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Perspective: Challenges and Opportunities of Cross-Border eCommerce

The outlook for the global eCommerce market is optimistic for 2010 and according to a survey by global delivery and logistics provider UPS , small-business owners who engage in international trade were more likely to project that their business would be in a better economic position in a year than those who did not.

But until recently, many merchants have relied on a single Web site to serve customers around the world. While many companies still rely on this model, the one-size-fits-all approach is increasingly being displaced by cross-border eCommerce.

Merchants have learned that country-specific sites work better to attract and serve customers in those countries. Why?

  • More convenient for customers
  • More attractive localized product offerings
  • Better, more persuasive communication in local language
  • Less expensive shipping options for customers
  • Higher rankings on search engines and greater ability to attract customers
  • Ease of payment options for the customer

Cross-border eCommerce presents a host of challenges as well.

  • Local language
  • Local product differentiation/inventory issues
  • Complex distribution/shipping costs/timing
  • Local competition/pricing
  • Customer service

Additionally, merchants must deal with a host of payment-related issues, including increased fraud risk, currency conversion, merchant banking relationships and regulatory requirements. This involves creating a complex network of acquiring banks and payment processors and making sure your customers have a wide variety of payment options. Most importantly, this network has to be secure and trustworthy.

I’ll address the challenges and risks of cross-border eCommerce expansion—as well as the benefits of a new model for cross-border payments—in a future post.