Cross-border ecommerce: A complete guide

What is cross-border ecommerce?

Cross-border e-commerce is when a business sells products or services online to customers in a different country. Essentially, it's international online shopping.

Let’s say you live in Europe and you want to buy a handmade rug. You visit an online marketplace such as Etsy and after browsing for a while, you find a beautiful piece from a seller in Morocco. You decide to buy it, and you make a payment online. The transaction that happened online crosses national borders. 

Who can launch a cross-border ecommerce?

Both independent sellers, freelancers, and companies of all sizes, can set up their cross-border ecommerce store. You can sell physical goods such as clothes or electronics, or digital products such as software or ebooks. But there’s a lot you need to take into account before going global.

Deanna Clark, Managing Attorney at Clark-Esposito Law Firm, specializes in regulatory compliance for growing companies with international affairs. She shared how the actual technical setup of the online store is not an issue.

The real challenge is knowing the international law and being fully aware of the responsibilities you have as the global ecommerce owner:

“It seems simple – let’s set up a website and start selling. But it’s important to know that you can’t actually sell to everyone, and you can’t ship your goods to everyone. You have to deal with restricted parties, blocked people, blocked countries. For US businesses, some obvious examples include North Korea or Iran.”

Ignorance of the law excuses no one. If you get caught in unlawful actions, you’ll go through ramifications and your company will probably come under investigation. 

Now let’s take a closer look at everything you need to consider before launching your cross-border ecommerce store.

How to start a cross-border ecommerce business 

If you’re looking to start a cross-border ecommerce, you first need to have strategic clarity about the markets you’re going after. At a very high level, it comes down to three main steps:

1. Identify target markets
2. Define online sales channels
3. Localize your cross-border ecommerce

To help you successfully navigate through these steps, we’ll provide you with actionable tips and further resources. 

1. Identify target markets for your cross-border ecommerce 

There are a lot of elements to consider when selecting new markets to expand to. You need to assess the total addressable market and the realistic purchasing power of your target audience. Competitiveness is another piece of the puzzle.

So how do you do that?

Analyze your website traffic

Firstly, look at the data you have. If you already own an ecommerce business and want to serve customers across the border, check your website traffic in Google Analytics.

Look at geographic and demographic user reports to see if you have demand coming from abroad that is currently not being met simply because you’re not shipping internationally.

After that, you can compare your traffic to your competitors’ using tools such as SimilarWeb or Searchmetrics. This allows you to go more granular and get a better idea about market saturation and the distribution of demand across different countries.

SimilarWeb showing web traffic by country for IKEA’s global website

Use dedicated tools to learn more about demand

Tools like Google Trends, Google Keyword Planner, and Ahrefs can be incredibly useful for initial market research. You can discover regional and local keyword search volumes, as well as keyword difficulty scores which indicate the level of competition. It’s also possible to see what’s the cost-per-click for advertising in the target market, which is another signal of demand.

Understanding import and export

It’s also very useful to look at the demand trends for your product, year over year. There are paid market intelligence platforms that give you access to import data and other market intel.

Typically, these tools would allow you to enter your HS code, which refers to the international index for classifying product categories. Then you’ll get access to import and export data, which can tell you if domestic companies don’t meet the demand of the local market.

There are also amazing free tools that can help you learn more about international trade:

• The Observatory of Economic Complexity (OEC) allows you to visualize and interact with trustworthy international trade data
• The Organisation for Economic Co-operation and Development (OECD) gives you access to data on specific market segments (e.g., you can see how many companies operating in the same vertical industry are active in a certain country)

Language and cultural compatibility 

In addition to evaluating the market on its own, you need to look inward and think about your resources and business goals. That’s the second layer to figuring out your gtm strategy. You need to consider language and cultural compatibility.

For example, strong cultural proximity has enabled UK-based ecommerce retailers to successfully sell to former Commonwealth markets. The same goes for Scandinavian fashion designers who influenced the lifestyle aesthetics of many European markets.

Linguistic and cultural barriers come in different forms and sizes, and this will impact the amount of resources you’ll need to invest in localization. 

Regulations and costs

Lastly, you need to think about legal aspects of cross-border selling. This includes import and export laws (e.g., restricted products, custom procedures in the target market), data protection laws, local intellectual property laws, and consumer protection laws. 

Tax and duties require particular attention. Here, you need to familiarize yourself with local tax obligations such as VAT and import duties.

Essentially, you’re taking into consideration:

• Total landed costs: The cost to produce your product + all the associated costs of getting the product to its final destination
• The ease of selling: Market accessibility, regulatory requirements, payment processing solutions, logistics, and competition

This is extremely important because you’re calculating profit margins and assessing if it’s truly worth expanding your business to that particular market.

2. Define online sales channels

Everyone has a unique starting point before they launch a global ecommerce. There are two main scenarios: 

• You don’t have a website and are interested in selling within existing online marketplaces
• You want to sell your products through your own website

We’ll take a look at both scenarios and explain what would be the best path forward for you as you define your ecommerce strategy.

Jumping into cross-border ecommerce by entering existing marketplaces

You don’t necessarily need to build your own website to sell to international customers. Existing marketplaces like Amazon, eBay, and Etsy can be a great way to start your international expansion with minimal risk. The obvious advantage is that you can go live faster. But let’s look at the pros and cons.

Marketplaces are not necessarily the end destination for your cross-border ecommerce. You can also use them as an in-between step before launching a website or localizing your existing website. They are a good way to test product-market fit and collect additional information about your target market.

Enabling your website for cross-border ecommerce

If you want to use your own website to sell products internationally, your starting position is likely one of the following: 

• You don’t have a website, but you want to build one
• You have a website, but you still haven’t enabled it for ecommerce
• You already have an ecommerce store and now you want to do business cross-border

The good news is that today, you can have a single website that supports multiple locales. In the past, it wasn’t that easy.

Patrick Perreault, CEO at Getting to Global, has over 20 years of experience working with world-class e-commerce websites. He led digital campaigns for companies looking to expand to new markets and worked with leading names such as Amazon and Adidas.

Patrick shared how creating a cross-border ecommerce website is a “million times easier” today than it was just ten or fifteen years ago:

“Fifteen years ago, we delivered a cross-border ready, centralized e-commerce channel for Adidas. It was a 15 million dollar project, and it took two years to deliver. It chewed through five or even six project managers. Quite an endeavor. But today, even with a limited budget, you can achieve the same results in just a few months.”

There are great cross-border ecommerce solutions that are available to you for a very reasonable subscription fee. We’re talking platforms such as Shopify, BigCommerce, and Magento.

These user-friendly website builders are empowering entrepreneurs and companies by simplifying the process of setting up an ecommerce store. They are feature-rich, intuitive, and they decrease your time-to-market.

Moreover, they allow you to centralize your channel management. This means that, if you’re selling products both directly on your website and on different marketplaces, you have a single place where you manage all your orders.

Unified view of all orders and a snapshot of revenue stats in Shopify

Now let’s get into the nitty-gritty and look at adapting your cross-border ecommerce for local audiences, which is the key to making your online store ready for cross-border selling.

3. Adapt your cross-border ecommerce for local audiences 

With new technologies and cross-border ecommerce solutions, expanding to international markets is a lot easier. This includes adapting your website for local audiences. But what exactly do we mean by ‘adapting your store’?

You need to make sure your website is available in target languages and adjusted to different cultures and consumer preferences. This is what’s known as localization.

Ecommerce website translation and localization matters. If you still think it’s sufficient to have your ecommerce in English, think again. Up to 75% of online shoppers won’t even bother with a site that’s not in their language. Are you really willing to cut this market share off so easily? We didn’t think so.

There are three main things you need to take into account:

• Content translation and localization
• Payment localization
• Localizing the entire experience

Content translation localization 

Translation and localization are related, but they are not quite the same. 

Content localization refers to both the cultural adaptation of your brand and products, and translating your website. Additionally, you would need to adapt your ecommerce website to each market. This might include everything from selecting the products that you’re going to sell and adjusting marketing materials.

Localizing your product information is a necessity to ensure that your customers can discover and buy your merchandise.

Silvi Nuñez, Managing Director at Optimational, pointed out that many companies make the mistake of focusing solely on language translation rather than localization. They often overlook the fact that people in different countries, even those who speak the same language, search and shop differently:

“For example, a UK customer searching for “jumper” is looking for a sweater, while a US customer using the same word is likely searching for a baby’s onesie or blouse. Ignoring these regional differences can result in missed opportunities and a poor customer experience.”

You might also need to adapt your photography and website design to ensure diversity, representation, and accessibility. Different customers have different browsing habits, and you want to make sure that you can accommodate them.

Payment localization

Luckily for cross-border ecommerce businesses, most payment solutions have built-in fraud protection. That’s one headache less to worry about. You still need to think about preferred payment methods and pricing transparency.

Consumers in different countries favor different payment methods. For example, credit cards might be popular in the US. Digital wallets like WeChat Pay are preferred in China, and cash on delivery is common in some parts of Southeast Asia. You can also partner with local payment gateways to provide additional options.

Pricing transparency is another piece of the puzzle. You need to be well aware of the local financial regulations and tax implications to make sure you’re showing the correct price of the product. Make sure you:

• Integrate duties and VAT calculations at the checkout
• Display your prices in local currencies

There’s nothing worse than a customer getting their package only to realize they have to pay additional money to cover for custom fees or taxes. Be transparent and set the right expectations. 

Localizing the entire experience

You don’t want to create any friction in the shopping experience. This is why you need to think beyond adapting language, localizing currency and pricing, and offering the right payment methods. We’re talking about shipping, customer support, and product preparation.

Shipping and delivery are a part of your cross-border ecommerce localization, and so is  customer support (both in the context of multilingual support and availability in time zones). 

When it comes to shipping, you should consider partnering with local courier companies to ensure faster delivery. In the world of consumers that are so used to instant gratification, fast delivery is key to your cross-border ecommerce success.

Another overlooked element is preparing your product, which is incredibly important if you're expanding to highly-regulated markets. You might need to adjust product packaging to comply to local regulations, or to go one step further and adjust the design for better reception in the market.

Cross-border ecommerce translation and localization just got a lot easier

If you want to launch a cross-border ecommerce, you can easily translate your website with a simple end-to-end solution. Think of it as affordable, AI-powered expansion into new languages.

At Lokalise, we already helped Amazon, Home Depot, and Cornershop by Uber to localize for global markets.

With Lokalise, you can accurately translate the entire content of your store, whether it’s dynamic content, content generated by other apps, or even the checkout process.

Create amazing localized experiences, increase traffic and checkout conversion rates, and successfully expand to new markets.