The what, why and how of cross-border ecommerce in Europe

Cross-border ecommerce refers to when a customer makes a purchase from a distributor outside of their country of residence.

There is more cross-border ecommerce than ever, and it is a phenomenon which is rising. Understanding why and how consumers are making cross-border purchases is crucial for brands who are looking to increase their customer base internationally. In this blog, we will explore what cross-border ecommerce looks like in Europe, the challenges of selling cross-border, and how marketplaces can help to overcome the associated challenges.

Why is cross-border ecommerce on the rise?

There are several reasons that more consumers are turning towards cross-border purchasing, one being that it is often cheaper to get the same product from an international distributor, with another being the huge diversity of products that are often only for sale abroad.

Arguably, the main driving force behind this shift is the number of marketplaces like Amazon and Zalando that make it increasingly easier to buy from international distributors. Some consumers may be unaware that the distributor is international, while others are aware but are swayed by the product availability or lower price point.

Cross-border ecommerce in Europe

There is an open market structure within all EU countries which heavily aids cross-border trade. However, consumers within Europe are making purchases from all over the world, including countries outside of the free-trade EU market.

Netherlands

• Last year, 37% of Dutch consumers bought from online shops abroad (an increase of 32% from 2017) and spent 880 million euros (3.7% of the country’s total online spend)
• These purchases were largely from Chinese (31%), German (17%) and British (15%) distributors.

Switzerland

• Nearly two thirds (64%) of Swiss people made a cross-border purchase in 2018, with competitive prices abroad a major driving force
• Germany (51%) and China (23%) are the lead countries that the Swiss purchased from.

France

• The top four ecommerce sites in France are marketplaces; Amazon, Cdiscount, Fnac and Vente-privee
• 4% of all French people who purchase online have bought from other countries.

Spain

• Last year, 57% of Spain’s total ecommerce transactions were made on foreign sites, with UK (14%), China (13%), the US (10%) and Germany (10%) making the most commonly bought from countries.

Austria

• In 2018, 57% of Austrians bought from cross-border distributors online.

Challenges

Opening your business to international customers has several benefits, including increased revenue and global brand awareness. However, it is not without its challenges. Delivery is a key issue, with cross-border purchases typically having longer delivery times than a consumer would expect. It is also more difficult for customers to return damaged or unwanted goods.

Price point is a key consideration for cross-border ecommerce. If the goods aren’t available within a country, or they are available but at a higher cost than what can be bought abroad, consumers will be willing to buy from international distributors. This means that you will need to have competitive overall prices (including shipping) to be successful.

Using online marketplaces to test the waters

If you want to gain international customers, marketplaces are a great place to start for three reasons: it is quicker and cheaper than setting up a local website; it does not require you to build authority and brand awareness in order to sell; in many countries, marketplaces are the preferred place to shop online.

The following considerations need to be taken if you are to successfully launch your brand on marketplaces:

• Not all marketplaces are available, or popular, in every country. You will need to conduct research to find out which marketplace is best suited to reach your target audience
• Copy needs to be localized, not translated, in order to rank well on marketplaces, and be trusted by consumers
• You will need to provide clear guidelines on the delivery and returns policy for any goods that have been shipped abroad
• The payment options you allow should reflect the country you are marketing too; different European countries have different preferred methods, for example Italians typically do not use PayPal, while credit cards are rarely used in the Netherlands.

You can read more about the steps to take when expanding internationally here.

If you would like more information on how you can use marketplaces to grow your business internationally, get in touch.