Cross-Border eCommerce For Survival

cross-border ecommerce at night in Asia
Photo by NASA's Earth Observatory on Flickr

Back in the 1980s, actress Susan Saint James did a series of commercials for a small-town radio station in Connecticut in which she urged listeners to “Think globally, but shop locally!” The campaign encouraged shoppers to buy from small, independent local store owners threatened by large retail chains, á la Meg Ryan’s small bookstore owner character in You’ve Got Mail.

Back in Saint James’s day there was no Internet, and by the time Ryan’s 1998 movie was released, Amazon was just expanding beyond books and far fewer people were on the Internet. Even fewer trusted online shopping and it took too long for the WWW (WorldWide Wait) to load to be of practical use. It was much easier and quicker to drive to a big box store where you can take your purchase home and you didn’t have to worry about the safety of your credit card.

Ironically, now some of these former big box behemoths are being driven out of business by the same forces that once pushed less powerful indies into history. Goodbye to The Limited, BCBG Max Azria, American Apparel and Wet Seal. Good luck, Payless, Office Depot and JCPenney. We’re rooting for you!

RIP gravestone

(Borders Books, we hardly knew ye.)

Even the champions of ultra-cheap like Family Dollar, Dollar Tree, and Discounts-So-Deep-You-Can-Smell-The-Fire-And-Brimstone pioneer Walmart are facing lower revenue figures as government cuts in public assistance decrease their target market’s spending power.

Related: Retailers Are Going Bankrupt at a Record Pace

The late ’90s, early ’00s debates about which were more profitable – Clicks? Bricks? Or clicks ‘n’ bricks? – are a fait accompli as ‘bricks’ stores fall like autumn leaves. Whether those still remaining survive or haunt the ex-retailers graveyard depends on how well they navigate the jump to eCommerce and its newer growth path, cross-border eCommerce.

Cross-border eCommerce: The new growth strategy

A new DHL Express report demonstrates that, for better or for worse, the growth may now be in “Think locally, shop globally.” It details how the cross-border eCommerce market is expected to grow by 25% each year through 2020 including a surprise growth path for manufacturers, which are now beginning to cut out the middleman and sell directly to consumers.

Related: The 21st-Century Spice Trade: A Guide to the Cross-Border eCommerce Opportunity

‘Buy American’ has been a catchy political slogan in the U.S. for several decades, and more so now with the current “powers that be” but modern math shows the real profit path for some retail sectors is no longer in selling to Americans. A Boston Consulting Group study showed that 61% of mainland Chinese prefer to buy American products. That’s nearly equal to 836M American-loving consumers, or two and a half times the entire US population.

‘Buy American’ is the new mantra for the growing middle class in China, which we’ve already detailed in a previous blog post as they seek to buy American products like pet food supplies and pharmaceuticals, due to product safety concerns with Chinese manufacturers. Chinese youth are also big consumers of clothing and accessories and beauty products.

Related: Payments – How Fintech Can Fuel Global Expansion

Cross-border eCommerce demand works both ways. Americans look to buy Canadian when medication prices are often much lower across the border. It’s largely illegal but it doesn’t stop many people when their health is at stake. Plus, foreign goods shopping just got a lot cheaper for Americans courtesy of a new trade law that raises the maximum on tax-and-import free purchases.

Economic patriotism often extends no further than one’s wallet.

Asian cross-border eCommerce growth

A cross-border eCommerce strategy isn’t just a growth opportunity with which to impress the Board of Directors. It may soon become a matter of survival as players much bigger than North America’s set their sights on the West. While Amazon and eBay expand into India and other parts of Asia, China’s eCommerce heavy hitter Alibaba is targeting America. If you think Cyber Monday offers insane deals, wait until you start buying on Singles Day. You may not have heard of this online consumer frenzy before but you will. It’s coming to North America in a few more years and last November, Alibaba and their vendors sold a billion dollars of merchandise in the first five minutes alone and ended with sales over $17 billion. By contrast, 2016’s most successful Cyber Monday yet raked in a mere pittance of $3.45 billion dollars for the entire day.

Alibaba’s CEO Jack Ma is working on rebranding Singles Day for the U.S. market by calling it “11.11 Global Shopping Day” with English-language materials. It’ll be interesting to see how well that effort pans out. Not only does “11.11 Global Shopping Day” lack the catchy ring of Singles Day or Cyber Monday, not to mention the fact that it sounds a little too close to ‘9/11’, but there’s a potential cultural/localization problem as November 11th is Armistice Day in the U.S. and Remembrance Day in Canada, both of which are solemn holidays commemorating the contributions and memories of fallen soldiers. Turning that day into another consumer opportunity may prove offensive to military veterans and many others. Nevertheless, Alibaba’s efforts are likely to ultimately succeed, if perhaps they settle on a different date.

Fortunately, there are plenty of mainland Chinese American-loving customers whose money may be lured from afar with good prices, brand names and most importantly, product safety.

Related: Three Keys to Success in the Asian eCommerce Market (Yappn white paper)

Related: LOCALIZATION: Why You Shouldn’t Ask José In Accounting To Do Your Translation

The newest growth threat: Trade wars

Another reason to consider cross-border eCommerce as a survival strategy is the looming threat of trade wars which may also impact cross-border eCommerce growth depending on how these disagreements pan out and who they affect economically. If discount and dollar stores are losing revenue at home because of domestic political policies, they’re going to look elsewhere for new revenue. Just as American tobacco companies market abroad to compensate for declining revenue in the increasingly health-conscious U.S., other North American retailers will turn to cross-border eCommerce strategies if they can’t compete within their own borders.

Selling to your neighbors – and not just the ones next door – may soon become a survival strategy rather than a bold growth initiative.

Devising a cross-border eCommerce strategy is tricky, but reliable local partners in each identified expansion region can reduce the risks and help your organization define a logical process to achieving a successful entry into a foreign market. You will avoid many common mistakes others make with localization and translation, payment methods, logistics/delivery and fraud/security issues, which differ greatly from one region to the next and sometimes by country.

 

 

 

Yappn Corp is an enhanced machine translation company with a strong global presence offering translation and localization in dozens of languages for websites, customer care and social media marketing. For more information please contact sales@yappn.com or call us at +1.905.763.3510 x246.

 

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Written by Nicole Chardenet, Sales Development Rep at Yappn

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