From manufacturers to online shoppers and payments to logistics and fulfillment, every aspect of the global ecommerce ecosystem has seen booming growth in recent years. Even as the risk of a potential recession looms in the year ahead, the shift toward digital commerce shows no signs of slowing.
What does this ongoing shift mean for your brand? What could it mean?
Find the answers in this guide to global ecommerce expansion. Below, we’ll cover the trends shaping ecommerce, the opportunities on offer and challenges posed by international expansion, and what to include in a strategy for how to expand your ecommerce business.
Table of Contents:
- The State of International Ecommerce
- Why expand globally? The benefits of international ecommerce
- Assessing international ecommerce expansion opportunities
- Building a winning international ecommerce strategy
The State of International Ecommerce
Initially fueled by shifts in behavior and brands’ responses during the pandemic, growth in global ecommerce looks almost as if it’s really just begun. With businesses consolidating gains and countless others joining in, global ecommerce sales are expected to reach $6.9 trillion in 2024. By the end of 2026, that number is expected to top an incredible $8.1 trillion.
Set against this overall global growth, cross-border ecommerce is also expected to continue its rapid ascent, more than doubling the pace of global retail growth overall. By 2030, the global cross-border ecommerce market is projected to grow to $7.9 trillion—a ten-fold increase from 2021.
The trends defining global ecommerce
But it’s not just cross-border expansion that’s shaping the sunny outlook for global ecommerce. Other trends in international ecommerce are driving global growth, evolving experiences, and more.
Although automation and artificial intelligence have played an increasingly prominent role in supply chain management during recent years, it seems the age of artificial intelligence (AI) is fully upon us—and it’s set to leave no aspect of ecommerce untouched.
Crucially, AI is helping to power more personalized customer experiences—a key ingredient in any international ecommerce expansion when 80% of consumers are more likely to become returning buyers when provided with personalized shopping experiences. AI-powered solutions like chatbots and product-recommendation engines are driving improved experiences on the front end, while behind the scenes it’s helping improve everything from marketing automation to warehousing and beyond.
AI is far from the only technology providing growing benefits in ecommerce, though. As 5G technology and infrastructure have expanded, it’s helped drive increased mobility and digitization, and is augmenting already rapid growth in emerging markets such as China. The massive Chinese ecommerce market is expected to generate $1.4 trillion in revenue by the end of 2023, nearly double its value in 2019.
Meanwhile, many in the ecommerce world are also looking to the market in India. Between 2018 and 2022, the Indian ecommerce sector grew 1.6X and is expected to see yet another wave of innovation and ecommerce adoption thanks to the completion of 5G’s rollout.
Diverse payment options
Technology is also powering emerging payment methods in a variety of global markets, including China and India. For instance, though they have yet to see widespread adoption in the US, so-called super apps such as China’s WeChat and Alipay, India’s Paytm and Tata Neu, and Indonesia’s GoTo GoJek have exploded in usage. In Korea, the super app Kakao Talk’s user base now includes an incredible 87% of the country’s population.
Nevertheless, super apps are just one of the many payment options global consumers have at their disposal—and that ecommerce merchants need to keep up with and support.
Why expand globally? The benefits of international ecommerce
Expanding your ecommerce business internationally is no small order. But the reality is that it can open the door to game-changing opportunities, including:
- International growth: The stats behind global ecommerce growth should instill at least some fear of missing out in any business leader. With a proper expansion strategy, your business can tap into that growth to build brand awareness, reach new customers and increase sales and revenue.
- Economies of scale: As you grow internationally, you can unlock new efficiencies, increase profitability, and even more growth by achieving economies of scale that lower costs.
- Business sustainability: By expanding your presence and diversifying the markets you sell into, you can increase your business’s resilience and ability to withstand potential shocks or disruptions within a given market.
- Add global talent: Customers aren’t the only valuable resource for your business in new markets. Gaining a foothold in new geographies can also unlock talent pools with diverse skillsets and local knowledge that can be a boon to your growth in the region and beyond. Often, these skills may even be leveraged at a significantly lower cost, adding to your ability to scale.
- Gain a competitive advantage: When you enter a new market—and especially an emerging market—you can often get a head start on your direct competitors. If they lack a presence in a specific market, you gain not only the first-mover advantage but a competitive and reputational edge that can be grown over time as your business, brand, and image become more established.
Assessing international ecommerce expansion opportunities
The general case for expanding your ecommerce business internationally is quite clear. But how do you examine the particulars of expansion? How do you identify which markets present the best opportunities for your unique brand?
If international customers in a given location are already purchasing your goods, that’s a start. But it’s not enough to stake an entire ecommerce expansion strategy on. Dig into more data and, wherever possible, consult with experts on factors such as:
- Existing purchase volume vs. overall population: Understand whether your current customers constitute a significant amount of the market’s population and eligible audience.
- Geopolitical environment: Evaluate whether political (as well as regulatory) conditions are suitable for your brand and will support market entry and growth.
- Current demand and awareness: Assess and track search activity to understand how many foreign customers visit your site and generally search for products and services like yours. Analyze in-market social media signals to understand how many consumers know your brand.
Assessing these factors can help you not just determine the size of an opportunity but the size of the undertaking. In other words, evaluating a move into a new market should consider how much effort will be required to raise awareness of your brand, as well as overcome challenges.
Top Challenges of International Ecommerce Expansion
While each market generates its own unique challenges, there are plenty more commonplace obstacles you’ll need to account for as you develop a strategy for expansion.
Shipping and logistics are chief among these problems for most businesses. In a worldwide survey of cross-border ecommerce professionals, navigating customs and cross-border logistics issues topped a list of the most common challenges.
Before you face these obstacles though, you’ll need to iron out the customer experience, delivering the sort of localized online shopping and content that today’s global customers not only desire but expect.
As you build a strategy for international ecommerce, carefully consider which elements of a successful approach you will be able to provide on your own—and those for which you may require a partner that can offer local expertise, technology, or both.
Building a winning international ecommerce strategy
Navigating how to expand your ecommerce business comes down to first having the right international strategy. Be sure to consider these key aspects of any international ecommerce strategy.
As we mentioned above, it’s critical to offer your products and purchase experience in local languages – but that doesn’t mean it’s just translated from your home market. Your ecommerce site should consider culturally relevant verbiage and images and have tailored content to meet regional expectations. Other key considerations include displaying local currencies and being transparent about taxes and fees.
Shaping a robust pricing plan is pivotal to your business’s potential to stay competitive and maximize earnings in emerging markets, beyond just deciding what products to sell and where. Here’s a simplified guide to some of the widely applied pricing strategies that you can use as a starting point:
- Cost-based pricing: This involves a thorough calculation of expenses related to producing, distributing, storing, and promoting a particular product in a specific region. With these costs accounted for, you can set a price that aligns with your profitability targets. The advantage of cost-based pricing is that it does not demand extensive research and understanding of the dynamics of the new markets and their consumers.
- Competition-based pricing: This strategy focuses on evaluating the pricing range of equivalent products offered by your competitors in the market.
- Value-based pricing: This requires polling customers in a specific market to comprehend the worth they associate with particular product capabilities and advantages. With sufficient data and a comprehensive understanding of your target demographics, you set your prices according to local customers’ expectations.
We’ve already touched on it, but it truly bears repeating payment preferences vary by country and region. If your brand doesn’t integrate emerging payment methods and super apps into your platform, you run the risk of losing out on potential new customers and global success. Thoroughly research popular local payment methods in your target markets and deploy a payment solution that can support seamless payment experiences in each of these fashions.
The data are clear on how frequently businesses struggle with logistics abroad; it’s also clear how much your potential customers care about seamless (and painless) delivery experiences. Develop a strategy that not only steers clear of these issues but leverages logistics to gain a competitive advantage and boost repeat purchases.
When it comes to planning for international and cross-border logistics, focus on fulfilling crucial customer expectations, including:
- Fast and guaranteed shipping times
- Transparent delivery costs, with no landed-cost surprises
- Clear tracking and communications
- Seamless return experiences and reverse logistics
Given the complexities of international ecommerce logistics, as well as its centrality to winning customer experiences, being able to call on an experienced global logistics partner can make all the difference. Find an end-to-end logistics solution—one like Digital River’s—that can help you avoid costly delays at the border, leverage existing networks, and process fast, convenient cross-border and local returns.
Tax and compliance
While it creates a wealth of opportunities, it’s an inescapable fact that global ecommerce expansion also expands your tax burden and your risk profile. Every item that exits or enters a market comes with potential new customs, duties, and taxes. Of course, these vary—sometimes drastically—from country to country, along with the list of items that each location prohibits and restricts. Add to this a growing global patchwork of privacy standards, import/export rules, and other regulations. Put a plan in place—or a partnership—to identify and manage all of these complexities.
Streamline Your Strategy—and Simplify Global Growth—with a Merchant of Record
From delivering localized checkout experiences to reducing legal risk, there’s quite a lot to consider when it comes to learning how to expand your ecommerce business internationally. It can be daunting, but teaming with a Merchant of Record can simplify your international expansion—helping your business tap into ongoing global growth without all the hassle.
Digital River has more than 25 years of experience helping brands sell internationally and offers an extensive logistics network that easily flexes to fit your unique needs — and complements your existing suppliers. In a single back-end solution that integrates with your chosen commerce platform, we simplify global payments, taxes, fraud, compliance, and logistics. Our integration localizes your checkout experience for optimal conversions, provides a guaranteed landed cost calculation through our global tax solution, mitigates fraud, automates regulatory compliance, and offers low-cost freight rates.