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Localization 2.0: How brands can better navigate cross-border ecommerce

Localization 2.0: How brands can better navigate cross-border ecommerce 3

By Sam Ranieri, CEO of Reach

Localization 2.0: How brands can better navigate cross-border ecommerce 4

Ecommerce has been crowned the king of retail. The impact of the Covid-19 pandemic saw ecommerce growth smashing almost every record in the book, with year-on-year online sales increasing by 46% in 2020 – the highest rise for more than a decade, according to the ONS. This was despite overall retail sales falling by 1.9% in the wake of worldwide lockdowns and physical restrictions on stores.

There is a sizeable opportunity here – a ‘perfect storm’ of global economic, societal, and digital factors for retailers in the online space to take advantage of. If they play their cards right, they could grow their sales figures, brand reputation, and customer base x-fold in just a few short weeks.

Capitalizing on the expanded ecommerce arena                                 

The real moneymaker for an ecommerce retailer isn’t operating solely in their domestic market, but expanding their focus internationally to reach the consumers beyond their borders. In fact, global consultants McKinsey & Company recently reported that there has been double-digit rises in both the volume of cross-border shipments and the value of these transactions for retailers selling across borders.

Unfortunately, greater access to a global customer base has led to a hyperinflation in competition, with brands that had previously never operated digitally now flooding into the ecommerce market. To stand out in the crowd and best to tap into the new online opportunities, retailers need to optimize every aspect of their ecommerce presence. And this needs to be driven by the customer experience.

While consumers are less concerned with where in the world they’re purchasing from, they will still primarily opt for those retailers who deliver a solid purchasing experience – one that offers simplicity, comfort, and familiarity.

Understanding regional variations

‘Familiarity’ online means keeping the purchasing experience as close to local as possible for international shoppers. While most of us are happy to order anything from our sofas, we are naturally wary of unfamiliar foreign checkouts.

For those retailers operating internationally who constantly see a high number of drop-offs as their customers head towards the pay button, they need to consider what the checkout process looks like for their shoppers. If it includes any or multiple of the following points, it will likely be causing a lack of brand trust and a wavering commitment to clicking ‘pay’.

  • A stilted UX
  • A website presented in a non-native language
  • Displaying only foreign currency options
  • Irrelevant payment methods
  • Too many shipping options
  • Higher costs due to high foreign exchange (FX)

Uncomfortable checkout experiences lead to increased cart abandonments, lost sales, and lost opportunity to grow your customer base. But offering a range of languages and localized payment method, and working to the regional nuances of your customers, will smoothen the process and provide reassurance for the customer at the point of sale.

Keep track of the varying regulatory landscape

Every retailer will be aware of the guidelines that are in force for their domestic region, but it’s easy to get lost in the quagmire of statutes, amendments, and revisions for regulatory codes in different regions, especially if you’re operating in multiple localities at once.

For example, a European retailer will be well aware of the ins and outs of the General Data Protection Regulation (GDPR), or the Second Payment Services Directive (PSD2) and the accompanying Secure Customer Authentication (SCA) and 3D Secure protocols. But if that retailer wants to sell in China, they’ll face requirements such as the Multi-Level Protection Scheme (MLPS) 2.0. Or if they head across the Atlantic, they’ll be met with the California Consumer Privacy Act (CCPA).

The global regulatory framework is part map, part maze which online retailers must navigate. Fortunately, understanding regional variations is not something that a retailer has to tackle alone. Working with a specialist in cross-border ecommerce will enable brands to ensure they’re always speaking their customers’ payment language – no matter whether they’re selling in Toronto or Timbuktu.

The bane of cross-border commerce

For any retailer who is operating in the cross-border marketplace, FX rates are a constant source of frustration. They are often the final hurdle to fully localizing their online store.

The best rates available are often reserved for localized payment processors or banks, which often have a significant edge in terms of their rates of exchange. However, partnering with these local entities isn’t always easy to organize, and payment scheme regulations require retailers to have an on-the-ground presence in the region they’re operating within to do so.

While many payment solution providers (PSPs) promise access to regional currencies and acquiring, they often neglect to mention that the retailer must set up local operations in each market to access its local acquiring network. But many retailers don’t have the resources to do this, and are forced to process transactions as ‘cross-border’ sales with high exchange rates. Even fewer retailers have the capacity to monitor currency movements and optimize pricing strategies, which means conversion rates suffer due to cost impacts.

For most retailers, especially smaller cross-border businesses, the prohibitive costs of setting up a local branch can put an end to any hopes of expansion. While many PSPs promise to deliver cross-border ecommerce capabilities, only a few actually have the deep insight, the right partnerships, and direct access to the best FX rates to enable a retailer to go global with ease. Selecting the right PSP means a retailer won’t need to be incorporated in a region, because the PSP will remove barriers for them.

For more information on how Reach can help your retail business break down barriers and expand into new regions with a true local presence, visit:

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