The technology sector experienced unprecedented growth in 2020 and 2021, but this year has proven that growth was inevitably going to slow. Global recession is looming, and governments are doing everything they can to support local businesses. But cross-border e-commerce growth is still possible with the right tools and mindset.
The past few years have forever changed how we use digital services, increasing both virtual work and cross-border e-commerce growth. Pew Research Center surveyed 915 business and policy leaders, and of the 86% who reported that the pandemic brought about change, most also warned of the potential negatives that came along with it.
Tech stocks that soared to record levels in 2020 have since lost most of that value, and analysts believe it’ll only get worse as people partially return to their previous lifestyles. Instead of conducting simplifications, many governments are thwarting international e-commerce expansion by implementing tighter restrictions to protect their own assets and finances.
Europe has centralized VAT management and used the pandemic as an opportunity to reform its laws to favor domestic production, and other countries are following suit. Brexit caused its own predicament, as U.K. exports fell 14% last year. Meanwhile, each state in the U.S. has different thresholds to open registration in other states, and supply chain strain reduced its trade balance.
Furthermore, the Organisation for Economic Co-operation and Development found that international services trade (which is 10% lower than in 2019) got hit harder and is slower to recover than goods. All of these components combined put more pressure on sellers to develop a cross-border e-commerce strategy that accounts for any present and future obstacles that threaten to halt progress.
A New Normal in International Commerce
Cross-border e-commerce is a broad concept that can mean anything from selling abroad from home to localizing a warehouse and the general experience for the customer. Even between English-speaking nations, countries like the U.K., the U.S., Canada, and Australia have different currencies and dialects that must be adapted to. There are also local regulations to remain compliant with, especially as an outsider.
Overcoming these problems requires investment in managing fiscal compliance and understanding the legal entities involved.
Fortunately, it’s still possible to experience cross-border e-commerce success. Companies like Nike and Apple experienced explosive global growth during the pandemic, and they’re still sustaining those levels in 2022. In fact, Nike experienced a $2 billion global revenue increase in 2022 from the previous year, as well as an overall increase in global revenue every year since 2005. Apple saw only success, as well, reaching a global revenue of $97.28 billion in the second quarter of 2022.
Mirroring this success requires the following three steps:
- Remain compliant.
Before you can focus on success, you need to eliminate risk. Staying fiscally and legally compliant secures adequate investments and time while avoiding potential government fines. To ensure you’re on the right track, take time to learn and understand the regulatory changes in markets and data management. Doing so will shed light on the rules and regulations you need to follow to stay compliant. - Localize your experience.
If you want to succeed in any country, you need to localize marketing efforts in terms of language, payment methods, shipping, and everything in between. If a customer is buying an item from the other side of the world and needs to make a return, it must be free. Amazon’s international return policy is a shining example of what to aim for. - Stick to your strengths.
Big brands like Birkenstock are trying to cut big distributors like Amazon to get closer to their clients in a clever way. Their cross-border e-commerce strategy is to optimize their value chain with best-in-class specialized vendors. Don’t try to do things outside of your competencies; instead, perform due diligence to partner with whoever’s already doing it best in that region.The technology sector experienced unprecedented growth in 2020 and 2021, but this year has proven that growth was inevitably going to slow. Global recession is looming, and governments are doing everything they can to support local businesses. But cross-border e-commerce growth is still possible with the right tools and mindset.
Written by Simone De Ruosi.
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