It is interesting how a shift in the global economy towards the inclusion of digitisation in almost every aspect of a business has spun off a whole new ethos in the way e-commerce businesses function today. Indian e-commerce companies have ridden multiple waves that have had them deal with low to high internet penetration, from hesitant consumers to those now comfortable making purchases online and from zero to big disposable incomes. It is only a natural progression, I feel, that when e-commerce companies are confident of having established a strong, robust domestic market, that they will look at cross-border e-commerce to further expand their businesses and customer base. After all, cross border e-commerce is the next big wave as it is growing faster than domestic e-commerce.
This is especially beneficial for MSMEs, and smaller retailers and manufacturers sitting in any part of the world wanting to sell their products to as many customers as they can, across multiple geographies. Global numbers are encouraging and indicate that cross border e-commerce is picking up steam when it comes to exports. An UNCTAD 2019 report says that global e-commerce sales grew 13% hitting an estimated $29 trillion in 2018. The number of online shoppers jumped by 12% to around 1.3 billion people and while most of these shoppers made purchases from domestic vendors, there was a 6 percent increase in those making online purchases from abroad. Within this, cross-border business-to-consumer (B2C) sales were an estimated $412 billion.
A win-win senario
While increased brand and product awareness, sustainability of business and access to new consumers and new markets are some of the benefits of cross-border e-commerce, a business may have to tie up with a third-party in the country they want to sell in. In most cases, the third party is a marketplace that puts in place software to enable consumers to buy products, through its platform, from a company located abroad that it has collaborated with Korean products becoming a rage in countries around the world is one of the biggest examples of how cross border trade can grow in leaps and bounds through the e-commerce channel. What also makes cross border trade a very lucrative business platform for any company is the option to be able to put out a low demand product in the domestic market to other consumers who might instantly take to it, generating revenues for the seller because of an increased demand. Again, one might wonder if Korean products are as big a hit in Korea as they are in the rest of the world?
Companies that deal in health and wellness, beauty, handicrafts, pharmaceuticals, travel and tourism and commodities such as appliances, mobile phones and electronics have the right business model to gain tremendously from cross-border trade through the e-commerce channel.
Though beneficial to all the parties involved, several challenges can pop up with regard to payment options, pricing products (developed and developing countries) delivery, logistics and returns and other legal implications of this cross-border e-commerce arrangement. Once businesses have done thorough market research and have all the legalities in place, the world is their oyster.
The blog has been authoredn by Radhika Ghai, Chief Business Officer, and Co-Founder, ShopClues.com