In the world of e-commerce, growth is an ever-moving target. If you’ve ventured into new marketplaces, launched a multi-channel strategy, and are looking for the next profitable path forward, you’re probably thinking about expanding your e-commerce presence across borders.
Global expansion presents a $1 trillion opportunity for e-commerce brands. However, launching in a new market brings all kinds of unfamiliar challenges.
Unlike selling in your home country, where you know the people, customs, rules, and regulations, you’re leaping straight into the unknown each time you launch a new store in a new territory.
Still, for an increasing number of e-commerce brands, expanding internationally is worth it.
If you’re ready to take your brand across borders, you’re in the right place. In this guide, we’ll share the latest insights on the size of the cross-border e-commerce market, plus practical tips to help you make your mark on a global scale.
What We’ll Cover:
- What Is Cross-Border E-commerce?
- What’s the Size of the Cross-border E-commerce Market?
- The Biggest Cross-Border E-commerce Markets to Enter Right Now
- 6 Surefire Tips for Successful Cross-Border Expansion
What Is Cross-Border E-commerce?
Cross-border e-commerce eliminates geographic barriers, enabling consumers to access products no matter where in the world they are. E-commerce merchants can launch a cross-border strategy through their existing sites, platforms, or marketplaces, or even set up new ones for specific regions.
From international e-commerce marketplaces like Shopify Markets to fully-customized headless commerce, today’s brands have a plethora of options when it comes to executing international expansion strategies.
For example, DTC brands like Warby Parker and J.Crew execute international e-commerce directly through their websites. Other brands partner with third-party retail platforms like Alibaba or Amazon. Some even partner exclusively with one platform, like those in the Amazon Exclusives program.
If you’re a brand with an established marketplace presence and you’re thinking about selling direct-to-consumer, you might be wondering if the pros outweigh the cons. We’ve got the complete rundown in our (free!) e-book All About DTC: Benefits, Drawbacks, & Opportunities for Marketplace Sellers.
What’s the Size of the Cross-Border E-commerce Market?
The size of the cross-border e-commerce market has grown significantly since its initial boost in 2020. All signs point to a continued upward trajectory over the next several years. Vantage Market Research reports that the total market, valued at about $793 million in 2021, is expected to reach a staggering $304 billion by 2028 — a compound annual growth rate (CAGR) of 25.1%.
PayPal’s 2022 Borderless E-Commerce Report found that in almost every country surveyed, more than 40% of shoppers currently make cross-border purchases.
In some countries — like Canada and Brazil — that number is significantly higher (63% and 72%, respectively), and 42% of overall survey respondents said they are more comfortable shopping cross-border now than they were in 2020.
The opportunity looks promising from a holistic market perspective as well. McKinsey predicts that cross-border e-commerce merchandise value will reach $1 trillion by 2030 (more than triple its current valuation of $300 billion) — and that’s a conservative estimate.
Why is cross-border e-commerce important for growing your brand?
Smart DTC brands and e-commerce players are taking advantage of this current and projected growth trend.
Lululemon, for example, expanded into Asian markets earlier this year and has experienced 35% YoY growth in revenue from countries outside of North America. After finding success domestically, top Chinese brands like Perfect Diary and POPMART are making plans to grow their international presences. Marketplaces are getting in on the action too, with Walmart ramping up its tools and resources to help sellers expand internationally.
The execution details vary, but a clear theme is emerging consistently across industries, regions, and marketplaces — it’s time to go global.
The Biggest Cross-Border E-commerce Markets to Enter Right Now
The cross-border e-commerce growth opportunity is huge, but success depends on multiple variables, including product-market fit, timing, and marketing efficiency. Knowing which markets to enter and when can make or break your profitability.
So which markets are the hottest right now? To find out, we considered potential markets in three ways:
- Total share of retail sales
- Total e-commerce dollars spent
- E-commerce growth rate
Unsurprisingly, China tops the list when it comes to total share. According to Insider Intelligence research from this year, China’s e-commerce accounts for nearly half — 45.3% — of total retail sales in the country. Just below China on the list are the United Kingdom (35.9%), South Korea (30.1%), and Indonesia (28.1%).
But markets in these countries vary greatly in size, which is why it’s also important to consider the opportunity from the perspective of total consumer dollars spent on e-commerce. From this perspective, the United States is the closest rival to China, with consumers spending $1.05 trillion to China’s massive $2.879 trillion (even though e-commerce only accounts for 16% of total sales in the US).
Finally, growth rate is the best way to identify emerging markets and capitalize on opportunities ahead of competitors. According to Statista data from this year, 9 out of 10 of the fastest-growing markets are in Asia and Latin America (Australia is the only exception at #6).
The top 5 fastest-growing markets (and their YoY growth rates) are as follows:
- Singapore (36%)
- Indonesia (34%)
- Philippines (25.9%)
- India (25.5%)
- Argentina (25.3%)
Rounding out the list is the aforementioned Australia, followed by Malaysia, Thailand, Mexico, and Brazil.
There are two key insights to take away from the research here. First, China and the United States are the leaders of the e-commerce pack when it comes to total market share and money spent. That said, they’re more established and could be harder to break into amidst a crowded e-commerce landscape.
If you’re looking for big potential, it’s all about Asia and Latin America. Investing successfully in these regions will likely set you on a path for substantial growth in the years ahead.
6 Surefire Tips for Successful Cross-Border E-commerce
1. Learn the Market
Not all products are created equal in any market or region. Before launching a new international store, be sure to research current demand for your product(s) in that territory, taking into account other important considerations like culture and consumer behavior trends.
2. Know Your Local Competition
Other e-commerce brands won’t be your only competition in cross-border markets. Expand your research to consider local providers of products that directly or indirectly compete with your own. Keep in mind that strong competition doesn’t necessarily mean a market isn’t right for your brand; it just means you need to understand the landscape and differentiate effectively.
3. Learn the Tax Laws
This one is mandatory. International tax laws are complex and the consequences of not following them (knowingly or not) can be serious. To streamline your tax compliance and avoid issues as you expand into cross-border markets, the best strategy is adopting an expert tax solution that can manage this for you. Through the SellersFunding-AVASK Global Growth Program, sellers can access compliant international payment capabilities, plus get the tax and policy knowledge they need in order to scale confidently.
4. Find the Right Payments System
The benefits of choosing the right international payments tools are twofold:
- A global payments and collections solution makes back-end processes more cost-effective and efficient.
- Streamlined payments make the customer experience seamless and sales-ready.
On the customer-facing side, PayPal, Worldpay, Stripe, and Amazon Pay are all well-established options. To easily accept global payments and pay international suppliers in their local currencies, solutions like the SellersFunding Digital Wallet can help you keep it simple and low-cost.
5. Prepare Your Supply Chain
Global supply chains have seen no shortage of disruption over the past few years, and the challenges become even more complex when operating across borders. While some issues are unavoidable (for example, brands can’t control labor or supply shortages), you can avoid bigger problems with smart planning. Don’t assume what works in one area will be the same in another.
Get to know the supply chain ecosystem in your new target market. Become familiar with the established shipping and delivery networks and how you can optimize them for your own business.
You can also invest in supply chain visibility with the right software solutions and IoT technology for seamless tracking. When supply chain delays inevitably occur, providing proactive and accurate updates is crucial for meeting the needs of global customers.
6. Know Your New Customers
Consumer cultures and preferences can vary greatly by region. When you expand into new cross-border markets, get to know your new potential customers and speak directly to their needs. This could mean anything from adjusting your marketing messaging to using different communication channels, and ensuring your website is optimized in shoppers’ native languages.
A Whole New World Is Open for Business
Cross-border e-commerce is the next frontier in retail. Brands must embrace it if they want to grow into the future.
And with modern e-commerce payment solutions, there’s no reason you can’t scale affordably.
With simplified foreign exchange, SellersFunding puts 37 currencies at your fingertips in one central, low-fee platform. Combined with flexible e-commerce funding to fuel your international expansion, you’ll have everything you need to build a thriving global brand.
Learn more about how solutions like the SellersFunding Digital Wallet can simplify the way you pay and get paid as you grow your global e-commerce business.