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The growth potential of cross-border ecommerce has not gone unnoticed for those in the ecommerce industry. According to reports, cross-border is speculated to reach $1 trillion by 2020. According to research by Accenture, more than 900 million people will be international shoppers by 2020.

Cross-border is an opportunity not to be wasted. DHL has definitely taken notice. The logistics giant has published a report, The 21st Century Spice Trade: A Guide to The Cross Border Opportunity, assessing the vast potential of cross-border logistics and last mile opportunities across the world.

Source: DHL

Why are people willing to shop internationally?

Although cross-border ecommerce may seem like an expensive hassle, respondents from DHL’s survey indicate that cross-border is appealing due to product availability and attractive offering, i.e. price. The top selling items for cross-border are fashion and electronics. However, consumers are beginning to search for cosmetics, pet care and sporting goods, which means all product categories now have cross-border growth potential.

Source: DHL

Here are the key takeaways from the report

  • Cross border ecommerce is expected to grow at 25% between 2015-2020, which is twice the pace of domestic ecommerce retailers and manufacturers.
  • Online retailers are boosting sales by 10-15% on average simply by extending their offering to international customers.
  • An additional boost for retailers comes from a premium service offering: retailers and manufacturers that incorporated a faster shipping option into their online stores grew 1.6 times faster on average than other players. This is also applicable to SMEs, not just global brands.
  • On a country level, demand is more fragmented than supply, with the US, the UK, and China accounting for closer to 30% of all global high-value demand (versus 60% of supply)

What are the challenges with cross-border ecommerce?

Having an attractive offering (including price) stands out as key to convincing international consumers to act. However, maintaining a long-term competitive advantage in terms of website appeal, broad range of payment options, and convenient customer service will be challenging for many e-tailers. The speed of delivery is also another key roadblock that often hinders the growth of cross-border  ecommerce, which means that for brands, picking a delivery partner is a key step to driving conversion.

Who can benefit from cross-border ecommerce?

Ecommerce giants

The most obvious contenders for cross-border selling. Multi-billion businesses have the budget to move abroad.  Amazon, for instance, has carefully gone market by market since the late 1990s and now generates 40% of sales outside the US. For Alibaba, on the other hand, sales outside China still represent less than 10% of its revenue.

Overall, survey respondents associated with ecommerce giants confirm their role as early movers: they report the largest average share of cross-border sales (15%) among e-tailers.

Pure online retailers

As ‘purely online players’, they can influence online shopping behavior easily. Cross-border selling can give them access to less penetrated market opportunities abroad, where further sales growth may be cheaper to generate even than in their respective domestic market.

Brick-and-mortar retailers

They report the lowest cross-border sales share (on average 11% of total sales) today, although by a small margin. They need to build out the digital capabilities that allow them to go head to head with online-first competitors. If they do manage to carve out their own multi-channel niche however, brick and mortar retailers may offer a unique cross-border experience for international shoppers.

What to think about before going cross-border?

  • The right product assortment
  • The global local website: localization is key
  • Warehousing and fulfillment
  • Delivery choices: speed is the decision factor and can be an effective conversion tool for brands and retailers

For brands that have the scalability and budget to test out international reception through cross-border ecommerce, they would be joining a growing market with a trillion dollar potential. The DHL report represents only a fraction of the surging industry, but has shed light on the various pros and cons that brands and retailers should keep in mind before expanding beyond their domestic market.

Download the DHL report here.

Nippon Express will work with ecommerce giant Alibaba Group Holding to ship Japanese goods to China for around 30% less than current prevailing rates, reports Retail News Asia.

The Japanese shipper will transport goods from companies doing business on Alibaba’s Tmall platform to China, while an Alibaba affiliate will handle the last mile delivery. Goods can either be delivered across the sea when ordered or shipped by surface in advance and then stored first  in warehouses.

In teaming up with Tmall, which controls 60% of China’s online retail market, Nippon Express aims to handle half of all online purchases headed there from Japan.

Currently, Japan Post ships 90% of online purchases traveling to China via airmail with its express-mail service. But a fee hike of around 30% in June to $13.68 for packages up to 500 grams has raised headwinds to the service’s use.

Nippon Express and Alibaba will also take on the complex business of dealing with customs for companies on Tmall. Following the changed rules regarding China’s cross border ecommerce in April, information needs to be given about what’s being shipped, prices and logistics are to be submitted electronically.

Nippon Express will be the first Japanese logistics company to create a digital link with Alibaba allowing this data to be combined and submitted in one neat package.

A number of Japanese companies are competing to offer better and cheaper shipping options to China, opening up opportunities even for smaller players in the market. For example, Yamato Holdings inked a partnership in April with companies including JD.com, Tmall’s smaller rival, to offer international shipping and home delivery.

Ecommerce is growing more important to Japanese companies as a source of continuous demand from China.

A version of this appeared on Retail News Asia on August 3. Read the full version here.

China Post Group, China’s state owned postal service provider and Lazada Group have entered a strategic agreement to enhance cross-border logistics solutions for Chinese sellers on the ecommerce platform, reports Yahoo Finance.

The collaboration will simplify the cross-border processes for Chinese sellers who want to expand their consumer market to the Southeast Asian region.

By specifically targeting Chinese sellers who wish to deliver lighter parcels, this partnership could trim down certain logistics costs for smaller merchants on Lazada and simplify the cross-border delivery process.

The partnership will also see the two companies collaborating on enhancing current delivery options for merchants selling small and light items. The companies hope to develop financial solutions such as micro-credit loans and online payment options for logistics fees.

Both China Post Group and Lazada have also expressed an interest in collaborating to find cross-border warehousing solutions, providing logistics training and seller-on boarding in the long term.

As Lazada looks to attract more brands and online merchants in the Southeast Asian region to bring a wider product assortment to consumers, China Post’s extensive network in the region will enhance the cross border partnership.

A version of this appeared in Yahoo Finance on July 12. Read the full version here.