also includes documentation, user manuals, guides, and other help content.
It's impossible to adapt and conquer new markets if you don't know the local markets you're entering and localize to serve them. A study of Fortune 500 companies showed that those that localized their content were twice as likely to increase profit and 125% more likely to grow earnings per share year-over-year.
Currency and payment
Alongside localizing content, there is a need to localize payments and currency. Every region has its own native currency, and this goes beyond the currency symbol. Building your ecommerce business to support real multi-currency across multi-market can be hard. It goes beyond manually defining exchange rates and rounding rules for all other currencies. Your business will be prone to currency risks (as the FX rate is very likely to change positively or negatively) during the time gap between authorizing and capturing a payment before shipment. To avoid that risk, most often, you need to manage different price lists for each market. These price lists will be distinct from the base price list.
While a credit card is a universal and popular payment method, some countries prefer to use other local payment options that are popular and more trusted in the region like wire transfer, bank checks, debit cards, prepaid cards, electronic bank transfers, mobile payments, etc. Some regions even prefer cash payment on delivery over card pre-payment. Some customers also prefer the subscription-based billing business model to one-time payments. Your ecommerce business's currency and payment should be optimized and localized for each market you support.
Data duplication and management
Multi-markets require multiple business logic (inventory model, payment methods, taxes, duties, prices, currencies, business model, etc.). This often leads to data duplication. Traditionally, selling internationally requires developers to clone their existing stack (including data and management resources) and create a new instance for each new market. They will also need to duplicate any form of future change or update made across all instances or markets.
Each market can require dedicated and market-specialized employees assigned to them (especially for large-scale businesses). These employees will be split between developing data, managing data, managing the markets, and managing post-sales activities. This means there will be a need for more employees to manage the markets. Gradually it becomes time-consuming, hard, and expensive to manage markets in several regions.
It's also hard to distribute inventory across multiple locations closer to customers or in more shipments as required. Decentralizing inventory makes it easier to manage inventory across global markets. This will lead to customer satisfaction and revenue growth. However, it's harder to distribute inventory across markets without a centralized hub for managing all markets.
Scalability and infrastructure
Your ecommerce platform must be "fast everywhere" in each market you expand to. Some customers still access the web through 3G and even 2G networks. Hence there is a need to utilize solutions and architectures that will enable you to scale effectively in a region. Developers need to geographically distribute infrastructure across regions to ensure each market has better performance and experiences no downtimes. Some regions can significantly impact your infrastructure or scaling decisions due to regulations or technical limitations.
Architectures like the Jamstack and PWA (progressive web applications) have many performance benefits when you're building an ecommerce web platform. Websites become just plain HTML pages pre-generated by a static site generator during build time and are deployed to a CDN. With modern APIs, you can design your web applications to be capable, reliable, and installable. These modern architectures, by default, make it easier to handle traffic spikes with less infrastructure cost.
As markets grow, developers need to improve the delivery performance and serve customers from an infrastructure closest to the location a request is made from. According to Google, slow sites have a negative impact on revenue, and fast sites are shown to increase conversion rates.
Shipment and fulfillment
While selling internationally, order fulfillment and return management become harder. Each market will have to manage its orders and returns separately. With the absence of a centralized hub for multi-market management, selling internationally will be stressful and expensive. Import and export regulations existing in several countries can affect revenue, retention rates, and customer satisfaction.
Merchants are often faced with many cross-border issues like custom duties, extra fees, shipping delays, financial requirements, fines, penalties, handling fees, damaged shipments, and other regulations from legal authorities. For example, in June 2015, the Brazilian government charged that all imported shipments carry a label marked with a CPF (Cadastro de Pessoas Fisicas; a Brazilian individual taxpayer registry identification number). Customs uses the tax ID number to require the customer receiving the package to make a duty payment before they can collect the package. Packages sent without a CPF are returned or destroyed, and the seller also gets fined by the Brazilian Customs.
Many ecommerce businesses did not collect the CPF from their customers, and hence this regulation disrupted their sales and revenue. Regulations like this differ from country to country, and merchants must stay informed of the laws in the country they plan to expand to. Businesses will also need to rely on local shipping carriers who better understand the country's customs duties and regulations.
Business laws and regulation
Businesses are also affected by different business laws and license regulations practiced in the countries they expand to. Several countries require businesses to acquire specific licenses before they can start operations in that country. The process of creating a business bank account in Canada is quite different from the process in Italy. A country like China has many regulations, and hence it can be complicated to expand there. Without proper research and consultation, business owners can be prone to lawsuits and penalties. This can affect sales, revenue, and even customer satisfaction.
Europe's General Data Protection Regulation (GDPR) regulation imposed new data privacy and security law responsibilities on controllers and processors of data (all ecommerce businesses fall into this category). Every business operating in Europe or making sales to customers in Europe will have to adhere to this policy's regulations. Ecommerce businesses need a commercial Internet Content Provider (ICP) license to sell in China. The same applies to the California Consumer Privacy Act (CCPA), which enhances privacy rights and consumer protection for residents of California, United States.
Businesses need to abide by laws and regulations like these to operate smoothly. With many different laws existing across several countries, setting multiple markets can be tedious and expensive. Successful global expansion is not easy. Each country has its own unique set of laws and regulations, ways of doing business, and culture that change constantly. Businesses need to understand country-specific laws and regulations to avoid legal issues, negative business impacts, and broken customer trust or relationships.
How Commerce Layer supports global brands
Commerce Layer provides commerce APIs that lets merchants sell their products to customers in different markets with no data duplication. For each market, merchants can define localized business rules, specific price lists, inventory models, payment gateways, delivery options, shipping carriers, and more. All these are done from a single account without any data duplication.
Before now, managing multi-market effectively was a problem. With Commerce Layer, similar business logic can be reused across several markets. Merchants can now sell products in any market from one unified hub with ease, add global shopping capabilities to any website, mobile app, chatbot, or IoT device, and reach customers wherever they are.
Commerce Layer provides a distributed order and returns management system. Merchants can get orders or return requests from anywhere globally in a centralized hub. Hence these orders or returns can be managed with ease. With 250+ API endpoints distributed across 60+ CDN (content delivery network) edges and a 30ms average response time. Our commerce APIs guarantee a 99.99% platform uptime. Developers can use our global and secured APIs to build a new ecommerce website on the Jamstack architecture. They can also utilize the PWA architecture to serve better performance to customers.
Commerce Layer has been designed for global brands from the ground up. When building ecommerce with Commerce Layer, multi-language capabilities (and translations) are delegated to the headless CMS. All our partners have native content localization support. There's no need to duplicate market instances, as they all belong to one account. Within the same account, developers can configure many markets, each with a localized price list, in the local currency.