Cross Border E-Commerce & Flat world

With recent rapid advancement in Logistics and Digital solutions, commerce and in particular e-commerce is pacing its way into traditional and mainstream retail. With various research report supporting the claim, we believe target audience of online shoppers will be over 2 billion by 2020. This 20 % of global population will contribute to the minimum of 12-15 % of total retail sales through online transactions and this % is definitely going to be a surge in near future.  E-commerce is defining, setting & dictating new trends for Logistics Industry.

                            

The concept of Cross-border e-commerce has surged recently in last 5 years. The United States is the most popular country for buying online goods (45%), followed by the United Kingdom (37%), China (26%), Hong Kong (25%), Canada (18%), Australia (16%) and Germany (14%).The revenues generated by cross-border e-commerce in these markets alone are set to reach approximately 307 billion dollars in 2018, three times more than the global amount in these markets in 2013. The Boston Consulting Group expects that by 2025, the Asian market will account for around 40% of the revenues generated by cross-border e-commerce; making Asia the global epicenter of e-commerce.

Asia Pacific all together is driving the global e-commerce growth. Everyday empowering new technologies in China and India, 2 biggest countries in terms of population are driving this surge of business. These digital revolution is giving chance to remote individual to sell their products in Metros using Online platforms.

Western developed countries have a relatively higher share of cross-border e-commerce trade, driven largely by intellectual products like Books, CD, DVD, games & Toys. Developing countries like India & China in general, value “trustworthiness of shop/ brand”, Known shop owners and “multitudes of products” much higher than developed countries counterparts. This could be explained by the underdevelopment of multinational retailing or their behavior in developing markets, and all the downstream issues of this like counterfeiting. Product-categories-wise, “apparel & accessories” scores highest as what cross-border e-shoppers are pursuing. China is exceptional where products related to personal consumption such as “cosmetics, beauty & health product” and “food & grocery” are also highly sought-after.

Flat World

Cross-border e-Commerce brings all market participants on an even level playing field. No longer are global consumers only accessible are confined by geographies and rulings of domestic markets. Market expansions for any SMEs have become easy with cross-border e-commerce. SMEs, especially those born Digital, are trying to find new avenues to sell their products across territories. When all gears in the cross-border engine are well lubed, it is indifferent to the shopper whether the online /offline purchase is domestic or cross-border. Cross-border online merchants could compete as effective with domestic offline merchants as they were on-shore. OEM-Original equipment manufacturers would have an opportunity to market directly to end consumers, eliminating all wastage existed today in multi-tier distribution and retailing (e.g., supply-chain inefficiencies).

Barrier in cross border ecommerce

1) Laws and Regulation- Each destination country has its own set of regulatory measures in product returns, consumer right protection. Customs Clearance and related documentation.

2) Confusion over full landing cost - Many merchants still could not provide full-landing costs (product net +shipping + duties and taxes) at the time of transaction – this in return discourages sales & purchase.

3) Unclear/long Transit time - Limited ability to Alter Delivery times and Locations

4) Reverse logistics for return are costly and complicated – altogether dragging down overall customer experience

5) Complex Online Payments - Restricted payment options available due to FERA / FEMA regulations to avoid cross border fraud.

Making Globe Borderless

a) Government Support: -

• Regular improvement in Transportation network will automatically make thing smooth for logistics industry thus faster delivery adding happiness to end customers.
• Internet Connectivity & Internet Speed also plays an important role from seller and purchaser point of view.
• Transparency in regulation at par with Global regulations.
• Simplified payment options.
• Proper address of counterfeit and taxation leakage issues preventing Local players and promoting balance players in sync.

b) Enterprise Support:-

• Brand Awareness of product to targeted audience.
• Sustainable environment creation where local companies work in synergy with Global companies.

Economics is generally affected by Geographical boundaries but equally, the statement is true that “Economy of Demand and supply reshape old existing Geographical boundaries”. With the digital revolution, these boundaries have become flat and every seller wants to tap every potential market of a buyer. We hope that continuously improving logistics and supporting govt framework will add ease to cross-border e-commerce.