Selling goods across borders is a big opportunity for small businesses in the U.S. and around the world. That’s not lost on them. The trouble is in how to get started — so most just don’t. According to new figures released by PayPal about the growing digital footprint of American SMBs in the global digital marketplace, less than 5 percent of all U.S. small businesses export.
The opportunity is a big one to be sitting out. PayPal reports that 79 percent of their U.S. merchants export goods cross border, and those who did saw their sales grow 22.9 percent year over year between 2015 and 2016. Those who didn’t, suffered — still growing, but a much lower rate: 7.8 percent on average. PayPal’s small business merchant base saw even more impressive growth: 32.8 percent year over year between 2015 and 2016.
So, if the opportunity is so big, why aren’t more small businesses taking advantage of the chance to up their revenue stream?
According to PayPal’s director of global initiatives Melissa O’Malley, it’s all about that nasty “f” word — friction.
“We hear constantly from merchants that they would like to expand into global sales, but they can’t … between translating their website, managing global shipping logistics, figuring out localized payments and even just deciding what countries to go to first, there is just too much to do.”
Large enterprise level firms, she added, have proprietary solutions in place for global sales, but for small and even medium-sized sellers, those solutions are not only too expensive, they’re the wrong fit.
“If you have an eCommerce site that is up in, say, five countries, it can quickly become almost impossible to manage things like just updating inventory in real time. It became clear to us that there needed to be a solution for merchants who want to play in the cross-border game but don’t want to become international logistics experts to do so.”
Which leads to today’s launch of PayPal Global Sellers, a new suite of cross-border trade tools aimed at making it easier for PayPal merchants in the U.S. to increase their international presence and sales.
“This is really about knocking down the barriers that get in the way of a small and medium-sized merchant that wants to expand outside of its domestic market,” O’Malley noted.
Those barriers include website translation, taxes/customs and duties presentment, international shipping and return facilitation and localized payments acceptance.
Push Button Ease for International Service
O’Malley explained that merchants who use one of the major digital shopping cart services (e.g. Magento, WooCommerce, Shopify) can access Global Sellers via a single API. Once integrated, PayPal Global Sellers — with an assist from Webinterpret — can translate a merchant’s entire website for foreign presentation within a week and update it “more or less” in real time from then on.
“So, if I am a merchant and I want to start selling in France, after incorporating the API, my shopping cart would be in French, the euro would be the site currency accepted, PayPal is provided as the checkout and the merchant is now able to sell to French-speaking customers and ship its products there without any hassle.”
But here’s the trick, O’Malley explained: From the merchants’ point of view, they are handling a domestic order which is shipped to a central hub where all local customs and duty issues are managed and addressed. The package is then sent from there to the customer. Global Sellers also supports local currencies, which O’Malley said helps merchants not used to receiving payments in that way do so via their PayPal account.
“We let our merchants look at things like how they want to handle costs and whether they want to just charge the translated price for goods, or if they want to set a premium for some goods in some markets,” O’Malley explained. She said that selling cross border is not a one-size-fits-all approach, and Global Sellers was created to provide that flexibility.
Matching to the Right Opportunity
One of the issues that merchants face in getting started on their cross-border journey is knowing where to target one’s efforts. In the beta phase of the project, for example, they saw that U.S. merchants looked initially in the U.K. and Canada — much as one would expect, given the lack of language barriers. But going beyond that is where merchants could use a helping hand.
Sometimes, O’Malley noted, merchants have some ideas about where they want to sell — based on where they see international demand coming from already. Another is from accessing PayPal data on what consumers want to buy and where so that merchants have every opportunity to optimize their cross-border efforts. This can lead to new insights into market trends that might not otherwise be visible — like the thirst among Brazilian consumers for luxury goods; or Southeast Asian customers’ enthusiasm for vitamins.
The point, she noted, is to take the pain away and make the costs a background consideration so merchants can start finding opportunities for growth.
Small and mid-sized merchants are excited about cross-border sales, and O’Malley said that they keep hearing from everyone that they need to sell internationally. The reality of taking that first step, however, is daunting — and a lot of hard work.
“It is exciting to not only show these merchants the opportunity that cross border provides them, but to now give them a complete solution and the ability to do it.”