International

A Cross Border Commerce Case Study: uSneaker and Its Missing $10 Million

The world is global, so why isn’t eCommerce? MPD CEO Karen Webster hosted a digital discussion with BlueSnap CEO Ralph Dangelmaier and President of iGlobal Stores Clint Reid to get to the bottom of why 75 percent of merchants in the US aren’t capable of selling cross-border and how they can get in on this $4 Trillion opportunity. Dangelmaier and Reid walked Webster through a hypothetical merchant, uSneaker, and showed how they could capture the $10 million in lost sales each year that come from buyers outside of the US that they can’t serve.

The world is global, so why isn’t eCommerce? MPD CEO Karen Webster hosted a digital discussion with BlueSnap CEO Ralph Dangelmaier and President of iGlobal Stores Clint Reid to get to the bottom of why 75 percent of merchants in the US aren’t capable of selling cross-border and how they can get in on this $4 trillion opportunity. Dangelmaier and Reid walked Webster through a hypothetical merchant, uSneaker, and showed how they could capture the $10 million in lost sales each year that come from buyers outside of the US that they can’t serve.

 

THE $4 TRILLION OPPORTUNITY

Cross-border commerce presents merchants and innovators with a $4 trillion opportunity that many merchants miss out on because they cannot serve customers cross-border. In fact, 75 percent of U.S. merchants are not set up to sell cross-border, at the same time that e-commerce is growing gangbusters on a worldwide basis.

To make this real, BlueSnap CEO Ralph Dangelmaier walked MPD CEO Karen Webster and the PYMNTS.com digital discussion audience thru a hypothetical company, “uSneaker.” The profile fits that of many businesses looking to latch onto cross border sales.  uSneaker is an established, growing merchant since 2011 with strong sales in the U.S. and China. uSneaker, however, is experiencing a 92 percent shopping cart abandonment rate from shoppers who show up on its eCommerce doorstep and who are unable to transact and simply never get to checkout. uSneaker is also losing 56 percent of its sales because of surprising shipping fees that are not made transparent at the time of checkout. BlueSnap estimates that costs uSneaker $10 million in lost sales.

 

HOW CROSS-BORDER AS A SERVICE WORKS

As a small company without any cross border payments capabilities, uSneaker experiences larger than average abandonment; global stats suggest that about 67 percent of online shoppers abandon shopping carts due to payment issues – mostly because the site does not support local payments methods.  Obviously the goal for uSneaker is to increase its sales, go global with a local checkout, and do this all quickly and easily.

In order to improve its odds of reclaiming the $10 million in sales that it is losing every year, uSneaker, said Dangelmaier, would have two options: to build the capability itself, or to partner.

To build out cross-border capabilities itself, a company like uSneaker would have to do the following:

1) Establish a legal entity overseas

2) Establish relationships with local acquiring banks and processors

3) Build checkout pages that accept local payment methods and currencies

4) Present these pages in local languages

5) Optimize the pages for any device

6) Calculate and remit local taxes

7) Figure out costs of shipping, logistics, customs and duties

 

WHERE LOGISTICS COME INTO PLAY

But payment is just the beginning.  International order logistics can be extremely complicated because each country can have certain regulations and fees. 

Obviously whenever a package is shipped to another country, there will be duties and taxes associated with it and cross border buyers expect to pay those costs. But, those costs can be controlled by doing a better job of sourcing competitive carriers, making sure that the right size box is used, the right weight is calculated, etc. Also knowing what products and brands are restricted in specific countries so that products are not presented to customers that they can’t purchase because they won’t be allowed in the country.

 

THE INTEGRATION PROCESS

At the end of the day, said Webster, a merchant just wants to sell their stuff to people who want to buy up. And, they don’t want to give up on the ideathat they can get in on the $4 trillion opportunity. Building it themselves or even integrating to an API seems like it could take time and resources away from the “core” business and expertise that merchants have.

Dangelmaier and BlueSnap have a “cross border commerce as a service” platform that helps merchants reclaim what they are losing. uSneaker, Dangelmaier said,  could opt to  partner with companies like BlueSnap, which creates a localized checkout experience, increases payment conversions by integrating with multiple acquiring banks, and offering an easy, turnkey boarding process.

On the payments side, BlueSnap currently works with 180 countries, 30 languages, 60+ currencies, and 110 payment types. Its BuyNow Checkout is compatible with any device. For those who want marketing tools, BlueSnap has “mini Amazon-like interfaces” that allow merchants to sell via their storefronts. Offers that help  customers increase order value are also part of the platform.

While BlueSnap handles the localized checkout experience on the payments side of cross-border, iGlobal handles shipping and logistics to reduce cart abandonment and reduce the risk of unknown business costs.  The two companies have teamed up to enable an enhanced cross-border service.

iGlobal offers landed cost intelligence – calculating the fees for merchants based on the product, shipping, duty, tax, and front and backend fees per country. iGlobal also handles shipping services so that merchants have the option to easily identify and use any logistical provider they want.

iGlobal also manages the restricted international product (RIP) aspect of shipping. For example, if uSneaker had a line of shoes that are made out of camouflage material, since camouflage is restricted in Barbados, that option would not be presented to anyone coming to the site from Barbados, saving merchants time and money and avoiding customer disappointment. iGlobal’s RIP service allows merchants to restrict by country, category, keyword, brand, sku and delivery method.

In addition, iGlobal calculates billable weights of packages. It is important, said iGlobal President Clint Reid, for merchants to know the proper weights of their packages.  One particular merchant they worked with, he said, could have lost $40,000 on shipping based on not knowing the correct billable weight of their items. Regardless of whether merchants have complete data or not, iGlobal can perform rules-driven weight assimilation services to help ensure the most accurate international shipping weights and dimensions for all orders.

 

THE END RESULT

So, what’s a company like uSneaker to do?

Well, it could start simple and slow by testing out cross-border capabilities in specific countries. If it didn’t know where to start and wanted to test out new markets, it would have that option with just a simple integration. According to Dangelmaier and Reid, it typically takes a few days to get checkout pages set up, run test scenarios, and complete all necessary tasks. If the company decided to sell in Italy, for example, but then after a few months discover that they aren’t making money in that market, they have the option to pull out quickly. There are no contractual restrictions.

And while lots of competitors in the space have their own API strategies, BlueSnap can work with merchants if they want to use their own APIs. The company advises merchants on whether or not they should use their API strategies and pitfalls of building certain components themselves.

Merchants have not been quick to jump into selling cross-border because of the unknowns – they don’t know what they should do to service customers in certain areas, and they can’t calculate shipping costs, for example. It is a complicated process, depending on how large the merchant is, and they often do not have time to sort it out themselves, said Dangelmaier. It becomes an opportunity lost, he said.

 

 View the slides from this digital discussion below.

 

 

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