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Cross-Border

Ecommerce

Borderless Global Commerce


The Promise has Arrived:
With the rapid advancement in Digital and
logistics connectivity over the past
decade, B2C e-Commerce is pacing its
way to be a mainstream channel for retail.
By 2020, over 2 billion e-shoppers, or
60% of target global population1, would
be transacting 13.5% of their overall retail
consumptions online, equivalent to a
market value of US$3.4 trillion (Global
B2C GMV, growing at CAGR of 13.5%
from 2014 to 2020). Until now, B2C online
transactions have been mainly domestic
(supply and demand from the same
nation); however, cross-border
e-Commerce is taking over as the key
growth engine to B2C trade, with a CAGR
of 29.3% from 2014 to 2020.

Asia Pacific is leading the pack, not only in


overall GMV, but also in volume growth of
cross-border e-Commerce, contributing
53.6% of the incremental trade volume
over the period of 2014 to 2020 (Figure 1).
Western Europe and North America are
trailing at 18.9% and 14.4% respectively;
near-shore B2C transactions among EU
countries is the driver behind a relatively
high cross-border component in Western
Europe. Remaining emerging regions would
all experience rapid growth with domestic
and cross-border at almost same pace,
enjoying the maturity of borderless global
commerce.

Figure 1: Global Cross-Border B2C Market (sources: EIU, Industry Research Report, World Bank, Accenture Analysis)
Global cross-border B2C e-Commerce transaction value (US$ billion)

Western Europe

Mid-Eastern Europe

North America

918
502 13%
67
2014

19%
176
2020

Latin America
10%
61 6
2014

140 37%
53
2020

674 32%

402 18%
73
2014

51

13
2014

216
2020

Middle East & Africa


33%
15 5
2014

25%

60%
43 26
2020

48%
45
2020

93

Asia Pacific
1525
558 12%
71
2014

31%
476

2020

B2C e-Commerce
B2C Cross-border e-Commerce

2014-20
e-Commerce
Contribution
Figure 1 Global Cross-Border
B2Cincremental
Market B2C cross-border
(sources: EIU,
Industry Research
Report, of global total incremental
trade
volume
(billion
dollars)
trade volume (%)
World Bank, Accenture Analysis)
Asia Pacific
Western Europe
North America
Latin America
Mid-eastern Europe
Middle-East and Africa

405
143
109
47
32
21

53.6%
18.9%
14.4%
6.2%
4.2%
2.7%

Target population of 15-65 years old; sources: EIU, ISI, World Bank, Accenture Analysis

Values Beyond Bargains:

achieve that by cutting-through layers of


intermediaries. On the other hand, with
cross-border e-Commerce, B2C consumers
are seeking values beyond bargains, and
they vary across different countries
(Figure 2).

For most shoppers who make online


purchases domestically, besides
convenience and variety of selections,
bargains over conventional offline
channels is the most important value
driver no doubt, online merchants

Figure 2: Values and Categories (sources: eMarketer, Google & TNS: Consumer Barometer, Jul. 2015, EIU, Accenture analysis)
Cross border B2C e-commerce shopper penetration 2015 (% of population above 15 years old)
89%

88%
83%

70%

88%

86%

66%

85%
77%

89%
73%

71%

57%

50%

48%
31%

UK

USA

19%

France

18%

Germany

12%

Russia

48%

32%

30%
21%

Australia

67%

61%

23%
10%

Japan

10%

China

9%

Brazil

23%
16%
8%

Mexico

7%

23%
9%
1%

Turkey

India

Turkey

India

B2C cross-border e-Commerce (at least one purchase over 1 year)


Intemet penetration (mobile + broadband)
B2C e-Commerce (at least one purchase over 1 year)

Values pursued by cross-border B2C e-Commerce shoppers (%)

Australia

UK

USA

Appealing offer
Better price, services, payment tems

France

Germany

Russia

Better availability
Diversity of products

Japan

China

Better quality
Word of mouth

Brazil

Mexico

Trustworthiness of shop / brands

Product categories pursued by cross-border B2C e-commerce shoppers (%)

Australia

UK

USA

France

Apparel & accessories


Computer hardware, software & peripherals

Germany

Russia

Japan

China

Cosmetics, beauty & health products


Books, CD, DVD, games

Brazil

Food & grocery


Toys

Mexico

Turkey

India

Household good & furniture

Appealing offer is very consistent in all


countries (except Japan) as a key value
driver to cross-border trade (more so
than better price).
Western developed countries have
relatively higher share of cross-border
trade, driven largely by digitizable
intellectual products (Books, CD, DVD,
games).
Developing countries, in general, value
trustworthiness of shop/ brand, better
quality, and diversity of products
much higher than developed
counterparts. This could be explained by
the underdevelopment of multinational
retailing in developing markets, and all
the downstream issues of this (e.g.,
counterfeiting).
Product-categories-wise, apparel &
accessories scores highest as what
cross-border e-shoppers are pursuing.
China is exceptional where products
related to personal consumptions such
as cosmetics, beauty & health product
and food & grocery are also highly
sought-after.

A Disrupted Market Landscape:


Cross-border e-Commerce brings all
market participants on an even level
playing field. No longer are global
consumers only assessable by those
having resources to deal with
complications of global distribution or
costly market expansion. SMEs, especially
those born Digital, are the new (micro-)
multinationals in the game of
e-Commerce. When all gears in the
cross-border engine is well lubed, it is
indifferent to the shopper whether the
online purchase is domestic or crossborder. Cross-border online merchants
could compete as effective with domestic
offline merchants as they were on-shore.
OEM manufacturers would have
opportunity to market directly to end
consumers, eliminating all wastage
existed today in multi-tier distribution
and retailing (e.g., supply-chain
inefficiencies).

Implications to Enterprises and Governments


Challenges to Tackle:
Despite of early success in cross-border
e-Commerce as seen in number of
markets, there are still barriers to be
addressed in order for merchants to
capture fully the promise of borderless
global commerce. A study done by
Accenture on the European cross-border
e-Commerce market has unveiled impact
of barriers related to market-entry, law
and regulations, logistics, and localization
(Figure 3).
According to the survey, merchants are
most concerned with barriers related to
laws and regulations. Each destination
country has its own set of regulatory
measures in product returns, consumer
right protection, labeling and discounting
costs of compliance for cross-border
transactions add up quickly with

uncertainty. Many merchants still could


not provide full-landing costs (product net
+ shipping + duties and taxes) at the time
of transaction this in return discourages
purchase.
Barriers related to market-entry are
mainly costs associated with building
brand awareness in new markets,
especially when demand is yet to be
proven in initial stage. Some merchants
might choose to test the market with
listing on e-marketplaces first,
complimented with promotions to drive
volume, and at the same time understand
market perception on their products and
price sensitivity. However, this approach
could never build up brand nor customer
loyalty. Another cost-justification
consideration is the tailoring of product
and label to the new markets.

Other barriers are related to logistics and


localization. For cross-border purchases,
especially from long-haul offshore origins,
transition time could be unpredictable
with limited track-and-trace (e.g., postal
network). In addition, the reverse logistics
for return are costly and complicated
altogether dragging down overall
customer experience. Merchants also
need to consider complexity in translation
(e.g., for listing and customs clearance)
and aftersales services/ conflict
resolution. Besides, payment needs to be
localized to motivate purchases, and in
some cultures where pre-payment is not
preferred (e.g., Russia), effective COD
option needs to be provided.

Figure 3: Barriers to Cross-Border e-Commerce (source: Accenture European e-Commerce Survey)


Percentage of respondents who identified the issues below as barrier to cross-border e-Commerce

Market Entry

Laws and Regulations

Logistics

Localization

37-42%

38-47%

34%

Building awareness in multiple new markets

42%

Market-entry costs not justified for unproven demand

37%

Product return laws

47%

Cost of compliance with different national laws


regulating consumer transcations

42%

Discounting and sales laws (e.g., frequency of sales and


promotions)

41%

Differences in product packaging and labelling

38%

Customs clearance: duties and taxes

N/A

32%

Call for Action: Merchant Enterprises Call for Action: Service Enterprises
Destination market-entry: Merchants
need to prioritize destination countries
according to market demand (per Figure
2) and readiness (per Figure 3). Defining
marketing mix is a unique exercise of
identifying a small set of winner SKUs
and placing them at the right direct and/
or indirect e-channels (subject to local
consumer preference, and brand
awareness/ promotion strategy), and
finally offering the appropriate level of
discounts. For brand owners and
manufacturers: this poses the golden
opportunity to sell directly to end
consumers, and to reorganize sales
structure along customer demand (vs.
the tradition geographical structure in
brick and mortar distribution). For
retailers/ franchisers: many see crossborder e-Commerce as a channel for
introducing new products into an
existing market (lower barrier in
registration/ inspection/ quarantine/
taxation for certain supply chain
models). For new markets, they need to
refine distribution/ franchise agreement
to cater for geographic expansion.
Ultimate goal is to have alignment
between brand owners, manufacturers,
retailers, and franchisers, as such to
removing geo-blocking and geo-filtering.
Global operating model: With crossborder e-Commerce, all the sudden
merchants are challenged with a
complex array of issues in demand and
supply chain optimization, globally.
Fortunately, the consideration of sales
channels and logistics model could be
and should be decoupled. Decision on
e-channels should naturally follows
consumer preference and behavior
(e-marketplaces or direct webstore);
however, veteran merchants should also
anticipate Digital disruptions on
consumer front, and start adopting key
enablers accordingly (Sidebox 1).
Logistics model should be considered
with volume effectiveness (e.g., direct
shipment vs. bonded warehouse),
scalability (e.g., hub and spokes for
regional expansion), supply-chain
efficiency (e.g., nearshore to
destinations) and sourcing (e.g.,
outsourcing, as-a-service).

Industry ecosystem and platform


business: Service enterprises facilitate
merchants in carrying out the business
of cross-border e-Commerce (e.g., trade
platforms, logistics providers, payment
providers, customs clearance agencies,
marketing agencies, operators, etc.) In
such a dynamic environment, to stay
relevant, such organizations need to
anticipate continuous evolvement of the
market, and have a vision how their
business looks like in the future this
includes understanding their adjacent
industries and the interplays. For crossborder e-Commerce to reach farther and
inner into the destinations, there needs
to be collaborations between global
logistics players with the domestic ones.
Furthermore, logistics firms should
leverage technology to connect and
automate their assets and processes
(e.g., IoT, wearables, robotics), as such to
drive better track-ability and utilization.
Trade platforms, besides integrating
logistics and payment to create a larger
service platform, could also consider
cross-listing with those from other
countries and regions (i.e., marketplace
in a marketplace).
Private-Public cooperation: Crossborder B2C customs clearance requires
information from transaction, payment,
and logistics, each resides within
different companies and systems. To
ensure data integrity and to achieve
effectiveness, service enterprises should
consider data sharing mechanism with
governments. Companies should also
actively participate and contribute to
industry association, for the promotion
of cross-border e-Commerce, and for
channeling feedbacks and
recommendations to public
organizations.

Sidebox 1
Digital Accelerators:
Advancements in Digital technology
and Digital business models are
having significant positive effect in
accelerating the growth of B2C
cross-border e-Commerce.
Digital Communications
Infrastructure, such as messaging,
VoIP, and trade platforms, are the
key drivers of cross-border internet
traffic, connecting buyers and
sellers globally, and enabling the
tracking of goods and pre-/ postsales customer services. Crossborder social media connections
also play a part in cultivating online
sales e.g., China and other
developing countries in particular
rely strongly on word of mouth
before committing cross-border
transactions.
Digital Customer
Omni-channel technology enables
cross-border merchants with
domestic offline store to integrate
and compliment a seamless
customer experience (e.g., e-travelshopping). VR technology enables
those without any offline stores to
embed and mimic offline experience
digitally, as such to re-create
overseas travel shopping experience
virtually based on real-time
inventory information.
Connected Commerce
IoT technology not only generates
data for cross-border shipment
tracking (e.g., RFID), as such to
provide transparency and reduce
inventories, but also creates Big
Data, when built onto a platform,
would be leveraged for new business
opportunities with ecosystem
partners.

Call for Action: Governments


Offline/online infrastructure: Besides
strengthening transportation network
(e.g., rails/highways) and Internet
connectivity and speed, governments
should also consider working together to
establish a global platform (policy and
system), for information-sharing among
government agencies and service
enterprises (e.g., logistics providers,
payment and financial institutions, credit
bureaus, e-Commerce trade platforms
and operations agencies, etc.) as such to
streamline cross-border operations
globally, to strengthen end-to-end
transparency and risk management, and
to facilitate online complaint and dispute
resolution. Furthermore, governments
should establish electronic identity
management, and better yet collaborate
to define an interoperable global
standard to streamline cross-border
customs clearance.
B2C inbound e-Commerce regime:
Policymakers need to address legal and
administrative barriers that hinder crossborder e-Commerce, and to harmonize
customs and legal frameworks in order to
de-bottleneck clearance of goods.
Favorable terms could be given to B2C
import purely for personal use, for a
certain set of consumer products, within
a preset transaction and annual
thresholds. Because these measures
encourage declaration of B2C crossborder import, in many countries, they
also produce a parallel effect of
addressing counterfeit and taxation
leakage (e.g., due to haitao).

SMEs and startups environment:


Governments need to create a levelplaying field for SMEs and new startups
(merchant or service enterprises), by
nurturing an open, innovation-friendly,
and low-admin-burden environment for
them to participate in the cross-border
e-Commerce value chain. With the
aforementioned government platform,
SMEs and startups would have access to
knowledge about trade and consumer
laws, customs and taxations rules, and
other resources (e.g., financing, market
data about destinations, etc.) In
addition, governments should invest in
human capital (e.g., education, import of
talents), and IP right/cybersecurity
protection, in order to create a healthy
and sustainable development of the
business.
The stake is high with cross-border
e-Commerce. It is a moving-goal-post
game, where demands of cross-border
shoppers vary greatly by countries, while
at the same time competitive landscape is
continuously disrupted. To capitalize on
the next wave of mega growth, merchant
enterprises, service enterprises, and
governments all have their parts to play
in taking down barriers and in adopting
Digital accelerators but more
importantly, there needs to be
cooperation between regulatory bodies
across the world, and between public and
private sectors, in order to deliver the full
promise of borderless global commerce.

Author

About Accenture

Ivan Chan
Managing Director and Lead of Digital Transformation
Accenture Digital, Greater China
ivan.s.chan@accenture.com

Accenture is a leading global professional services company,


providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining
unmatched experience and specialized skills across more than 40
industries and all business functions underpinned by the
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their performance and create sustainable value for their
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