Cross-border Ecommerce: How to do it right

Do you want to expand your business to a wider audience? Now anyone can buy any product from anywhere in the world. And every business owner can offer their product to foreign markets. Between 2022 and 2023, the number of cross-border online shoppers grew by 2.3 million, marking a 3.4% increase. This shows that shopping internationally is becoming more popular and continues to rise each year.

But how to start selling across borders? What challenges should you prepare for and what benefits can you get? Let's answer these questions!

What is cross-border ecommerce?

The concept of cross-border ecommerce is as straightforward as it sounds — it's about buying and selling goods internationally. Imagine you're renovating your kitchen and fall in love with fittings from a Spanish supplier. You place an order online, and voila! You’ve just engaged in cross-border ecommerce. The seller ships the items across borders, and they arrive at your doorstep.

Cross-border trade can be different:

• B2B (Business-to-Business): Think of a company needing materials from another country to manufacture its products.
• C2C (Consumer-to-Consumer): Picture a private art collector selling a painting from their gallery to someone across the globe.
• B2C (Business-to-Consumer): Just like in our kitchen fittings example — you, the consumer, are purchasing directly from a business abroad.

Remember that both parties are in different countries, which is exactly why it’s called cross-border ecommerce. As you grow and expand your business, keep in mind that accounting and tax compliance might get more complex with each new level you reach.

For instance, while large enterprises’ accounting requires tackling a high volume of financial tasks, midsize business accounting uniquely faces challenges from both ends — managing the complexities of big business while keeping the agility of smaller operations. This balance requires a tailored approach.

Why sell cross-border?

The main reason is simple: Selling cross-border can greatly expand your customer base and revenue potential by tapping into international markets beyond your domestic reach. But the perks don’t stop there. Let's explore more advantages of taking your business global.

Rapid business growth

If your business is successful locally, holding off on taking it global means missing out on massive opportunities. Going international doesn’t just let you sell your products around the world; it forces your business to level up. Every country has its unique tastes and preferences, so you’ll need to either tweak your products or find creative ways to market what you already have.

What’s more, international growth doesn't just expand your customer base — it broadens your talent pool. Some markets are hungry for skilled professionals, while others are brimming with untapped talent. Bringing local experts on board will solidify your presence and help you grow confidently in new regions.

For example, when entering new markets, like India, Coca-Cola adapted its products to fit local tastes and preferences, offering vegetarian options to respect cultural norms.

Competitive advantage

This next point is very important too. Expanding internationally gives you a chance to outmaneuver competitors. If your rivals haven't entered a specific market yet, this is your golden opportunity to step in and claim the top spot. Once you're established, customers will trust your brand more than any new players.

This early entry helped the company build trust and loyalty, making it harder for competitors to catch up later​.

Stronger brand reputation

Expanding internationally can supercharge a brand's reputation, instantly boosting visibility and positioning the company as a global player. By tapping into new markets, businesses gain recognition across regions, building credibility. This increased presence establishes trust with a broader audience, making the brand appear more reliable and well-established across multiple countries.

When a company thrives in one international market, it enjoys a "halo effect," where its reputation in one region boosts its standing in others. This opens doors for smoother expansions into additional markets.

Growth strategies for cross-border selling

To set your brand up for global success, it's important to understand the behavior and mindset of consumers in the regions you’re expanding into. To set your business on the right path, finding the right ecommerce growth strategy is key. When it comes to going international, you have two main paths to consider for cross-border sales:

• Localization
• Regional markets.

The distinction might not be obvious at first glance but don’t worry — let’s break down each option and find out which is the right fit for you.

Localization

The first option is localization -- or brand adaptation, to make it clearer. Let’s say you're moving from the American market to Northern Europe. You’ll need to tweak your ecommerce strategy, website design, content, and product offerings to fit local preferences. Since cultures differ, it’s key to meet your new audience's expectations rather than using the same tactics that worked at the local market.

Take Starbucks, for example. Their success stems from expertly adapting to local cultures while staying true to their core identity. In Japan, they introduced matcha beverages, and in India, Chai Tea Lattes, catering to local preferences.

Regional markets

This option is great for brands looking to quickly break into a new market. By using popular global marketplaces like AliExpress, Alibaba, or Taobao, you can get your products in front of local and international audiences without changing your site. It’s a fast track to visibility and sales. But remember — cultural differences still matter. If your product doesn’t resonate right away, be ready to tweak your approach to match local tastes and preferences.

Amazon's entry into India in 2013 is a great example of successful market expansion. Since many Indian consumers lacked internet access and didn't use credit cards, Amazon adapted by launching the Amazon Chai Cart. This initiative brought free tea to small business owners while introducing them to the benefits of ecommerce. Amazon enrolled over 10,000 merchants, who then helped their local customers shop online and handle cash payments.

Challenges of cross-border ecommerce and their solutions

Expanding your business overseas requires courage, so you need to be prepared for the challenges you may face, such as language barriers, shipping charges, and unique VAT, GST and sales tax rules for ecommerce. But don’t worry, there’s a solution to every problem, so let’s look at the main challenges below.

1. Language barriers and localization

2. Currency and payment processing

3. Shipping and logistics

4. Customs, duties, and taxes

5. Product returns and customer service

6. Regulatory compliance and data privacy

All these challenges demand your focus and could become major hurdles in your business journey. The number and complexity of these challenges will vary based on the size and scale of your operations.

Bonus: Cross-border ecommerce glossary

To quickly navigate a new area of your business, you need to know the main terms used in this area.

• APAC (Asia Pacific): This abbreviation is used to refer to the region around the Western Pacific Ocean, typically including East Asia, South Asia, Southeast Asia, and Oceania.
• O2O (Online-to-offline): Online marketing that drives customers to make purchases in physical stores.
• VAT (Value-added tax): A tax applied to products whenever value is added during production or at the point of sale. It’s important to know for accurate tax calculation.
• MENA (Middle East and North Africa): An acronym for the region covering countries in the Middle East and North Africa.
• 3PL (third-party logistics): Companies that provide outsourced logistics services like warehousing, transportation, and order fulfillment.

What’s next?

If you've decided to expand your business abroad, it's a great opportunity to establish yourself in a new market, build your reputation, and outpace competitors. International expansion allows you to reach untapped customer segments and diversify revenue streams, making your business more resilient.

Remember: automation and compliance softwares are your friend. Check out these tasks your ecommerce business should automate and learn about how to automate your tax processes.

And if you’re ready to jump in already, why not start a free trial of Quaderno? After a short and simple set up, you’ll see how much time you save with automatic invoicing and tax calculations on all your sales. Try it for free today.

Thanks to Yara Pross from Synder for sharing her expertise and writing this article for us!