Cross-border eCommerce: guide and overview in 2024

What is cross-border eCommerce?

Cross-border eCommerce involves using online platforms to establish a "global marketplace" for international transactions - buyers can acquire goods or services from a different country than their own. This form of digital trade allows for easy access to worldwide products, and businesses can venture into new international markets and expand their market presence.

International commercial activities and business model

The business model behind cross-border eCommerce closely resembles traditional global trade practices, covering procurement, cross-border sales, international logistics and distribution, and cross-border payments. The key difference lies in the shift from offline international trades to online platforms. With the rise of online shopping and live-streaming eCommerce, the rapid advancements in e-commerce technology, and enhancements in logistics networks, consumers can now engage directly with global merchants, bypassing the intermediaries and distributors typically involved in traditional trades.

Competitive advantages of cross-border eCommerce

Individuals and small and medium-sized enterprises (SMEs) often opt to set up virtual stores on cross-border e-commerce platforms like Amazon, eBay, Shopify, and Shopline. This strategy allows them to enter the global markets with reduced risk while reaching international customers.  On top of that, it enables them to test markets, validate products, understand market demands, and gather consumer feedback, thus minimising the risks associated with international expansion. Furthermore, these platforms typically provide diverse payment options such as credit cards, Alipay, PayPal, and partner with global logistics partners to ensure swift worldwide delivery. This one-stop service facilitates and nurtures entrepreneurship in cross-border e-commerce.

Common sales models for cross-border eCommerce platforms

1. Amazon: Founded in 1994 and headquartered in the United States, Amazon stands both as a pioneer and titan in the world of eCommerce platforms. Serving a global clientele, its sales models target both businesses (Business-to-business, B2B) and consumers (Business-to-consumer, B2C). With its seamless payment system and robust logistics network, Amazon empowers customers to shop for products worldwide through its website.

2. eBay: Established in September 1995, eBay is a global platform for individuals and businesses. It integrates both B2B and B2C models to facilitate trade, while also embracing consumer-to-consumer (C2C) sales. With a wide range of product categories, millions of items are auctioned or sold through fixed-price listings daily on eBay.

3. Shopify: Established in 2004, Shopify is a Canadian multinational eCommerce company. Offering one-stop services for online retailers, Shopify excels in website building, payment solutions, customer engagements, logistics, and more. With a focus on the B2C sales model, Shopify empowers individuals and businesses to effortlessly launching their online stores.

4. Shopline: Founded in 2013 and headquartered in Singapore, Shopline is a global intelligent store-opening platform. With around 2,000 employees worldwide, it supports over 500,000 merchants in launching stores and promoting products and services internationally. Offering a wide range of solutions, Shopline specialises in eCommerce, social commerce, and POS systems.

eCommerce 2024: Which industries will be the key focus of future development?

According to Amazon's projection, the sales of global retail cross-border eCommerce will reach $65 trillion by 2024, accounting for over 21% of the total retail sales worldwide. 

The North American eCommerce industry, well-established and extensive, stands out as the prime choice for cross-border eCommerce startups. In terms of products, electronic goods like smart home appliances, tablets, and accessories are among the most popular and frequently purchased by consumers. Following closely are everyday household items like clothing, bedding, and furniture, showing substantial market growth.

What conditions must be met to establish an eCommerce business?  What are the initial steps to take? 

Before delving into cross-border eCommerce, it is vital to conduct thorough market research. This includes choosing products that align with the market demands and trends, and devising appropriate product strategies. For those not using eCommerce platforms, it is crucial to secure reliable suppliers and logistics partners for timely delivery and quality control. Meanwhile, sellers on e-commerce platforms should pick the suitable platforms wisely. If setting up your own online store, prioritising excellent user experience and a secure payment system is key.

Key factors and challenges in cross-border eCommerce operations

• Exchange rate costs: Regardless of operating independently or via eCommerce platforms, exchange rate costs are inevitable. Variations in currency exchange rates across countries can lead to increased expenses or reduced profits with  each conversion.

• Cross-border logistics: Cross-border logistics involve customs procedures, transportation methods, freight costs, delivery times, and other associated factors. Due to the complexity and uncertainty of international shipping, businesses require reliable logistics partners. Similarly, cross-border logistics must address the costs stemming from exchange rates fluctuations.

• Overseas market: Expanding into overseas markets stands as a core objective for cross-border eCommerce. Given the diverse market cultures and consumer preferences globally, conducting thorough market research becomes essential. Understanding the distinctive traits and competitive landscape of the target market is key to refining product positioning, pricing strategies, marketing tactics, and brand image.

• Third-party receipts and payments: Selecting a reliable third-party payment service provider is crucial for streamlined payment and enhanced security.  These service providers typically present a range of payment methods and currency options. Collaborating with reliable third-party service providers helps businesses to expand into international markets and deliver positive consumer experience.

How does Airwallex help cross-border eCommerce businesses?

Airwallex’s Global Account offers a hassle-free experience without account opening fees, monthly charges, minimum deposits, or minimum transaction amount. Upon successful account setup, cross-border e-commerce businesses unlock access to accounts with local bank details in 22+ currencies across 60+ countries and regions. With 160+ local payment methods in over 180 countries, enterprises can boost conversion rates and cut costs associated with currency exchange.

Airwallex offers real-time competitive exchange rates, with fees as low as 0.2% above interbank rates, a significant saving compared to the wire transfer charges for  traditional banks. Leveraging local networks, Airwallex replaces SWIFT with up to 90% of overseas remittance services without minimum remittance requirements.  Even individuals or small businesses can enjoy cost-effective swift payments. 

Airwallex holds a Money Service Operator licence from the Hong Kong Customs and Excise Department (MSO License No. 16-09-01929). Known for its solid reputation as a reliable remittance platform, Airwallex is the go-to choice for clients venturing into the realm of cross-border eCommerce.

Open an all-in-one Business Account with Airwallex today, or watch the demo video to learn more.

FAQ

1. What are the advantages of selling products or services through cross-border eCommerce platforms such as Amazon, eBay etc.?

A: Individual sellers and SMEs can set up virtual stores on cross-border eCommerce platforms like Amazon and eBay to access established international markets with lower risk. These platforms often partner with global logistics companies, and offer various payment options such as credit cards, Alipay, PayPal etc.  This one-stop service simplifies the launching of cross-border eCommerce for startups.

2. What are the main challenges for cross-border eCommerce?

A: Whether businesses opt for cross-border eCommerce platforms or engage directly with overseas enterprises, they face a shared challenge: the impact of FX rate. Fluctuations in FX rate can significantly affect profits. Airwallex addresses this challenge by offering real-time advantageous FX rates for remittance, alleviating pressures for merchants.

3. Which well-known cross-border eCommerce platforms should entrepreneurs from Hong Kong start with? 

A: For those looking for established and globally recognised platforms, try kick starting the journey with Amazon and eBay. Those looking to set up their own online stores might want to explore up-and-coming platforms like Shopify and Shopline.