With the COVID-19 pandemic and its resultant acceleration in digital adoption by businesses, more and more entrepreneurs and brands are realising the value of expansion into newer markets and the opportunities presented by cross-border trade in driving increased revenue and acquisition of customers.
According to the Forrester report, cross-border shopping globally will comprise about 20% of all the e-commerce transactions in 2022 with a total transaction value of $627 billion. In fact, cross-border shopping has more than doubled in the past decade and today makes up for over 22% of the total online trade. According to a Payoneer report, India is among the top 10 countries for cross-border e-commerce growth. Besides generating revenue through inroads into newer markets, cross-border trade is an effective way for business expansion and brand awareness across the global market.
Despite the obvious benefits of cross-border trade like enabling businesses to scale up and acquiring new customers there are several other challenges that an exporter/importer has to overcome to secure a foothold into new markets.
1 Understanding the market and establishing your business: The biggest challenge that businesses face while tapping into newer markets is to understand the dynamics of that market. This entails studying the local laws and regulations applicable on new business ventures including its overall operations or dealings with local customers to ensure familiarity with the local culture and consumer habits.
Coordinating with partners who have already helped businesses establish their cross-border trade operations across different countries is critical. Through the Cross-Border Business Trade solutions offered by such partners, businesses can navigate the laws and regulations of different markets with ease and understand market-specific preferences and nuances, among others. Setting up a digital presence is also crucial as is ensuring that your website is set up with the multilingual option.
Regulatory compliances and paperwork: Once you expand your business operations and go global, you’ll have to deal with customers and merchants who are located in different parts of the world, which usually means familiarising yourself with different policies. Keeping track of different paperwork requirements, regulations, compliances, etc. for each market is crucial and the significance magnifies when multiple markets are involved. Cross-Border Business Trade Solutions and Services provided by banks like ICICI Bank can help a business execute their cross-border trade transactions with ease. By leveraging solutions like ICICI Bank’s Export Bill Regularisation, businesses can regularise their export bills online without any hassle and ensure that the eBRC is issued on time by the banks. This will also enable the exporter to claim incentives, if any, on the product exported on time. Export Bill Regularisation is a process where the export proceeds (Inward Remittances) received are mapped against the individual shipping bills (shipments) thereby, regularising the export transaction on the RBI portal known as EDPMS.
Benefits of Export Bill Regularisaton from ICICI Bank are :
Raise Transaction Requests digitally without a visit to the branch
Handle courier and postal shipping bill regularisation in association with logistics partners
Handle large volumes in the digital format through the Bulk Export Bill Regularisation facility
Free and automated FIRS issuance to exporters, reducing TAT.
2 Logistics and supply chain: With international shipping, it is of utmost importance to track orders and meet the committed timelines for shipments. It can also be difficult to communicate with the on ground logistics partners in other countries. Managing the paperwork related to supply chain and logistics management is also a challenging process. Digital solutions such as multi-carrier software platforms help businesses find the most appropriate shipping partner and plan routes for maximum efficiency. Having a local partner can also help you in communicating with local logistical partners
3 Financing: An issue faced by all MSMEs is financing. It is critical to ensure regular financial inflow and support while venturing into the global market. This will help businesses purchase or manufacture goods on time and reduce any financial strain that might crop up in the gap between selling the product and receiving its payment. Partnering with an institution like ICICI Bank can help a business get access to both pre and post shipment finances.
ICICI Bank also ensures that finances for businesses dealing with exports are more accessible, flexible, efficient and convenient.
4 Ensuring product quality & return policy: In today’s competitive environment, it is very important to have superior quality products at the right price. Also, consumers expect to have a fair and transparent return policy (especially from e-commerce businesses). This builds confidence for the product and the entity across the global market.
5. Payment method: Understanding the payment mechanism for each country and the various charges/costs associated with wire transfer is important. It is also recommended to route all cross-border payments through an Authorised Dealer in foreign exchange. Also, e-commerce exporters/importers may explore the OPGSP route as well to receive/ send cross-border payments.
As digital access and e-commerce continues to grow, it has become a necessity for businesses to establish an e-commerce platform/presence, if they want to scale and sustain their business. According to the Trade Promotion Council of India, cross-border e-commerce can actually play a key role in pushing India to its $1 trillion export vision. There is no doubt that moving into the global market can be very useful to businesses, especially MSMEs. However, it also comes with its array of challenges. In order to navigate these challenges, small businesses should choose partners to help facilitate smooth expansion beyond their home markets
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