Cross-Border Business Is Becoming a Non-Negotiable. Are You Ready?
Building a cross-border business might seem daunting, but it's an essential component to a brand's longevity.
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Despite all the headlines around trade wars and protectionist tariffs, the globalization of business is a genie that cannot be put back in the bottle. The future of business is global. Like never before, companies are able to enter markets overseas nearly barrier-free.
Even accepting payments from international consumers has become more seamless than ever before. Just this year, PayPal led a $50 million investment in PPRO, a full-service e-payment provider that enables businesses to accept more than 140 alternative payments from around the world. For an online retailer, offering more than credit card options to visitors can mean higher conversion rates in countries where bank transfers, for instance, are the preferred payment method.
As technology continues to improve and it becomes easier for buyers to connect to sellers, businesses that devise a strategy to sell goods abroad will inevitably take the lead and reap all the benefits of a global marketplace.
For one, you grow your customer base. Two-thirds of consumers have already made cross-border purchases, and 32 percent do so monthly, according to a study by Pitney Bowes. And DHL has found that cross-border retail volumes will reach $900 billion by 2020. If you've yet to dip a toe in international waters, you can trust that a competitor has.
You can also discover new business opportunities. An estimated 10 percent of small companies in the U.S. buy and sell internationally. And Jack Ma, co-founder of Alibaba, expects many U.S. companies to export goods to China in the coming years, thus creating a more equitable and active cross-border relationship between two of the world's biggest economies.
This isn't to say that starting a cross-border business is easy, but the following can improve your odds of success:
1. Don't miss out on huge (previously unknown) selling opportunities.
Every culture has its own high-volume shopping seasons that businesses outside that region might not understand.
For instance, people across the globe know that Christmas is a busy shopping season in the U.S., but they might not know about slightly smaller shopping rushes, such as back-to-school season or the time around Mother's Day. Similarly, most American consumers aren't aware of the 11.11 Global Shopping Festival. Originally a non-commercial holiday created by single male college students to celebrate bachelorhood, it's now one of the largest online shopping days in the world, with sales totaling $25.3 billion in 2017.
But if you're truly prioritizing going across borders, you need to know when these periods happen and what's popular during those times -- no matter where your business is located. Study the culture. Bring team members from that region on board if you can. Put the time in now to know when the busy shopping seasons are so you can reap the rewards when the time comes.
Besides, knowing one another's calendars means you'll know when the work slows down. Many countries in Europe slow down considerably in late summer, and much of China spends about a month away from work during Chinese New Year. Prepping for downtime is as vital as mapping out cultural shopping spikes.
2. Master the logistics.
Thanks to Amazon, two-day shipping is now the status quo in the U.S. But how do you make this possible when selling goods across borders, or how do you educate consumers about why this timeframe is not always possible? After all, you'll be working with multiple carriers to transport goods, which lengthens the supply chain and opens you up to risk.
In fact, KPMG found that 40 percent of global manufacturers lack visibility across their supply chain. If you can't track your goods, you increase the chances of delays and disruptions to your shipments, which could impact your bottom line.
Consider the disruptions Toyota and Sony experienced when multiple earthquakes hit Japan. A disaster such as this could lead a small cross-border business to shutter its doors if it lacked supply chain visibility or an airtight logistical strategy to respond and mitigate risk.
3. Get in your global customers' heads.
Borders come with more than language barriers. How people interact with one another in business varies greatly from country to country. The same can be said for the speed at which business gets done; some countries just move faster (or much slower) than others.
But one of the most important cross-border differences to recognize is consumer behavior. This, too, will vary by region. What advertising, for example, will be successful in other countries? What messaging and social media platforms are important?
In the U.S., "social" shopping has failed to catch on. But it's an entirely different story overseas with the growing popularity of platforms such as Pinduoduo, an app that allows users to lock in low prices by way of group discounts when they and a legion of friends purchase the same item. Where Pinduoduo gets social is its functionality. The app integrates with WeChat, a popular chat app that allows users to open other apps within its own platform. Users can send product links to friends and coordinate purchases to secure a discount of up to 90 percent, all while on WeChat.
Consider conducting surveys or focus groups or bringing on a team member who can help you better understand the different interests and priorities these other cultures have.
Related: How to Take Your Company Global
While building a cross-border business might seem daunting, it's now an essential component to a brand's longevity. But if you plan accordingly, understand the logistics of fulfilling customer needs and comprehend the cultural and behavioral differences between countries, you can ensure nothing gets lost in translation.