The complexities of building an ecommerce platform increase when you need to cater for a diverse international audience. At a basic level, you have different cultural norms and communication styles, not to mention languages, but at a deeper level you have a wider set of legal, compliance, data and process issues to address. This blog highlights some of the common challenges that business owners need to think about when expanding an ecommerce operation internationally.
Please feel free to add to the list via the comments. It’s not a comprehensive list (it would be more like a book than a blog to get everything covered) but it does give you some really useful pointers.
1. Domain strategy
Simple. You’ll buy ccTLDs for all countries right?
Not so simple. In some countries, like Australia, you can’t buy a country level domain unless you are physically registered to trade in Australia, which has legal and tax implications. Many retailers opt to avoid this complexity and trade using a generic international domain, or a country sub-folder on their existing domain.
You may also find there is another business trading in one or more countries that has your brand name domain for that country already registered. For example, in Australia houseoffraser.com.au is owned by an Australian jewellery company.
Whatever your commercial decision, you need a clear domain strategy this is scalable to support future growth. Think about the following?
- Which countries can we have a ccTLD for without incurring onerous compliance and cost risks?
- For countries where we can’t have a ccTLD, do we have a generic .com domain that we can use?
- Is our brand name domain available for all options we need?
- Do we have a strategy that caters for local country domain extensions and different language versions?
One option that works well is to have a generic .com domain like <mybrand>.com and then use locale/language sub-folders for local country versions. This covers you for multiple countries and multiple languages within one country (e.g. French, Italian and Swiss German within Switzerland).
So example local country homepages for the different language version for the Swiss market would be:
Data protection requirements can vary from country to country when you start operating outside the EU.
There are implications based on:
- Where your business is physically registered
- Where your physical servers are located
- Where customer data flows globally through systems
- Where customer data is stored in local databases
For example, if you have a distributed network model for global ecommerce where you’re using cloud-based infrastructure to serve content using local hubs to speed up page load, you may fall under the local data protection requirements as you’re effectively handling data in multiple locations.
My advice – find a legal expert from the countries you’re expanding into and get them to assess your data protection liabilities. For this you’ll need a clear data flow map showing the systems and physical locations of all customer data flows.
3. Tax and duties
Cross-border online sales are becoming an increasingly significant proportion of ecommerce orders, but the rules and regulations can be confusing for retailers and customers.
You have a responsibility to be transparent about any additional charges for which customers are liable – if you’re not, you’re likely to see more returned orders and angry customers. Getting it wrong can leave you open to financial penalties.
So you need to know what taxes are due where and how much they will cost.
For example, VAT rates vary within the EU from 17%-27% once you have exceeded the ‘distance selling threshold’ for each country, so the final price payable by a customer even within the EU may vary depending on shipping country. Additionally, VAT rates for different goods may vary.
Some countries charge import duty and taxes, for example in Norway the valuation is based on the shipping value (including the value of the goods, the cost of freight and cost of insurance). Understanding cost liabilities is critical to international trade as it can make the cost of delivery prohibitive.
What do you need to do?
Understand the rules and regulations for each country you ship to, then ensure this information is clearly presented to the user throughout the checkout so there is full transparency about cost and process. If you’re unsure, seek legal advice.
4. Localised content
Aim to provide a localised experience even at a global level to help potential international customers use the website.
As far as possible you need to use localised content; the more familiar the language, the more likely people are to respond. Machine translation should be avoided as much as possible. It’s important to use a native language speaker to check translations. For example, there are differences between the way Dutch is used in Holland and Belgium, and language that is inaccurate could put off potential customers.
Below is an example of Amazon localising content for its Spanish website:
You also need to ensure your website is compatible with foreign characters, for example accepting accented letters in form fields. This has a knock-on impact as data contained in transaction files has to be compatible with fulfilment systems, which can require the front-end to accept foreign characters and then normalise to send through to back-office systems. Whatever the technical limitation, don’t prevent customers from being able to use your forms.
5. Country specific needs for checkouts
It’s almost impossible to create a universal checkout that works for a customer from any country because of the differences in language, address formats, payment types and even cultural differences. I’ve used checkouts before that try and force people down the standard house number/postcode route for address lookup. But not every country has a postcode, though the number without is decreasing; for example, Ireland used to be the only country within OPEC without a postcode system but it launched one back in 2015.
There are variations in preferred payment methods as well between countries. In Germany cash on delivery is popular and in China you’ll need to support AliPay and/or TenPay.
The best advice is to create a localised checkout experience that reflects what customers are used to in that market. Be sensitive to cultural differences and create appropriate content. For example, a Japanese checkout form requires customers to enter their name twice – once for the actual name, and once for how the name is pronounced (used for an identity check).
Few companies can justify the cost of investing in local warehousing for local markets, the typical route is shipping international orders from an existing hub. This works well when you have carriers who can provide international shipping, or you can sign agreements with new carriers to cover this.
However, you need to think through the returns process carefully. Returns is more than a policy requirements, it can be a competitive advantage (just look at Zappos offering 365 day free returns). So you need to think about how easy it’s going to be for overseas customers to get items back to you – the rather poorly termed ‘hassle free returns’.
Consolidation services help ecommerce by centralising the return of items in the local country and then shipping in bulk back to the central warehouse. They can take care of all customs paperwork and charges, providing a fully outsourced service.
“By reducing administrative and transportation costs, consolidation cuts reverse logistics costs by 40 percent on average”
Charles Johnston, Director at The Home Depot
Services like Rebound Returns provide customers with online self-service tools to request returns and then manage in-country consolidation and linehailing back to the retailer’s own warehouse.
Comments and questions
So what do you think is essential for expanding ecommerce internationally? What tips can you share and what pitfalls should people be aware of?
Please drop by and share your comments, questions and experience.