Executive Briefings

Crossing International Borders Easier Than Ever for Many People - But Not for Retail Merchants

Movement across borders is as simple as getting in a car or on a plane. It's a seamless, simple experience to which most people devote little thought. For both merchants and consumers, however, the path to online and offline purchasing across borders is still a bumpy one.

For online and offline consumers, cross-border retail holds the promise of easy access to a wide selection of attractively-priced merchandise not available in their locality. For example, the largest IPO in U.S. history, by Chinese retail portal Alibaba, was part of the company’s cross-border strategy to reach the estimated 50 million people of Chinese descent living outside the country. And cross-border retail is taking place, with 23 percent of German e-shoppers having bought from other EU countries, 25 percent from North America, and 15 percent of French internet users having made a cross-border purchase.

However, cross-border purchases can take buyers out of their comfort zone, forcing them to pay in a foreign currency at unclear exchange rates, unable to use their preferred payment methods and unclear on questions of duties, taxes, customs, shipping and other hidden costs. Many simply abandon the process, and look for locally-sold options.

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For online and offline consumers, cross-border retail holds the promise of easy access to a wide selection of attractively-priced merchandise not available in their locality. For example, the largest IPO in U.S. history, by Chinese retail portal Alibaba, was part of the company’s cross-border strategy to reach the estimated 50 million people of Chinese descent living outside the country. And cross-border retail is taking place, with 23 percent of German e-shoppers having bought from other EU countries, 25 percent from North America, and 15 percent of French internet users having made a cross-border purchase.

However, cross-border purchases can take buyers out of their comfort zone, forcing them to pay in a foreign currency at unclear exchange rates, unable to use their preferred payment methods and unclear on questions of duties, taxes, customs, shipping and other hidden costs. Many simply abandon the process, and look for locally-sold options.

Read Full Article