2. 1
International e-commerce is a growth opportunity for small and medium-sized businesses.
In the European Union (EU) alone, the business to consumer e-commerce market was
worth €91 billion in 20102
according to European Commission research. A more recent
estimate suggests that Europe’s total online trade is now worth €250 billion annually3
. 32%
of the EU’s online shoppers say they have bought goods from other EU countries and 18%
have bought from countries outside the EU4
.
E-commerce as a whole is growing and increasingly confident consumers are attracted by
the wider range of goods – and potentially better prices – they can find when shopping
internationally. As a result, international e-commerce is creating opportunities for buyers
and sellers alike.
The international e-commerce market is still at an early stage but growing quickly.
Businesses that can meet shoppers’ demand for trustworthy, reliable and simple cross-
border retail have the opportunity to develop a new source of revenue from a wealthy and
well-informed customer base.
This white paper looks at six critical areas of planning as you take your first steps across
international borders. It contains tips, useful information and pointers to further sources of
information to make the transition as easy as possible.
Introduction
Across Europe, a third of online shoppers
have purchased from other EU countries1
3. 2
Cross-border
e-Commerce, a
Growing Opportunity The EU plans to double e-commerce
levels by 2015 by removing obstacles to
cross-border trade.
The Market Opportunity
Global business to consumer (B2C) e-commerce
exceeded $1 trillion in 2012 according to eMarketer,
a specialist in e-commerce5
.
Consumers are becoming confident with
international e-commerce: domestic shoppers are
increasingly venturing to sites in other countries and
experienced cross-border shoppers are increasing
their activity, spending more money in more
transactions across more sites in more countries.
Cross-border shoppers represent a particularly
attractive demographic, as industry analysts
Forrester found: they’re young, well-educated and
experienced online shoppers with a high disposable
income who tend to out-spend domestic shoppers
across a number of categories6
.
Overall, it’s the larger markets with strong domestic
e-commerce that attract the most cross-border
trade. For example, Germany attracts 27% of
cross-border shoppers, whilst UK attracts 24%.
Consumers from smaller markets such as
Luxembourg tend to be the ones looking beyond
their own borders7
.
International e-commerce is heavily influenced by
proximity, linguistic and cultural ties: 90% of Austrian
cross-border shoppers target Germany; 74% of Irish
shoppers and 93% of Maltese shoppers target the
UK. From Belgium, 42% of cross-border shoppers
target French sites and 38% target Dutch sites8
.
Nevertheless, more shoppers from across the world
are looking at European markets, and this
represents a further growth opportunity. The British
Retail Consortium recently reported that the number
of overseas shoppers conducting Google searches
for UK brands in the first quarter of 2013 grew by
16% overall. Searches originating from the US grew
by 75%9
.
The Consumer Perspective
Consumers are becoming increasingly confident
with shopping across borders. However, they still
mention some concerns as listed in the chart below:
• Concerns about fraud or non-delivery of
goods (62%)
• What to do if a problem arises (59%)
• Concerns over delivery (49%)
• Uncertainty about their consumer rights (44%)10
.
That said, in recent EC research, 1 in 7 consumers
intended to spend more on cross-border purchases
in the coming year11
. They are motivated by:
• Lower prices – driven by lower taxes and
exchange rate differences
• Exclusivity and access to products not available in
their own market
• A wider range of products12
.
Business Concerns
Despite the growing market opportunity, many EU
retailers aren’t actively pursuing cross-border
opportunities because they’re unsure about:
• Delivery costs
• The complexity of handling returns
• National regulations and taxes
• Accommodating locally preferred
payment methods
• The need to build local brand awareness13
.
4. 3
“Going international” used to be a daunting prospect
requiring you to establish a physical presence in the
target market. You might have appointed agents or
local representatives, established a subsidiary and
taken on considerable financial risk.
International e-commerce brings opportunities to
help you:
• Find new markets for your products (think of Italy
and Japan’s appreciation of British fashion labels)
• Leverage your business’ existing infrastructure
to generate more sales (the same warehouse
can process sales to more customers in
more countries)
• Spread your risk across different markets; if the UK
is slow, perhaps China or USA is more buoyant.
Today, e-commerce enables you to trade
internationally with less risk than before. With access
to online marketplaces such as eBay and with online
tools that support search engine optimisation,
markets can be tested, products trialled and a virtual
online presence established with relative ease.
The following six areas divide into two groups.
Points one to four discuss how you can make the
most of the cross-border opportunity using your
existing web-site. The final two points start to
consider steps you can take to target and
encourage new customers with a dedicated
web presence.
Your first
steps across
the border
Across the EU, 36% of payments are
made using an online payment service
like PayPal, Smart2Pay or iDeal14
Try these websites for useful information:
• Gov.uk: www.gov.uk/browse/business/
imports-exports
• eBay.co.uk: http://internationalselling.
ebay.co.uk
• Local Chambers of Commerce: www.
britishchambers.org.uk/business/
international-trade/
• UK Export Finance: www.
ukexportfinance.gov.uk
5. 4
1. Planning your entry into a
new country
Before you start, research your target
market thoroughly.
Demand for product
Is there demand, or a gap in the market, for
your product?
Local infrastructure
Is the internet, payment and delivery infrastructure in
place to enable you to do business effectively?
Customers
How much do you know about the consumers in
your country of interest? You may need to do further
research to identify their pattern of spending. Online
shoppers from smaller countries are most likely to
make cross-border purchases (Malta, 94%;
Luxembourg, 88% etc.)15
. Further, they are most
likely going to spend it in the 3 biggest markets in
the EU, which are UK, Germany and France16
. If the
country you’re targeting has strong cultural links with
your country or shares your language, then it may be
more open to buying from your site.
Competition
Who are your biggest competitors? How will your
offering compete with a local champion?
Routes to market
Consider whether it’s best to use your existing,
domestic, website (perhaps offering a translation
and local currency options) or an established online
marketplace. Established sites like eBay can often
give you better reach for lower cost. They allow you
to test demand for your products and experiment
with different offerings before committing a large
sum to re-developing your existing site. Also,
consider other online marketplaces that may be
popular in your target market.
6 Steps to consider when taking your business across borders
Planning
your entry
Accepting
payment
Shipping
services
Taxes,
laws and
regulations
Setting up
your
in-country
presence
Great
customer
service
Maximise existing traffic
Reach new buyers
in international
markets
6. 5
Cultural differences
Are there local cultural issues you should be aware
of? For example, some markets rely heavily on
brand-names, whilst others don’t.
Promoting your presence
Once your website or marketplace is set up, how do
you plan to promote it? You may want to invest in
search engine optimisation and paid search for your
new market. You may also want to explore the social
media platforms that are most popular in that
country and find ways to promote your presence
on those.
2. Accepting payments
The point of payment is when most transactions are
abandoned. Customers need confidence that their
payment will be handled securely and they need the
comfort and convenience of paying in familiar
currency using their preferred method.
Preferred payment methods
These vary significantly depending on the country,
and it’s important that you find out how best to do
what’s best for your market. For example, in the
Netherlands, 60% of payments are by direct debit; in
the Czech Republic, more than 50% of payments
are Cash on Delivery while in Germany, 46% of
payments are by online bank transfer17
. Check that
you can offer a payment method that customers will
be comfortable with.
Local currency
People prefer to pay in a familiar currency, ideally
their local currency but possibly an internationally
recognised one like US dollars. If not offering
payment in local currency, make sure you give a
currency conversion so that customers can see
what they are paying.
It is important to check local variations and offerings
before selecting a payment processing provider. To
give yourself flexibility with room to expand into new
countries, consider a payment provider with global
reach. For example, PayPal allows you to accept
payment in 24 currencies across 190 local markets
and lists locally accepted payment methods on its
site18
. PayPal also accepts Switch/Solo cards and
Direct Debit in the UK; wire transfers in Germany
and Discover cards in the USA.
3. Shipping Services (outbound
and return)
Potential customers need to have confidence that
the goods they pay for will be delivered, and that
they can easily return them if there is a problem. If
you address these concerns proactively, then
customers will be more likely to buy.
Delivery
Make sure that your delivery policy is clear and easy
to find on your website. Include charges and
estimated delivery times for the country you are
selling to. Many delivery companies now offer
services dedicated to the needs of small and
medium-sized businesses delivering to consumers
at reasonable prices. Often, this includes online
tracking, label-printing and guidance on required
documentation. If your delivery service offers
customers online tracking, remember to mention this
as it gives added comfort to your customers.
• Ensure that all costs are clear in advance. Offering
a total price that includes delivery costs plus any
likely duties will help to enhance customer trust.
• Encourage even more sales by offering free
delivery once the order reaches a certain threshold.
Check international payment options
and offerings before selecting your
payment provider.
7. 6
Returns
You should set out a clear policy for returns and a
“no questions asked” returns policy. Offering free
delivery will give an enormous boost to customer
confidence. At a minimum, your returns policy
should cover the following:
• Local consumer laws and the EU Distance Selling
Directive19
- Your policy must comply with these
laws and it will give added confidence if you state
this within your policy.
• Refunds – Set out the circumstances when a
refund will occur, and what the nature of the refund
will be, e.g. full money back or shop credit. Ensure
this complies with the law.
• Time limit – Set out the period when returns will
be accepted, e.g. within 28 days of the item
being delivered.
• Restocking, return delivery or other fees – if there
are restocking fees or return delivery charged, this
should be specified clearly.
4. Taxes, Laws and Regulations
You must comply with local laws when trading
across borders and you should research this aspect
thoroughly. Important areas to consider are:
Duties and taxes
Duty and tax may be levied on different items by
different countries. These will be the responsibility of
the buyer to pay. You should investigate if this will
impact the items you sell, in the market you are
entering. If so, ensure that the customer is aware of
the likely amount and that it will be their responsibility
to pay these before taking possession of your
shipment. Even though it is the customer’s
responsibility, failure to notify them may lead to
unhappy customers. In addition to customer duty or
taxes, if the items you ship are for a commercial
purpose, you may need to deal with quotas, duties
or paperwork. Again, research this area thoroughly
before you begin trading. The links under Customs
and Documentation below will help.
Customs and documentation
All deliveries must clear customs in the destination
country. To help customs officials understand the
contents, value and purpose of your package, you
must attach the appropriate customs forms to the
outside of the package. For further information on
customs requirements specific to your market, visit:
• The World Customs Organisation:
www.wcoomd.org
• The European Commission: http://ec.europa.eu/
taxation_customs/index_en.htm
• HMRC: www.customs.hmrc.gov.uk
• Gov.uk: www.gov.uk/browse/business/
imports-exports
• Your local Chamber of Commerce: www.
britishchambers.org.uk/business/trading-
internationally.
Distance selling regulations
All businesses in the EU must comply with the
Distance Selling Directive20
which gives specific
rights to customers buying online. The UK’s Office of
Fair Trading provides a useful guide for businesses
at: www.oft.gov.uk/shared_oft/business_leaflets/
general/oft698.pdf
Data protection
If you collect and reuse customer data via your
website, then you will need to comply with Data
Protection legislation in your own country and in the
country where the data is collected. You also need
to be aware of where that data is stored (for
example, if your website is hosted by a third party).
Across the European Economic Area (EEA), personal
data is covered by the Data Protection Directive and
national commissioners cooperate across the EEA
8. 7
to ensure that laws are consistent. To learn more
about data protection across the EEA (including
contact details for national bodies), see: http://ec.
europa.eu/justice/data-protection/index_en.htm.
As always, you should seek specific legal advice for
your particular situation.
5. Setting up your
in-country presence
Although many customers are experienced online
shoppers, they have a general concern about online
fraud that is heightened when they notice something
unusual about the website they are on. Things as
simple as a spelling mistake or a broken link can
damage the customer’s confidence and could lead
them to abandon the transaction. This concern is
even greater for cross-border buyers. Whether you
have decided to optimise your own website or to
use an established marketplace, the following points
are critical.
Build confidence and credibility
Pay scrupulous attention to detail, especially with
translated text; issues with spelling and grammar
damage trust. Use customer testimonials,
professional affiliations and trust marks like Verisign,
Verified by Visa or PayPal to assure visitors of your
legitimacy. In a recent PayPal study, 26% of UK
buyers surveyed said they would not have made the
purchase if PayPal had not been offered as a
payment method21
.
User testing
Test your site or marketplace thoroughly for bugs,
broken links and errors. Do text translation and
currency conversion work seamlessly? What about
calculation of delivery costs?
Make your website easy to use
Ensure your site is easy to use by having clear
navigation and information that is easy to find. A
general rule is to try and make every page on your
site no more than 2 clicks away.
6. Great Customer Service
The first step to great customer service is to
proactively address the main concerns customers
might have - preferably in their local language. Make
sure that your polices on shipping, returns and
payment are easily found on your site.
The next step is to make it easy for customers to
contact you, whether by telephone or by email.
Having this information prominently displayed helps
to give them confidence that any unexpected
problems encountered with their orders will be
easily resolved.
Email address
At a minimum, you should prominently display an
email address that customers can contact with any
concerns. Any emails you receive should be dealt
with promptly.
Telephone helpline
Specify if you offer a telephone helpline, and whether
it’s available in local language (ideally) or in English. If
you can afford it, a 24 hour, local-language customer
helpline is ideal.
Skype or instant messaging
Offering a “live chat” solution to help resolve
questions can reduce cost for the customer and for
your business.
9. 8
PayPal accepts a wide variety of payment methods,
making it easier for you to sell overseas and meet
local expectations and preferences. For example,
PayPal accepts Switch / Solo cards and Direct Debit
in the UK; wire transfers in Germany and Discover
cards in the USA.
PayPal accepts 24 different currencies across 190
countries allowing merchants to receive payment
from 110 million active accounts worldwide.
PayPal is also recognised worldwide as a means of
secure payment, boosting customers’ confidence in
your site and helping convert them to buyers.
Example: ASOS.com
The UK’s largest independent online fashion and
beauty retailer was looking to attract international
customers and found that PayPal helped drive sales:
PayPal and eBay
PayPal Inc. is owned by eBay, the world’s largest
global marketplace. With 112 million active buyers
around the world, eBay provides a unique
opportunity to test new international markets with
limited capital investment.
PayPal and
Cross-Border
Payments
“[PayPal] enables you to access an
extensive user base, both in the UK and
globally, and helps drive sales – we’ve
been really pleased with the results.” Nick
Beighton, Financial Director, ASOS.com
10. 9
Cross-border e-commerce is still at a relatively early stage but is growing quickly. Already,
nearly one in four online shoppers across the EU also makes purchases across borders.
Those cross-border shoppers tend to be younger, better educated and bigger spending
than the average consumer and represent an attractive market for those merchants who
can meet their demand for trustworthy, simple and risk-free retail.
If you are considering cross-border sales, you should look at 6 steps:
Maximise existing traffic
1. Planning your entry into a new market
2. Accepting payments
3. Shipping Services
4. Taxes, laws and regulations
Reach new buyers
5. Setting up your in-country presence
6. Great customer service
A little forethought in each of these areas will encourage overseas visitors to convert
into buyers.
PayPal accepts locally preferred payment methods and 24 different currencies in 190
countries around the world. As an internationally recognised and trusted processor of
payments, PayPal can help build your international business.
A Final Thought
11. 10
1. Planning your entry into a new market
a) Demand for product
b) Local infrastructure
c) Customers
d) Competition
e) Routes to market
f) Cultural differences
g) Promoting your presence
2. Accepting payments
a) Preferred payment methods
b) Local currency
3. Shipping services
a) Delivery
b) Returns
4. Taxes, laws and regulations
a) Duties and taxes
b) Customs and documentation
c) Distance selling regulations
d) Data protection
5. Setting up your in-country presence
a) Build confidence and credibility
b) User testing
c) Make your website easy to use
6. Great customer service
a) Email address
b) Telephone helpine
c) Skype or instant messaging
Stepping Across
Borders –
A checklist
Taking your first steps across the border trading has never been easier but it still requires
careful planning. Here is a handy checklist for the six critical areas to consider:
12. 11
References
1. Source: Consumer Market Study on the Functioning of e-Commerce and Internet Marketing and Selling Techniques in the Retail of Goods, page 32 (September
2011); http://ec.europa.eu/consumers/consumer_research/market_studies/docs/study_ecommerce_goods_en.pdf
2. Source: Bringing e-Commerce Benefits to Consumers (January 2012); http://ec.europa.eu/internal_market/e-commerce/docs/communication2012/
SEC2011_1640_en.pdf
3. Source: EMOTA Report 2012, EMOTA is the European Multi-channel and Online Trade Association; http://www.emota.eu/images/EMOTA_Report_2012_2013.pdf
4. Source: EC Consumer Market Study (as referenced above). Page 35 of this report contains a table detailing source and target of cross-border e-commerce across
the EU27: http://ec.europa.eu/consumers/consumer_research/market_studies/docs/study_ecommerce_goods_en.pdf
5. Source: Ecommerce Sales Topped $1 Trillion for First Time in 2012, e-marketer.com (February 2013); http://www.emarketer.com/Article/Ecommerce-Sales-Topped-
1-Trillion-First-Time-2012/1009649
6. Source: Targeting the European Cross-Border Buyer, Forrester (September 2009)
7. Source: Consumer Market Study on the Functioning of e-Commerce and Internet Marketing and Selling Techniques in the Retail of Goods (September 2011); http://
ec.europa.eu/consumers/consumer_research/market_studies/docs/study_ecommerce_goods_en.pdf
8. Ibid.
9. Source: British Retail Consortium (April 2013); http://www.brc.org.uk/brc_news_detail.asp?id=2429
10. Source: http://ec.europa.eu/consumers/strategy/docs/5th_edition_scoreboard_en.pdf
11. Source: http://ec.europa.eu/internal_market/e-commerce/docs/communication2012/SEC2011_1640_en.pdf
12. Source: IPC Cross-Border E-Commerce Report 2010: http://www.ipc.be/en/Intelligence/~/media/Documents/PUBLIC/Markets/IPC%20Cross-Border%20
E-Commerce%20Report.ashx
13. Source: Targeting the Cross-Border Buyer, Forrester, September 2009
14. Source: http://ec.europa.eu/internal_market/e-commerce/docs/communication2012/SEC2011_1640_en.pdf
15. Source: Consumer Market Study on the Functioning of e-Commerce and Internet Marketing and Selling Techniques in the Retail of Goods (September 2011); http://
ec.europa.eu/consumers/consumer_research/market_studies/docs/study_ecommerce_goods_en.pdf
16. Source: EMOTA, the European Multi-channel and Online Trade Association; http://emota.eu
17. Source: http://econsultancy.com/uk/blog/9387-7-tips-for-global-ecommerce
18. See: https://www.paypal.com/uk/cgi-bin/webscr?cmd=xpt/Marketing/general/LocalPaymentsMethodsWithPayPal-outside
19. See: http://ec.europa.eu/consumers/cons_int/safe_shop/dist_sell/index_en.htm
20. See: http://ec.europa.eu/consumers/cons_int/safe_shop/dist_sell/index_en.htm
21. Survey conducted by Northstar Research Partners, Q2 2011. Based on retailer-level data for 19 UK mid-market business retailers, representing 3,411 PayPal users.
Legal disclaimer: This article has been provided for your information only, and no legal, business or financial advice is being offered by PayPal nor should it be relied on
as such. PayPal has no liability for any use of the information in this article beyond its use as information and reference by the reader.