Cross-Border E-Commerce: An Emerging Norm

Introduction

In the age of the internet, connectivity and the global village, cross-border e-commerce is a norm. As the e-commerce sector has evolved in the last 25 years, the cross-border e-commerce sector has also emerged. Subsequently, this entails international trading between different persons, entities or countries by eliminating any geo-blocking. In earlier days, many resisted buying or selling abroad. However, the total volume of cross-border e-commerce worldwide is nearly USD 412 billion (Villegas, 2019). While using cross-border e-commerce, the cost of information acquisition for any product or service is only a few mouse-clicks away, online shoppers are increasingly buying products or services from other countries across geopolitical borders. Also, in comparison to traditional cross-border trading entails multiple levels of inquiry and exchange of offers. Cross-border e-commerce allows making deals directly with buyers through cross-border e-commerce platforms by eliminating third-party links and the associated intermediate costs. In other words, cross-border e-commerce platforms have linearized the international trading process by removing the necessity of any intermediate links and eased the flow of information, funds and goods or services between entities belonging to different countries. Thus, it is a preferred way for many companies to develop a presence in many international markets by selling products and services from the company’s original country to the consumers who reside abroad (Ecommerce Europe, 2016).

Beside widespread penetration of the internet and the globalization trend, the changes in international trade policies and liberalization have played critical roles in increasing cross-border e-commerce globally. For instance, the enactment of the ‘European Free Trade Agreement’ and development of the ‘China Free Trade Area’ is to reduce the customs duties, tax, and ease custom clearance process. It is now predicted that 1 in every 5 US dollars traded would be attributed to cross-border e-commerce trading. This is an unparalleled opportunity for the retailers and manufacturers across the globe to capture international market share (DHL, 2018). After connectivity and trade policies, one of the major reasons behind the booming cross-border e-commerce is the superior infrastructures available mostly in the developed countries. The effect of infrastructures is highly evident in the countries in the European Union where on average more than 25 percent of the online shoppers make a purchase from a different country (Ding, 2018).

As online shoppers are now more comfortable in purchasing a product online, the emergence of cross-border e-commerce businesses has become consequential and obvious. Moreover, the growing demand increase is normally seen when better quality goods are available at a lower price. Apart from the driving forces, there are some barriers that commonly impede business operations. These are cultural and language barriers, marketing challenges, product quality assurance, regulation compliance, payment readiness and security, and logistic chains (Ding, 2018). These barriers cause high additional costs and overlapping requirements for the companies that want to conduct cross-border e-commerce operations. In order to overcome these common challenges, support from the government is critical to ease or remove these barriers. While the governments of the respective countries are able to ease the cross-border e-commerce operations, cross-border e-commerce managers must cope with challenges differently as the degree and structure of the challenges differ from country to country. Hence, along with government support, the cross-border e-commerce business has to actively execute effective solutions to address the challenges by following different timely strategies.