Ready to take your e-commerce business global? With the right tools and strategies in place, there is an almost-limitless market out there for the savvy entrepreneur who is able to successfully clear the bureaucratic, logistical, and financial hurdles of borders. We’re here to help you do just that: here are our top 5 actionable tips to make a success of cross-border e-commerce.
1. Offer automated duty-paid delivery
What is it?
Automated duty-paid delivery (otherwise known as ‘delivered duty paid’, or DDP) means that your customers buy and receive their products with any import/export duty and other fees automatically included in the price and paid.
Automating this process saves you from an immense administrative task of manually filling out endless paperwork and manually checking rates, duties and more. Generally speaking, the easiest way to do so is with a single tool – of which there are a number on the market – which will enable you to automate crucial activities like:
Assigning harmonized system codes to your goods to track them throughout the process and ensure the correct payments are made and traceable
Automatically adding the correct fees in the retail price so that everything is included
Populating the right customs declarations with the correct information, from HS codes to tax identifiers
Filling in proprietary carrier declarations by auto-populating using data in your systems
With all this done automatically, your customer then receives their product without even knowing what’s gone on in the background!
How will it help your cross-border e-commerce?
Automating duty paperwork is a huge boon for cross-border e-commerce. According to research by Avara, a massive 96% of customers say they would consider abandoning a checkout if they couldn’t see the final price they’d pay. It actually pays long-term, therefore, to include those duties in your retail price, with an end result of helping to lead the customer to conversion.
In addition to this, it’s also an enormous time-saver for your company. If you’re already selling cross-border, you know how much manual time can be spent on making sure the EORI codes are right, or your HS codes haven’t gone haywire, or your customs forms are watertight. Hand it to the modern world of automation, breath a sigh of relief and focus on your main business!
Likewise, DDP on its own can be risky to a seller, as border delays can lead to expensive storage and third-party demurrage charges (when a transit entity charges for untimely loading or unloading). As we know that customers far prefer it to DAP (delivered at place, when the customer pays), it’s crucial we instead find a way to work with DDP, and that is where automation lets us combine the best of both worlds: offering your consumer the checkout experience that delights them, while also minimizing your own risk.
2. Offer a frictionless returns process
What is it?
Have you noticed yet how much we talk about fulfilment in our e-commerce blogs? It’s such a crucial part of any online retailing business, but don’t forget about the post-purchase process too.
Of course, we can all dream of a world with zero returns, but the reality is that they will happen, and anyone growing their cross-border e-commerce shipping needs to be prepared to handle these smoothly.
You need to make the entire e-commerce shipping returns process as frictionless as possible. In the past, businesses would put customers through any number of hoops of paperwork and form-filling. These days, it’s much easier. For example, for many businesses, the easiest way for both themselves and their customers is to use a secure online area where a customer can access a pre-paid returns label, or at least a pre-filled in returns form. Through the uses of QR codes, you can have the returns process completed from the customer’s point of view at the point of handing to the courier – we are seeing more and more cross-border e-commerce businesses who will refund immediately upon scanning a returns QR code.
How will it help your cross-border e-commerce?
Shifting the cost and management of returns further to your business rather than leaving it on your clients can be risky, but it means that you stand a higher chance of converting unhappy customers back into pleased customers who will at the least be satisfied with a high level of customer service. The risks of negative reviews on platforms like Amazon can be high as they can be a large contributing factor to your sales rank; positive ones can have a much better impact to the contrary!
It also means that you do stand a better chance of not receiving a product returned to you with incorrect duties from the customer’s side, and that you can easily track and measure them, helping to understand what products perform well, what ones don’t, and at what point returns are likely.
Based on this information, you’re in a much stronger position to evaluate and improve your product inventory, as well as to continue to please customers.
3. Protect against risk from currency movements
What is it?
For any business selling internationally, currency fluctuations are a lot handle. The problem becomes exacerbated with large cross-border e-commerce transactions, especially if you’re offering your retail price in the local currency.
The problem is that currency markets never stop moving. Imagine you’re selling from Vietnam and you’ve got 1,000USD to transfer to your home currency, the Dong. Look at the difference in rates over the past few months:
06/10/2022: 1,000 US dollar = 23.88 million Vietnamese dong
09/09/2022: 1,000 US dollar = 23.53 million Vietnamese dong
09/09/2021 1,000 US dollar = 22.39 million Vietnamese dong
There’s a difference of almost a million dong in twelve months, but just as importantly, over 35,000 dong in just one month.
How can any business predict their revenue properly when their cross-border payments are at the mercy of the currency markets?
This means you have two options. Firstly, to receive the payment directly in your currency, with your retail price in the buyer’s currency ‘baking in’ an acceptable margin of error that you can expect from the currency markets. This would then be transferred to you at more or less the interbank rate, as long as you have a provider who offers it.
Secondly, you can hold the payments in the local currency and transfer at an advantageous rate by locking in a particular day’s currency rate using a forward contract. This would be most common if you have some kind of prediction of how much revenue you’re expecting to come in from a particular currency zone.
For example, you would agree with your provider that you will transfer a total sum of X USD to Vietnamese dong across, say, twelve months. You would agree to that particular day’s rate to be fixed for your payments for a sum of twelve months. You would then pay a deposit of that total sum, and your broker would purchase the entire sum at that day’s rate, with the expectation that you would continue to fulfil your payments throughout the twelve months.
How will it help your cross-border e-commerce?
Having done this, you can work with confidence, knowing with certainty how much revenue you really will be receiving – even if the markets suddenly move against you. With the uncertainty that we’ve seen in recent years, it can really pay off for any business handling international e-commerce shipping and transactions to have a currency risk strategy in place. Otherwise, you are betting – not even the brightest financial minds can truly predict where the markets will go.
It’s time to power up your cross-border ecommerce operations
As we head into one of the biggest global retail seasons for online businesses, it is the time to seize the global opportunities of cross-border e-commerce – so make sure your business is well positioned to take advantage! Keep following our blog to stay up to date with the latest information in the e-commerce sector, and don’t forget to check out how Multilogin can help your business grow by running multiple stores and accounts!
