Business Challenges and Risks for Global Trade

Selling globally offers significant opportunities for growing brands online, but is not without risks and challenges. We learn from Tim Laudenbach of digital river what are the right strategies in place to overcome these complexities

Cross-border spending is steadily increasing around the world. What can you tell us about the size of the global commerce market for the fastest growing companies and fields?

This year, global e-commerce sales are expected to exceed $5 trillion for the first time, accounting for more than a fifth of overall retail sales. This number is likely to continue to rise and proves that borderless e-commerce is a crucial growth strategy for online retailers. Southeast Asia, India, and Latin America are significant growth regions for retail e-commerce sales. By 2025, India’s e-commerce market is expected to more than double from 2020. Additionally, e-commerce sales in Latin America grew by 25% last year compared to 2020 sales.

When it comes to online revenue sharing, the apparel vertical is leading the way. The growth of mobile commerce and social shopping, along with opportunities for personalized experiences and personalized recommendations, is driving rapid industry growth. And selling globally offers great benefits: international consumers need brands with global reach, and global expansion extends the life of seasonal and trending fashion products. Segments such as beauty, entertainment, consumer electronics, and e-learning are also experiencing significant e-commerce growth.

What are the main challenges these companies face in the process of entering new markets?

Cross-border trade has become the new promised land for online sellers. The pandemic has pushed shoppers who were once averse to online shopping into the mix and encouraged others to look across borders to source products they could no longer access in physical stores. This shift requires brands to have the strategies and the right tech stack to match.

Lack of expertise and infrastructure are the main challenges for growing brands. Understanding the complexities of each new market and delivering localized experiences in each region is easier said than done. With each new market comes new payment methods and currency preferences, new tax rules, new compliance regulations, new fraud risks, and new logistical concerns. For brands that choose to be truly local, a local entity is a must, something most brands struggle to do on their own. Many brands choose to turn to partners to help simplify these complexities and get the infrastructure needed to enable local experiences for global shoppers.

Businesses need to consider consumer protection and satisfaction, local preferences and relevant regulations of new countries and regions. What should these companies do to ensure they can remain relevant and compliant in these new markets?

An optimized payment system can give brands a competitive advantage when selling in new markets. A good payment system can improve the customer experience, providing localized shopping experiences with currencies and payment methods that are familiar and preferred by shoppers in each region. It can also improve authorization rates by minimizing false declines and optimizing each payment transaction.

Today’s buyers are looking for convenience and transparency. Checkout processes should be simple and clear to reduce cart abandonment and there should be no surprises after a shopper makes a purchase. The full cost of the transaction must be presented to customers at checkout, including any import taxes or regulatory fees passed on to them. From a regulatory point of view, e-retailers must ensure that they have correct invoicing, so that goods are not stopped at borders. Working with the right processing partners to optimize your payment system and stay compliant is essential.

What fraud risks can businesses face?

As e-commerce continues to grow, security concerns continue to rise for brands. With such rapid changes in the industry, fraudsters can take advantage of companies that have had to adapt faster than they would have liked, looking for weak links and gaps in e-commerce infrastructure. Sophisticated bot attacks test payment types to check for system weaknesses and determine how to get orders through anti-fraud solutions.

Brands need a holistic multi-layered fraud approach to reduce transactional risk. Device intelligence, custom behavioral modeling, attribute-based rulesets, and consortium data can minimize retained rates and reduce false positives. It’s important to have the tools in place to stop fraud, without stopping the right customers from buying your products. Continuing to invest and adapt like fraudsters do is key to staying one step ahead of them. To be more effective, many brands find that working with a fraud prevention partner is often a better strategy than tackling the effort on their own.

What makes the cross-border trade journey so difficult?

While it’s clear that cross-border selling is full of opportunity and growth, getting there successfully is harder than it looks. Trading across borders requires a deep understanding of global markets and customer preferences. As more consumers make purchases outside of their home country, brands are expected to deliver seamless, localized and seamless experiences – from browsing to payment to delivery – regardless of location. where buyers buy from.

Brands selling overseas will also need to adhere to payment preferences, local tax laws, trade compliance, and customs regulations. It is crucial that sellers have a thorough knowledge of local regulations to account for the smallest deviations. Failure to understand the nuances of local regulations can lead to serious financial penalties and bad publicity. Additionally, compliance with these rules and regulations can have a significant impact on the customer experience. Brands need to ensure they have the right cross-border logistics systems, processes and technology in place to succeed and deliver the experiences their customers expect.

How does Digital River help businesses achieve a risk-free global expansion experience?

Businesses that cannot afford to develop their own cross-border trade strategy or lack the expertise to do so can partner with suppliers who already have the expertise to successfully overcome these hurdles. Digital River helps brands simplify and fuel international e-commerce growth by managing cross-border challenges on their behalf.

Low-code integration enables growing brands to localize payment experiences, automate tax and duty calculation, optimize fraud prevention, and streamline cross-border logistics. Our Official Merchant business model takes the risk and complexity out of selling internationally. We take on the financial and legal responsibilities that come with global expansion so brands can focus on the customer experience and what they do best.

To learn more about how to future-proof your e-commerce business with a solid cross-border strategy, look at this article.

About Tim Laudenbach

Tim Laudenbach is the Director of Risk Management and Fraud Operations at Digital River, responsible for developing and deploying custom fraud strategies for client organizations as well as managing day-to-day operational volumes. Tim has extensive experience helping companies manage risk with cutting-edge techniques and technologies. He uses his in-depth knowledge of fraud and chargeback solutions, and extensive experience in implementing authorization and settlement strategies, to minimize spend and limit big brand exposure.

About Digital River

With over 25 years of experience, Digital River has mastered global commerce. An industry disruptor from the start, our Global Seller Services make it easy to expand global commerce to help businesses of all sizes increase revenue by providing buyers with a localized shopping experience in OVER 200 DESTINATIONS worldwide . Using our flexible APIs that combine payments, tax, fraud and compliance into one integrated solution, brands INCREASE CONVERSIONS, turning browsers into buyers as they sell virtually anything to anyone, anywhere. anywhere in the world. CHOSEN PARTNER of over 3,500 global brands across the Americas, Europe and Asia, Digital River is global commerce made simple.

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