Cross-border eCommerce 101: A guide for wholesale & retail SMEs

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Cross-border eCommerce 101: A guide for wholesale & retail SMEs
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After years of establishing your wholesale or retail SME locally, it’s time to achieve your global ambition by expanding to international markets. Of all the market entry methods, cross-border ecommerce remains the most cost-effective and accessible to Singapore SMEs, while offering high business growth potential. 

As Southeast Asia’s regional ecommerce hub, Singapore has the tools, talent, and infrastructure to help your business go global. Discover how to move from local dominance to international prominence, the hurdles you need to overcome, and how Airwallex can help you thrive in the digital economy.

What is cross-border eCommerce? 

Cross-border ecommerce, or international ecommerce, simply means selling products or services overseas through your own website or through a digital marketplace and online shopping sites like Shopee, Lazada, and Amazon. Whether you’re a traditional brick-and-mortar store, a local manufacturer, or a digital-only business, this channel can drive your growth by helping you reach new customers beyond Singapore. 

Global ecommerce is critical to our economy’s growth. A study found that 83% of micro, small, and medium enterprises (MSMEs) believe that ecommerce enables their ability to export goods. The same study also estimates that by 2027, Singapore’s ecommerce export revenues can double to S$3.9 billion if more SMEs increase their adoption of global online trade.

Why is cross-border ecommerce important for wholesale and retail SMEs?

When people talk about cross-border trade, they usually imagine large, well-established enterprises that serve the mass markets. However, wholesale and retail SMEs have much to gain from cross-border ecommerce. 

Here are several great reasons to participate in global ecommerce sooner rather than later, and enables that can help:

Unlock overseas revenue streams

The domestic market can be too small and competitive for retailers looking to grow, while 91% of wholesale SMEs export to China, USA and other foreign markets

With cross-border e-commerce, retailers and wholesalers can both access global markets and reach wider customer bases, tapping into new revenue sources.

You’ll also find that some products might fetch higher profit margins in certain markets due to different demand dynamics, perceived value, or lower competition.

Diversify risk

Expanding internationally allows you to minimise risks that come with putting all your eggs in one basket. If one market faces political instability or economic downturns, revenue streams from other countries can compensate. It also insulates you from changes in the domestic market that can negatively impact your business.

Better inventory management

Products that might move slowly in one market could be in high demand in another, which shortens inventory holding periods and reduces stock stagnation. Cross-border ecommerce also helps you extend your product lifecycle. Introducing the product to new markets or discovering a new use for the product in a new context can breathe new life to its lifecycle, even if it’s already declining in the Singapore market.

Easy setup through digital tools and platforms

Digital tools and ecommerce marketplaces have leveled the playing field, allowing SMEs to access global markets without hefty initial investments. For example, marketplaces like Amazon or Lazada let you create B2C storefronts with relative ease. Payment solutions like Airwallex simplify cross-border transactions through Global Accounts that make it easy to receive payments like a local bank.

These innovations handle the complexities of operating an international business, which lets you focus on your core competencies and product offerings.  

How to get started with cross-border ecommerce

Venturing into this space can be highly rewarding, but only if you’re prepared to navigate the complexities of international commerce. Here's a starting point for building your cross-border strategy:

Identify and uncover opportunities in key markets

Before anything else, discover where there’s demand for your products using local market research reports, online businesses data, and interviews with your target audience. The goal is to identify which markets have a large customer base and estimated local and online sales volume. 

You’ll also want to dive deep into the following to evaluate the feasibility of entering a market:

  • Competitors. Obtain the market share of your direct competitors (businesses that offer similar products) and indirect competitors (similar businesses who satisfy the same customer need). Knowing this can aid in formulating a go-to-market strategy and allocating resources effectively.

  • Product availability. Understand which products are in demand, which are saturated, and which might have potential for growth in the target market.

  • Consumer behaviours. Entering a new market means building trust, which can be a challenge due to geographical distance. Understanding local behaviours can help businesses bridge this gap, for example, by offering locally preferred payment methods.

Get to know the market’s legal and regulatory landscape

Before entering a new market, work with lawyers to understand its regulatory landscape and local ecommerce laws. Here are just some of the regulations you need to understand: 

  • Tax regulations. Each market and jurisdiction will have their own ecommerce tax laws and tax registration processes. Find out what kind of business licences you need to obtain and the tax jurisdictions that apply.

  • Import duties. Each country has its own set of import regulations, tariffs and duties. Understanding these can help you price products appropriately and minimise hiccups in the shipping process.

  • Product regulations. Ensure that the products you're selling have no restrictions or are fully compliant with local regulations. Some product categories may also require licences and permits.

  • Data protection and privacy. GDPR in Europe, CCPA in California, and similar local laws regulate the way businesses collect, store, and use consumers’ personal data. Non-compliance can lead to significant financial penalties.

Plan your go-to-market strategy

A go-to-market (GTM) strategy is a plan for how to introduce your SME to a new market. Start building your GTM strategy with these 4 key pillars:

  • Product-market fit. This simply means the degree to which your product satisfies a need or solves a problem in a particular market. Achieving product-market fit means you’ll have an easier time launching your product in a new market. 

  • Target customer. Define your ideal customer - the people who experience the problem your business solves and are willing to pay for a solution.  

  • Competitive landscape. Examine the regions or audiences your competitors own, and try to spot underserved areas. This is also a time to define your value proposition - what makes you distinct from existing solutions, and what you can offer that competitors cannot.  

  • Marketing and ecommerce channels. Knowing your target customer also means knowing where to build your digital storefront. You also want to make sure you’re advertising on the social media channels where your customer is present.

5 challenges (and solutions) faced by cross-border ecommerce businesses in Singapore

Although the growth opportunities are significant, cross-border ecommerce also comes with unique challenges for SMEs in Singapore. Let’s explore these roadblocks, and what you can do to overcome them.

Language barrier and cultural gap 

A good cross-border strategy requires a localised customer experience. Before entering a consumer market, consider cultural factors like family structures or religious beliefs. For B2B ecommerce, it means understanding local business etiquette.

Solution: Work with on-the-ground team

To get accurate cultural information, hire a local advertising agency or market research firm. These on-the-ground teams know exactly what drives sales for your target audience or what ideas can win consumers.

Shipping delays and logistics considerations

Customers expect to receive their orders on time, which makes shipment delays in customs a real challenge. These delays are caused by factors like frequently changing import duties or incorrect documentation. Things like transit times and order tracking can also be difficult to manage due to multiple carrier handoffs.  

Solution: Find the right logistics partner

When it comes to international delivery, it helps to work with a logistics partner that specialises in cross-border ecommerce. They have smart software that automates error-prone manual document handling. Meanwhile, you can send your items to a local delivery hub, and they’ll do the heavy lifting of preparing your items for export and assuming the risk of being the exporter on record. 

Complexity of handling foreign currencies

A survey shows that 98% of shoppers worldwide prefer to browse and pay in their local currency, which means you need to be prepared to handle multiple currencies. For SMEs, this comes with added complexity, such as the foreign exchange risk that comes with automatically converting foreign currency into Singapore dollars. 

Solution: Get a multi-currency account from a fintech firm like Airwallex 

Many established banks offer multi-currency accounts, but consider getting a business account from a fintech firm like Airwallex instead. Airwallex’s multi-currency account with market-leading exchange rates can help you accept payments with ease, as long as it can support the currencies in markets you serve.

With Airwallex, you can also hold funds in your international customers’ preferred currencies, so you can avoid forced conversions and their fees. This also lets you mitigate currency risk, and gives you full control over when to convert based on favourable rates.  

Lack of localised payment methods

Customers in the USA or the UK are used to paying through card networks like Visa and Mastercard. But in regions like Southeast Asia, every country has their own preferred payment methods, such as bank-transfer apps in Malaysia or cash-on-delivery in the Philippines.  

Offering localised options can instil confidence in potential buyers and boost checkout rates. However, just 13% of APAC ecommerce players offer local payment options, likely due to the operational costs and technical complexity of integrating multiple payment modes.

Solution: Use a payment gateway that supports local payment methods

Integrating local payment methods can boost checkout rates and instill confidence in your consumers. Use a third-party payment gateway to accept payments from local apps or digital wallets with ease.

Airwallex’s payment gateway supports over 160 global and local methods, including Alipay and Gopay in APAC, ACH direct debit in the USA, and Giropay in the EU. Through this, you operate more effectively in every market and confidently provide the payment options your consumers expect. 

 

Payment delays and hidden fees

Cross-border payments can take up to 5 working days to clear, and many banks can’t guarantee when your payment will arrive. These prolonged wait times can disrupt your cash flow, making it harder for you to replenish your inventory or cover operational costs. Accepting cross-border payments also come with large fees due to the complexities of processing international transactions.  

Solution: Airwallex Global Accounts

Opening a local bank account can resolve the issue of delayed payments and high transaction fees. However, this process won’t happen overnight and can even require an in-person bank visit. 

Instead, use a fintech solution like Airwallex, whose Global Account lets you bank like a local in the USA, UK, and 10 other territories.

With a Global Account, you get a local bank code and dedicated account number in your SME’s name. This lets you accept payments as though you were a local business, which eliminates delays and minimises transfer fees. The funds are then funnelled into your Airwallex multi-currency account, which you can convert, hold, or spend as needed. 

Case study: accelerating Hey! Chips’s global expansion with Airwallex Global Accounts

“Airwallex's Transfer is fast and reliable. It’s difficult to send money to China and Airwallex helps us solve this problem well.”

- Founder, Emily Chu​​

Hey! Chips is a wholesale trade SME known for their award-winning fruit and vegetable chips. In just 4 years, they built a presence in Malaysia, Indonesia, Hong Kong, Maldives, the USA, and the UK.  

Co-founder Emily Chu says this rapid international expansion was made possible with Airwallex. It would have taken weeks and multiple business trips to open a bank account in the countries they export to. With Airwallex Global Accounts, they could instantly create local business accounts that support 11 foreign currencies, allowing them to pay local suppliers and employees quickly.  

Case study: how Saturday Club saved up to 99% on fees with Airwallex Transfers

"Before Airwallex, we had no idea when our payments were going to reach our suppliers. Using Airwallex instead of traditional banks has increased the speed of our overseas transfers and optimised our cashflow significantly. We've also saved up to 99% of our TT and FX fees."

- Ying Tze Her, Chief Operating Officer

Saturday Club is a local fashion retailer turned international ecommerce brand, with a presence in the USA, Australia, Hong Kong, Japan, and Malaysia. 

As an SME with global plans, it was critical to use a robust payment platform that can streamline operations and minimise fees. The team started with a traditional bank account, but soon found that overseas payments came with high telegraphic transfer (TT) and currency conversion fees. It didn’t help that payments were frequently delayed, with no way to track their status. 

Using Airwallex Transfers helped Saturday Club save up to 99% on TT fees and view foreign exchange rates in real time, which lets them anticipate forex costs. With Airwallex Global Accounts, Saturday Club could start receiving funds like a local business in their customers’ preferred currencies, while eliminating the risk of delayed payments.

Achieve your SME’s global ambitions with Airwallex today

Ready to start building a cross-border business? Create an Airwallex account in 3 easy steps, and let us handle your multi-currency payment needs 

Step 1: Create an Airwallex Business Account for free

Step 2: Submit documents and verify your business

Step 3: Transfer funds into your Airwallex account

Open a global multi currency account for free in Singapore

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