E-commerce and various models
When transactions including the purchase or sale of goods, the supply or receipt of services, the transfer of funds, or the transmission of data take place over an electronic network such as the internet, they are referred to as e-commerce transactions also referred as e-commerce. Providing services is also the part of the e-commerce services has been decided in the case of Google France SARL, Google Inc v Louis Vuitton Malletier SA and others. In this case, the European Union’s Court of Justice ruled that an online reference service that stores information supplied by the advertiser qualifies as an information society service. And when these services are performed at international level called cross-border e-commerce. Here e-commerce stands for electronic commerce. There are generally four e-commerce models such as B2C (Business to customer) means when the business provides goods or services to end user, B2B (Business to business) means when deals in goods or services happens between two businesses, (C2B) which allows individuals to sells goods and services to companies and last is (C2C) where the customer exchanges goods and services and typically make their money by charging transaction or listing fees. In general, the goal of cross-border e-commerce is to develop the business, discover new markets and buying targets, export what they have to a larger audience, and raise the profit ratio of the company. However, there are several problems that businesses face when doing online commercial activities, which may jeopardise their plans to grow their operations internationally. As a result, this paper will cover the obstacles of the cross-border e-commerce transactions, as well as the evidence that supports them and the solutions that may be utilised to address these issues and assist boost business at an international level.
With the advancement of technology, businesses are expected to have the ability to provide their goods or services worldwide. As a result, the company makes an effort to deliver the finest deals to clients and to please them. But there are some challenges that are facing by a business in the current time concerning to the e-commerce business. These challenges are-
The language barrier- Language barriers are quite typical in cross-border e-commerce transactions. In general, while conducting commercial activities online at a global level, services to supply goods and services to customers are often given through online shopping platforms that are available to shoppers regardless of the languages they speak. When these browser-based translators or online buying systems do not support the customer’s language, problems arise. The e-commerce company’s ability to contact customers who speak languages that the translator does not understand becomes nearly impossible. And this flaw has a greater negative impact on the business.
Credit Card Authorizations- Due to a rise in financial fraud, online retailers are having difficulty authorising credit cards used by customers. As a result, most merchants insist on using an Address Verification System for all of their transactions. As a result, this action by online merchants excludes customers from countries where the verification method is ineffective.
Currency concern- There are a number of international e-commerce sites that exclusively accept one form of foreign currency. This condition makes it difficult for consumers or shoppers to purchase items using their own currency. They demand that customers convert their own money into the needed currency. As a result, this is one of the issues that makes it difficult for consumers to be drawn to the goods or services offered by companies operating across borders.
Challenges in cross-border e-commerce transactions
Legal Regulations- Compliance with the legal requirements of the country in which the business is operating is significant in any business because if the business fails, it may be subject to a larger legal penalty as well as other legal duties. However, because to the complexities of the other country’s legal rules, it can be difficult for businesses to comply with them. As a result, this is one of the most significant challenges in conducting cross-border e-commerce transactions. Here the business is required to be complied with the international rules and regulation of established over cross border ecommerce and also the rules of Information Commissioner’ Office which is the regulatory authority for all the ecommerce transactions operated from UK
Poorly-targeted Marketing- Market strategies play a vital part in expanding the global e-commerce business. Businesses, on the other hand, are unable to comprehend the personal tastes of customers from all over the world. Adopting targeted global marketing methods could also be costly for them. As a result, the firm is unable to implement suitable marketing strategies at times owing to a failure to comprehend the customer’s requirements and at other times due to a cost issue, resulting in a loss of cross-border e-commerce transactions.
Shipping concerns- When trying to ship items to customers in different parts of the world, online retailers frequently run into problems. Their financial resources may restrict them from shipping things purchased to a global audience. This challenge encourages them to concentrate their efforts on a local market. In this way, the challenge of determining the precise price of a product is also a source of concern for consumers, as corporations fail to incorporate all of the factors that would be included in the product’s total landing cost.
So, these are the difficulties the company has while doing transactions online at the international level. These challenges in the business at the international level have an impact on business growth, and as a result, a business organisation is less available at the global level to perform its business activities because these challenges take time to resolve, and sometimes due to market competition, a business loses the trust of its customers, and customers are drawn to other businesses that offer all of the same services.
As a result of the research, it was discovered that 90 percent of UK ecommerce start-ups failed within 120 days. And the top ten causes for this have been identified. As per an analysis report in 2020, it was found that at least 22% of the revenue had been decreased in the businesses. Some of the reasons include poor internet advertising, lack of online search exposure, cash flow concerns, almost no market for their products or services, retail giants controlling a large share of the sector, and being outcompeted. Customer service is lacking, as is teamwork, and product timing is off. These factors must be studied and addressed as soon as possible because these issues have a negative impact on the business. As the company begins to make money, it builds a better reputation in the market by reaching out to a larger number of potential clients through cross-border ecommerce. However, if the business does not function correctly and does not take difficulties seriously as a result of the aforementioned factors, the business criteria in the market will gradually deteriorate, and after offering so much, the business stability in the worldwide market will come to an end. And the likelihood of profit is nil. Not only that, but it also has negative impact on the business in domestic market, lowering the company’s share market price, causing a loss of stakeholder trust, a low profit-making ratio, a shortage of cash, and maybe leading to the company’s dissolution. As a result, these difficulties must be resolved on a timely manner in order for the firm to avoid the aforementioned problems. As a result, this paper will go over the approaches that can be employed to solve the issues mentioned above in cross-border ecommerce.
Language barrier
Cross-border ecommerce raises new concerns that must be addressed. Planning ahead and understanding exactly what is required, on the other hand, can help to avoid problems in the future. As a result, some of the strategies that a firm can utilise to lessen the problems in e-commerce are listed below.
Offering landed cost transparency- The true cost of the product must be communicated by the seller to the consumer by including shipping charges as well as additional taxes and tariffs. Consumers may not have been surprised by the additional price in the goods at the time of delivery in the past, but that is no longer the case. As a result, it is the responsibility of the firm to give the consumer with an exact pricing at the moment of order placing. Here also at the time of entering into the transactions, the e-commerce business should also provide all the necessary details to the customers in case of any discrepancy. This has been decided in the case of Bundesverband v Deutsche Internet Versicherung. The relevant court in this instance confirmed that a company may be required to disclose additional methods of communication in addition to its postal and email addresses. Not providing company e-mail is inconvenient for the customer because it would create difficulty to contact.
Furthermore, in order to eliminate shipping-related complications, the company’s website should always have a constantly updated, informative foreign shipping policy.
Provide a multilingual website- To overcome the language barrier in cross-border e-commerce, businesses involved in the trade must use multilingual websites, making it easier for consumers to trade or receive goods and services. Moreover, in order to keep the website’s material entertaining, the organisation should employ image and content that are culturally suitable and relevant. Failure to do so may result in the business’s intended clients becoming alienated.
Enable payments in the customer target market’s local currency- When doing cross-border e-commerce operations, it is also vital for the company to give consumers with the ability to pay for the goods or services they have gotten in their own currency. For this, a simple option should be given on the website to assist customers in determining how they are obliged to pay.
Provide local payment methods- To eliminate the issue of credit card authorization in cross-border e-commerce, the company website should offer choices to take a wide range of payment methods. Distinct geographic regions have different payment preferences.
Consult a professional- Before engaging in cross-border e-commerce transactions, the company should engage with legal professionals to avoid future legal issues. To avoid all of these problems, it is important to seek legal advice in order to determine the best fiscal optimization approach for moving forward to separate the business from the penalties. This has been decided in the case of Date Advertising DmbH v X and Martinez v Mirror Group . The Court of Justice of the European Union ruled that a country’s legal requirements may be more or more difficult than the legislation of the country where the business is located, but that the corporation must comply with them.
Credit card authorizations
Research on customer preferences- In cross-border ecommerce, satisfying customers by providing goods that meet their preference is critical because if they are not satisfied, there will be no motivation to conduct business, and this will have an impact on the business’s long-term viability because customers will not pursue further dealings with the company. As a result, it’s critical to first understand the customer’s wants and then present them with products that meet those demands.
Conclusion
As a result of the discussion, it can be concluded that if a business wants to expand their business activities outside of their domestic market, ecommerce is the best way to do so because ecommerce is a platform where all business activities are performed online, making it easy for the business to reach consumers all over the world, explore their business service at an international level, increase their market goodwill, and so on. However, because businesses operate on a global scale, the rules in different locations regarding how to conduct business activities differ, which businesses must grasp because if they do not, it will be impossible for them to stay in business on a global scale. Not only that, but the ferocity of these international business laws has an impact on their own market as well. As a result, while conducting business via ecommerce on a global scale, it is critical to consider the norms and regulations as well as the preferences of the customers in the location where the business is conducted.
References
Journals/Articles
Cardona M, and Martens B, ‘Supply-Side Barriers To Cross-Border E-Commerce In The EU Digital Single Market’ [2014] SSRN Electronic Journal
Gomez-Herrera E, Martens B, and Turlea G, ‘The Drivers And Impediments For Cross-Border E-Commerce In The EU’ (2014) 28 Information Economics and Policy
Huang S, and Chang Y, ‘Cross-Border E-Commerce: Consumers’ Intention To Shop On Foreign Websites’ (2019) 29 Internet Research
Martens B, ‘What Does Economic Research Tell Us About Cross-Border E-Commerce In The EU Digital Single Market?’ [2013] SSRN Electronic Journal
Xue W, Dandan L, and Yilei P, ‘The Development And Current Of Cross-Border E-Commerce.’ [2016] Whiceb
Case laws
Bundesverband v Deutsche Internet Versicherung (2008)
Google France SARL, Google Inc v Louis Vuitton Malletier SA and others (2010)
Date Advertising DmbH v X and Martinez v Mirror Group (2011)
Others
Chai W, ‘What Is E-Commerce? Definition And Meaning’ (2021) <https://www.techtarget.com/searchcio/definition/e-commerce#:~:text=E%2Dcommerce%20(electronic%20commerce),or%20consumer%2Dto%2Dbusiness.> accessed 15 April 2022
‘Changing Consumer Preference Towards Online Shopping, Increasing Cross-Border E-Commerce Trade, Government Initiatives And Collaboration With Private Players Expected To Drive The UAE CEP Market: Ken Research’ (Prnewswire.com, 2021) <https://www.prnewswire.com/news-releases/changing-consumer-preference-towards-online-shopping-increasing-cross-border-e-commerce-trade-government-initiatives-and-collaboration-with-private-players-expected-to-drive-the-uae-cep-market-ken-research-301460374.html> accessed 16 April 2022
Edwards R, ‘90% Of UK Ecommerce Startups Fail Within 120 Days’ (2019) <https://www.enterprisetimes.co.uk/2019/07/19/90-of-uk-ecommerce-startups-fail-within-120-days/#:~:text=The%20vast%20majority%20of%20eCommerce,operation%2C%20new%20research%20has%20revealed.> accessed 16 April 2022
‘The Basics Of Cross-Border Ecommerce’ (Essential Business Guides, 2021) <https://www.zoho.com/inventory/general-faq/what-is-cross-border-ecommerce.html> accessed 15 April 2022
‘Understanding The Challenges In Cross-Border Ecommerce’ (Pitney Bowes, 2021) <https://www.pitneybowes.com/uk/global-ecommerce/case-studies/the-challenges-of-cross-border-ecommerce.html> accessed 15 April 2022
Webber D, ‘Cross-Border Ecommerce: Three Challenges Defining The Next Decade’ (2021) <https://www.forbes.com/sites/danielwebber/2021/03/24/cross-border-ecommerce-three-challenges-defining-the-next-decade/?sh=6496245f3a3a> accessed 15 April 2022
‘Your Guide On Cross-Border Ecommerce – Market Finder By Google’ (Marketfinder.thinkwithgoogle.com, 2021) <https://marketfinder.thinkwithgoogle.com/intl/en_gb/guide/cross-border-ecommerce/> accessed 16 April 2022
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
