A 2023 research by Boston Consulting Group reveals that e-commerce is projected to drive 41% of global retail sales by 2027. This is a significant share, considering that e-commerce accounted for only 18% of global retail sales in 2017.
But what is fueling the growth of e-commerce businesses?
The advent of covid 19 is one of the leading propellers of e-commerce sales. According to an IBM report, the pandemic accelerated the shift from brick-and-mortar stores to digital shopping by around five years. That’s insane!
Since the pandemic, businesses uncovered the potential hidden in the global audience and online sales. As a result, over 26 million e-commerce sites have been launched.
Besides, the world is continually growing into a tiny global village through digital transformation, offering a broader audience reach. Consequently, shoppers are looking beyond country boundaries for quality yet affordable products.
But how can the importer of record help optimize global sales for e-commerce businesses?
Previously, we unraveled the role of an importer of record (IOR) with regard to social media. Social media emerged as a critical contributor to e-commerce business sales.
In this article, we look at the importer of record in relation to e-commerce businesses and global sales.
Let’s dive in!
Relationship between importer of record and e-commerce
So you have set up your e-commerce store and are thrilled with the numbers showing interest in your products. You are excited that potential customers from all walks of the world are spending significant time in your store, browsing product catalogues.
But how prepared are you to move that product from your store to the customer abroad? Are you waiting until you receive an international order, then it takes you 60 days to ship the product to the customer?
Setting up an e-commerce store is one thing, and fulfilling an order is another.
One of the leading reasons e-commerce businesses are not fully utilizing the power of their stores is the hassle involved in fulfilling global sales. And that’s where an importer of record comes into play.
So, what should you know when developing your e-commerce supply chain?
Here are the four considerations you should make to streamline your e-commerce business for global sales:
1. Order fulfillment
You must not carry the weight of order fulfillment on your shoulders. What if you end up with more orders than you can handle? Third-party logistics providers like 3PL and drop shipping are excellent choices for startup retailers and e-commerce.
However, you need an importer of record to navigate cross-border complexities since you want to drive global sales. The better part? Established IORs can handle both order fulfillment and ensure customs regulations compliance.
Hence, you should choose an importer of record acquainted with your industry demands, regulations, and compliance.
We put together the five common mistakes you should avoid when choosing an IOR.
2. Return and refund policies
How did it feel the last time you were about to check out an item only to meet a “Goods purchased cannot be returned or refunded” policy? Or the return and refund policy was too complicated never to help.
You may think customers will always be satisfied with the products they order because they are valuable. But that’s easier imagined than done. For some reason, customers want to know if they can return the product ordered if it doesn’t meet their expectations.
And if your return and refund policy is complicated or doesn’t even exist, they may abandon their carts. Of course, there are varied reasons for customers abandoning their carts at checkout. But 16% of customers do it due to an unsatisfactory returns policy.
Hence, you must determine when customers can return a product, how they should return it, when to expect a refund, and how to receive it.
A good returns and refund policy balances a business’s financial and operational needs while providing the best customer experience.
3. Localization
Based on CSA’s research report, “Can’t Read, Won’t Buy,” 76% of customers prefer buying products with information provided in their local language. And if a business fails to localize a customer’s buying experience, it risks losing 40% of potential customers.
For instance, imagine you are in the UK, and the prices of products you’re interested in on an e-commerce site are given in US dollars. You may have to do a currency conversion to establish if you have enough funds for the items.
Even worse, if you are at the checkout and the site only accepts credit cards, and you’re not able to use.
Hence, from a global perspective, you want to ensure a personalized experience for your global audience, from local language to currency.
4. Customs regulations
From setting up your e-commerce site to shipping your goods across borders, you must ensure compliance with local and international customs regulations.
These regulations are based on the secure processing of customer data, order fulfillment, illicit trade, and global security for imported or exported items. We’ll dive deeper into the regulations in the next section.
Customs regulations for e-commerce businesses
E-commerce businesses must ensure that they operate within set standards and guidelines for their digital trade.
Here are some of the critical regulations they should comply with:
General Data Protection Regulation (GDPR) Act
If you are importing or exporting within the EU region, you must ensure compliance with the GDPR Act. This involves transparently handling customer data, obtaining their consent for the use of the data, and ensuring the security of their data.
Failure to comply with GDPR can lead to fines of up to 4% of your annual sales or €20 million.
Consumer protection regulations
Whether using social media marketing or influencers, you should ensure transparency in product information, fair pricing and reasonable contract terms.
For instance, the Federal Trade Commission (FTC) requires social media influencers to disclose any financial affiliations with e-commerce brands in the US.
The disclosure helps maintain transparency and honesty, helping consumers to make informed decisions, especially on sponsored content.
Intellectual property regulations
Respecting intellectual property rights is paramount to the success of your e-commerce business. This includes avoiding global infringements of trademarks, copyrights, and patents.
So, if you use intellectual property within your products, you must have legal consent from the owners unless you own the products. Otherwise, you will be subject to infringement penalties.
For instance, in 2022, Shopify had to settle textbook publisher’s lawsuit for failing to act on websites that were distributing pirated education publications.
Cross-border customs and shipping regulations
Every country has a list of prohibited and restricted goods for cross-border trade. As an e-commerce business owner, you must know the customs that apply to specific goods in the importing and exporting countries.
Generally, the importation/exportation of firearms, certain food products, and cultural products are restricted.
However, the regulatory authorities in each country determine the requirements for importing restricted goods. Even the list of restricted goods differs from country to country.
Hence, ensuring compliance with unique requirements, such as export licensing, is essential.
Additionally, when shipping online orders, you must be careful to deliver according to the promises you make in your adverts. This is based on the Federal Trade Commission’s 30-Day Rule.
The rule states that you must have a reasonable basis for believing you can ship a specific item within a given timeframe. For instance, if you guarantee a 15-day delivery, you should ensure the product will reach the customer in 15 days.
However, if your shipping timeframe is undefined, ensure the products reach your customer within 30 days.
Payment Card Industry (PCI) Data Security Standard
The PCI DSS regulation in e-commerce controls acceptable payment methods and processes. Since most e-commerce businesses accept credit cards and banks, they must ensure secure processing, storage and transmission of cardholder’s data.
Failure to safeguard payment information can lead to data breaches and massive losses. And in case of such losses, the business is liable.
For instance, the Ireland Data Protection Act fined Meta $277 million for alleged data scraping. The incident contributed to the compromise of the personal information of 500 million users in November 2022.
Challenges associated with regulatory compliance in e-commerce
Ensuring compliance with regulations and laws has never been easy. Here are the three critical reasons challenging regulatory compliance:
Diverse and evolving regulatory requirements
Every country has standards, laws and regulations for imported and exported goods. And these regulations keep changing with evolving technological advancements to cater to emerging needs.
Hence, e-commerce businesses must stay updated with every regulation change, which can be challenging.
Complexities in compliance procedures
Some countries impose stringent procedures for ensuring compliance, requiring you to have legal representation in the destination country. You must meet certain quantities for specific goods in other countries to file an import declaration.
These requirements can take several days to weeks until you ship the product, which could mean delayed delivery and penalties.
Lack of expertise in regulatory compliance
E-commerce is a business, and so is importing and exporting. If you are unaware of the regulations you must comply with, there’s nothing wrong with what you do.
The best decision you can make when starting your e-commerce business is to leave the global order fulfillment processes to the experts. That could mean hiring a third-party importer of record, a customs broker, or a consignee to take care of your shipments.
However, you should know the roles and responsibilities of each of the entities before partnering with them. We discussed the difference between an IOR and a customs broker previously.
How the importer of record can simplify global e-commerce sales
Considering e-commerce businesses’ challenges when indulging in international trade, the IOR can be beneficial in myriad ways.
Here are the critical ways in which the IOR can simplify e-commerce sales:
Reducing product entry barriers
IOR’s experience and expertise is invaluable in fulfilling customs requirements and paving way to foreign markets for your products. Here’s a summary what IORs do to eliminate entry barriers:
- Accurately classifying your products
- Identifying associated regulations, paperwork, and licenses
- Fulfilling customs requirements including duties and tax payment
- Identifying the safest yet cost-efficient means of transport to get your product to the destination country.
- Tracking your goods in transit to ensure they are safe and are delivered within the expected time.
- Representing you in the destination country for easy customs clearance
- Ensuring door to door delivery for your products.
That’s the least an established IOR such as Blackthorne offers to ensure a seamless product entry into foreign markets.
Reducing B2B supply chain management cycles
If you are selling IT equipment or delicate products that require special handling, you may find it challenging finding the right logistics provider.
What if you handed over your shipment to an IOR that handles all the supply chain processes, from safe packaging to safe delivery? IORs have partnered with logistics providers and warehouse managers to ensure the safety of your shipment.
Making it easier to build an international presence
Assume your e-commerce store is doing so well. And you think you need a physical location in the destinations with a high demand. But you have no legal representation in those destinations. Also, you don’t want any staff residing in those destinations.
An importer of record with an established local presence in those destination countries can help you ship and manage your products in the new destination.
Blackthorne even offers technical support for IT equipment in data centers abroad.
Securing your e-commerce business against non-compliance
Licenses expire. And new regulations are introduced. So, you must stay abreast of updates and expiration dates for your licenses to stay compliant.
IORs are masters in ensuring compliance and have tools to update them of any expirations and new updates.
Ensuring 100% customer satisfaction
When your customers receive their products in time, hassle-free, then you have potential returning customers. You also have a good reputation and stand a chance to expand to broader markets.
That said, are you facing the complexities of global e-commerce with Blackthorne? We are your global supply chain logistics partner and would love to hear from you.
You can send us a message, or email us at sales@blackthorneit.com so we can discuss how to drive more global sales with your e-commerce business.
