From MultiChannel retail to cross border eCommerce: When ambitions take flight – Part I

There was a time, not too long ago- when eCommerce was considered traditional retail with wings (somehow reminds of the Red Bull ad). And then came the sometimes misplaced expectations of growth, breaking star-studded valuations etc. The dust then settled and thence came the realization that there is no silver bullet, multichannel needed to evolve- it did, and then some.

The advent & growth of online marketplaces, huge investments & more recently –consolidation, has been a game changer for both: Small/mid-sized brands, who can leverage these platforms for new revenue streams and Big players, forging strategic partnerships, undergoing Offline to Online; Online to Offline transformations.

Traditionally B2B centric 3PLs also are adapting to the opportunity by undertaking eCommerce Fulfilment & expanding their reach: with last-mile fulfillment at one end & crossing borders at the other.

The customers too are an evolved lot. They now shop for brands & not channels, what was showrooming for them is now web rooming. For them, the line between Online & Offline is increasingly getting blurred & more so – the line separating geographies.

From small sellers to large enterprises, organizations across the globe are featuring their products in both offline stores and online marketplaces. eCommerce worldwide is transforming into a single unified market- “In-store Global. Online Local”. Crossing geographical borders via eCommerce hence is not new but its growth is.

The time is Right & the time is Now. And Right Now – Global B2C cross-border e-commerce revenue is set to increase to 200% in the next five years and will reach $424 billion by 2021, with Asia, Europe, and North America accounting for 40%, 25%, and 20%, respectively.

China, Europe & US, in terms of eCommerce prospect base, tick all 3 checkboxes viz. Sizeable, “digitally equipped” customers – who love to shop. And while these locations are also the markets for growth in Cross-border e-commerce, India & SE Asian countries are catching up fast. With internet penetration, growth in eCommerce, these countries are both the consumers & a growing supplier base for the same.

The primary reason for customers to go shopping across borders:

• the need for products not readily available in the home country
• the need for genuine/branded products eg. people from India, SEA buy watches cross-border
• Better quality products (eg. from USA, Europe) & better prices (eg. from China)
• Under-developed /nascent domestic market for eCommerce could be the motivation

Electronics, Health & Beauty products, Apparels & books seem to be the most popular purchase categories world over, apart from travel /events.

Few motivators for a business selling Cross-Border to locations are (see figure 2):

• Direct approach from local customers through web/phone inquiries
• Easy to do business with – Stable Regional regulatory & economic conditions
• Opportunity to cater to a Niche market or category of products
• High growth potential category – Customer Need: Product Fit: Market size
• Ability to speak a local language, Regional Partners/Local Experience
• Traditionally the popular export destination

In a broad sense, there have been three approaches towards their Cross-border efforts:

1. Strategic: Cross-Border is a strategic intent. For e.g. Retailers with an Offline to Online (O2O) strategy
2. Opportunistic: Primarily driven by partnerships, existing customer base and/or reach. For some R(e)Tailers, this includes selling on regional Online marketplaces and their regional partnerships acting to facilitate this.
3. Reactive: Location choice a factor of demand e.g. from a B2C site. Low risk – Low investment approach. While selling on Marketplaces is usually the inventory stock models.

Barriers & possible ways around them:

So if there is a need & the market is great, why are people not buying more Cross-Border? Greener pastures come with fences & challenges.

To read in detail, visit: https://goo.gl/WUpZ9X

We recently concluded a webinar titled “eCommerce Fulfilment: From First Mile to Cross Border“, in association with Economic Times Retail & DTDC. The webinar talked about how eCommerce fulfillment today, is the cornerstone of the strategic approach to leverage new revenue streams. You can view it here