Hurricane Modular Commerce Limited
International ecommerce, also known as cross-border ecommerce, occurs when consumers and business purchase online from merchants, located in other countries and jurisdictions. Cross-border e-commerce enables businesses to enter into other geographical markets with ease and with that comes the necessity to comply with international trading legislation and regulations.
Research published by Pitney Bowes in 2014 has revealed that many of the obstacles to cross-border shopping can include:
- high shipping costs (68%);
- additional fees at time of delivery, including duties and taxes (58%); and
- too lengthy shipping times (42%)
These three dominant factors can result in the abandonment of a filled shopping cart. Doubts about the return procedure and costs can also represent a significant impediment to cross-border commerce. With respect to the total cost perceived by the purchaser, ideally the total cost (i.e. price) must be shown to the customer, and this invariably depends on where the purchaser is located.
There are a number of challenges associated with cross-border ecommerce, from regulatory restrictions and the plethora of payment options to the myriad of tax and liability variances throughout foreign territories. Retailers need to understand local business customs, consumer preferences and cultural differences, all of which affect decisions around inventory management and product marketing. Different infrastructure might also require local logistic and delivery services. In response, there is a growing need of ecommerce platforms to utilise innovative software solutions that enables retailers to handle multiple markets, marketplaces and sales channels.
Also, the present political landscape (particularly Brexit, coupled with increased protectionism from the USA such as the imposition of import tariffs on steel and aluminium) has created more trade uncertainty which is expected to create increasing changes to the legislative and regulatory environment. Also, as consumer online demand increases, service level expectations have risen when purchasing cross-border products from on-line retailers. The impact of poor customer experience both domestically and cross-border is resulting in an increase of cart abandonment.
Against this political backdrop, ecommerce growth is expected to rise dramatically in coming years: recent market research suggests that global cross-border B2C e-commerce will more than double over the next five years to reach $424bn by 2021. Cross-border sales will take an increasing share of online commerce, rising from 12% in 2015 to 15% in 2021. This rapid growth of B2C cross-border shipping is expected to place a huge burden on the custom clearance activities that are required to be performed by customs agents, postal operators, and customs authorities, requiring a better documentation of consignments and shipped products that will ultimately result in sophisticated pre-clearance solutions.
A recent media report has suggested that 46.1% of all cart abandonments occur at the payment stage, 37.4% occur at checkout login, 35.7% occur when the customer sees the actual shipping costs and then reconsiders, 20.9% occur when the customer has to enter their billing address; and 20% occur when the customer has to enter their shipping or delivery address. On closer inspection, the 46.1% of abandonments may occur on the purchaser discovering the actual cost of purchase after the shipping costs have been disclosed.
The Company is seeking to develop and launch a fully customs-compliant duty, tax and regulatory compliance engine which seeks to increase the successful cart rate purchases for the retailer via the provision of fully-landed costs, whilst also enabling cross-border shipping within the framework of full customs compliancy (including the collection and payment of Customs duties and taxes such as VAT and Goods and Services Taxes, etc). In doing so, the Company’s solution will support businesses to achieve their international compliance obligations, by efficiently providing an all-inclusive cost calculation for a shipment that is sent internationally. The Company purports that those retailers that actively manage cart abandonment can potentially recover lost sales and thus bolster their sales activities and thus gain a competitive advantage against competitors.