Becoming more and more commonplace, it can be argued that cross-border shopping can quickly turn into a legitimate threat to any domestic producer or distributor. As an increasing number of B2B and B2C clients resort to this e-commerce model, cross-border shopping can quickly translate into revenue drop on the producer’s side, in extreme cases even resulting in shutdowns of local branches. How to successfully deal with this problem? Fortunately, we’ve got tools at our disposal that can help you limit the scope of commercial activities that bypass the producer.
How to actively challenge cross-border commerce?
First of all, we need to understand that clients perceive the company website as a reliable source of information about products. As much as 55% of customers choose the brand’s website for their shopping over any other touchpoint, precisely because they feel protected there and are certain they buy the original product. Also, for customers, brand websites excel over other sites in that they display more detailed product descriptions and post higher quality pictures. Building on this knowledge, the producers should align their distribution network in a way that potential buyers who visit their site are transferred directly to the authorized partner’s store. To further facilitate the customer journey, we should use tools that help us promote and support our partners’ operations. Without joint effort, convincing the customer to choose an authorized partner might prove impossible, especially if clients can buy the merchandise cheaper somewhere else.
A robust cooperation between a producer and a seller should be developed on a system of solid building blocks. Fair partner relations and mutual trust come first. To develop those values the producer should consider promoting partner stores on his website or on high-conversion social media channels. Our partners should know from the start that, allying with us, they will obtain the goods at a price that would be competitive towards the prices offered by the cross-border sellers. Also, product and marketing support will come to that. Next, product availability overviews of inventories in partner stores increase the comfort of all parties involved. For one, such insights allow to shorten producer’s reaction time to shortage situations. They also rule out instances of overstocking. Another cornerstone of good cooperation between producers and retailers is the advertising support our partners should receive from the producer. Product campaigns launched in collaboration with selected partners, where clients make a purchase form a landing page specially allocated for this purpose, will surely prove beneficial. In order to further motivate seller’s cooperation, more often than not producers prepare special loyalty programs, attractive incentives and awards schemes to reward high turnovers.
Why do clients choose offers from foreign markets?
The main appeal of a cross-border purchase for the client is still lower prices on the same products he finds at home. If by restocking abroad sellers can add a dozen or so percent to their mark-up domestically, their loyalty will inevitably rest with the lower-cost provider outside of the country. The 2017 report, ‘Cross-border commerce. Opportunity or Threat?’, shows that almost 45% of European customers choose to shop abroad due to lower prices there. Other factors that contribute to that choice are clients’ previous shopping experience and low delivery costs. Another core driver of cross-border purchases, which the report fails to mention, is that often the product in distribution is already prepared for the Polish market. This is the case with certain console games that are available with the Polish language option, whether they are procured from Poland, Canada, or the Netherlands. This inclusive sales strategy is further reinforced by consistent promotional campaigns and discount deals that are available on the foreign markets, but not in Poland. Product bundles are one of such marketing strategies. Having purchased such a bundle at a lower price abroad, the retailer can repackage the items at home, separating the set and customising the goods as separate products. In that way, a console-game bundle abroad becomes two individual products on the domestic market.
How can cross-border commerce become a threat?
First and foremost, if a seller decides to order goods from abroad, especially from a questionable source, they will have to take into account potential problems with warranty and complaints processing. The recovery procedures might dramatically overrun deadlines, and the local shop might simply refuse to take the product in for repair if it comes from a different region. We should not forget to factor in supply chain disruptions, which this year have been caused by the COVID pandemic. In fact, many suppliers are still struggling with timely deliveries and managing stock replenishment. In the light of these facts, partnering with local producers able to restock our levels on request seems the most reasonable and safest choice in the volatile market conditions. Cross-border acquisitions should be seen for what they are, that is a disservice done to local markets. As a matter of fact, despite recommendations, retailers lower down the prices beyond common sense, which makes clients shy away from official distributors and turn to offers from outside of the country. As a result, the money drains away from Polish distributors and producers, which might in turn be reflected in reduced funds those entities will spend on promotion and support of the local marketplaces.
How can cross-border commerce turn into an opportunity?
Let’s face it, cross-border sales means abundance of new commercial outlets and an influx of new clients. According to Ecommerce News, 24% of total sales in Europe comes from cross-border commerce.
New retail outlets are an opportunity for medium-sized and small businesses as, naturally, sales can take place via different marketplaces visited by bulks and bulks of customers daily. As the Polish Post (Poczta Polska) reports, the highest number of cross-border e-commerce purchases (CBEC) is made in German online shops, with the Chinese sellers as the runner-up, generating 20% of total sales. The third place on the podium goes to the Netherlands, bringing home 14% of closed deals. As the article asserts, “It is estimated that the global cross-border e-commerce market will grow by 27% in 2020 with respect to year 2019. This year the companies which take their development seriously, are adaptable and geared towards expansion will compete fiercely for the largest piece of the pie.” In all honesty, it would not be too bad if both producers and retailers could break this pie together for a shared advantage.
