Cross-Border E-Commerce Or E-Export?

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on twitter
Share on facebook
Share on linkedin

Cross-border e-commerce is among the rising trends. Since this practice has serios opportunities, it attracted attention from manufacturers, exporters, brands and e-commerce companies. As in all newly built industries, some topics in e-commerce are confusing.

While there are those who believe they will not be successful in cross-border e-commerce, there are also those who can be successful. There is one important topics about cross-border e-commerce or e-export confusion which is the business model. In this article, we will look at the business models. To understand the difference between cross-border e-commerce and e-export, we need to understand the business models. First, we should tell the fundamental differences between cross-border e-commerce and e-export.

How To Make Cross Border E-Commerce?

In cross-border e-commerce, work flow is as follows:

  1. Business model is selected. I have mentioned business models in detail below.
  2. A target country is selected. A company is established.
  3. Depending on target country and business model, B2B or B2C digital/traditional marketing plan is created.
  4. Bank accounts, PayPal account and other payment methods selected for target country are activated.
  5. Agreements are made with a fulfillment centre in the target country or a storage is opened. Shipment agreements are made.
  6. Products are shipped to the target country inventory centre with a container rather than one by one.
  7. Orders are delivered from inventory centre to the shipment company and to the end-user.
  8. All content, graphic design or website management can be done from any place on the world independent of the location.
  9. While customer service change based on business model, it is possible to provide this from anywhere. I recommend “The World Is Flat” book by New York Times author Thomas Friendman.
  10. Depending on the business model, all payment collections are transferred to the bank account in the target country. The money in the bank account in the target company is transferred to the main company with the invoice provided from the main company. And all of these can be done online.
  11. Company profitability and tax calculation for the target country company can be shaped by central company revenue/profitability policy. This is an extensive topic that will not be covered here.

How Is E-Export Done?

Business flow process for e-export is as follows:

  1. Business model is selected. (I have mentioned business models in detail below.)
  2. A company is established.
  3. Bank accounts, PayPal account and other payment methods selected for target country are activated.
  4. Shipment agreements are done with international shipment companies with Electronic Commercial Customs Declarations. Express and economic shipment agreements can be done for long and short delivery times.
  5. The orders are send to end-users in the target countries one by one with micro export.
  6. Depending on the business model, all payment collections are transferred to the bank account in the target country. The money in the bank account in the target company is transferred to the main company with the invoice provided from the main company and all of them can be done online.
  7. All content, graphic design or website management can be done from any place on the world independent of the location.
  8. While customer service change based on business model, it is possible to provide this from anywhere.

Amazon And Cross-Border E-Commerce

Now, let’s check business models. Because this will determine that you should choose cross-border e-commerce or e-export. We can consider them in three ways.

  1. Amazon: We will divide marketplaces as “Amazon and others” and we will start with Amazon. Because Amazon is such a game that your entire business model must be optimised for Amazon once you start selling on Amazon. There are various reasons but I will not cover them here since it is long enough to be another article.

On Amazon, you can send your products to customers in 3 ways: First one is FBM or Fulfillment by Merchant. In this model, you use your central inventory with e-export. Second one is FBA or Fulfillment by Amazon. In this model, you sell your products to your company in the target country. You can deliver the inventory to Amazon warehouses as containers. But the important thing to consider here is to prepare the inventory based on Amazon storage standards. Otherwise, your inventory might not be accepted by Amazon. This case, you are involved in cross-border e-commerce.

Third one is Seller Fulfilled Prime which is your product is listed on Prime like FBA and you deliver from your inventory with the same day or next day delivery depending on the order time. Since it is impossible to deliver from a central warehouse to a target county on the same day, you need to use your warehouse in the target country. This case, you are involved in cross-border e-commerce not e-export. Because you send your products in containers to target country warehouse and deliver to end-user from there.

In short, if you are selling on Amazon, you can both have cross-border e-commerce and e-export. This might change depending on your inventory turnover, product-based logistic costs and pricing. It is not possible to talk about single correct application.

Marketplaces And Cross-Border E-Commerce

  • Marketplaces: Each country has horizontal or category-based vertical strong marketplaces. I will give two platforms as an example to clear explain this topic. To represent B2B2C model, we have German retail giant Otto in fashion vertical and to represent B2C in all other categories, we have Russian Ozon which is similar to Hepsiburada.

Otto is a retailer that operates with marketplace reflex. The company invoices the customer, provides customer services and conducts product logistic/shipment processes. The company asks the suppliers to use its warehouse. The company enables the suppliers with trusted logistic performance to deliver from their warehouses but only if it is express delivery…

On the other hand, you need to have a company in EU and a tax number in Germany. In this case, you need cross-border e-commerce not e-export to work with Otto. You need to have inventory in the target country to deliver on the next day and even for this scenario, it is wise to work with multiple e-commerce platforms rather than one. Think about working with 3-4 giant marketplaces in the German market…

Well, how does Ozon work? In fact, this method is easier but will bring success over the long run. Ozon does not care about the logistic, customer services and invoicing. The seller must do all of these. Answering the Russian messages will increase seller performance. It is important to list the products with cash on delivery because 70% of the deliveries in Russia are cash on delivery. Therefore, you need to deal with the fastest Russian shipment company with cash on delivery service. Orders are send from the central warehouse to customers one by one with micro export. In this case, you do e-export.

E-Store And Cross-Border E-Commerce

  • E-Store: I believe that the most complex but permanent way of cross-border e-commerce or e-export is via web store. This topic should also be covered separately. For Amazon or other marketplaces, the ball was theirs and you played by their rules. But when you open an e-store, the ball is yours and you can play by your rules. The most important topic here is localisation. Don’t get me wrong, I don’t mean translating the products. You need incorporation in the target country, local payment method, local return address, local customer service lines, local customer representatives and localised digital marketing/social media activities. At this point, you will decide whether you will do cross-border e-commerce or e-export. You can manage all these activities from Turkey. Remove borders from your mind!

The most important point here is whether to do cross-border e-commerce by opening a warehouse in the target country based on logistic and shipment costs, e-export with ETGB from a central warehouse or create a hybrid model. If I have to mention without giving names, one of the most important retail stores in Turkey does cross-border e-commerce with the entire East Europe with Romanian warehouse at the Hungarian border because the firm believes that e-export is not possible due to price competition in that product group.

This is all shaped by product pricing and logistic costs. It might be misleading to mention one correct or one incorrect solution. For example, a diamond seller can work with both business models because pricing advantage enables that. On the other hand, if you are selling small but expensive products, cross-border e-commerce is wiser. Because the international shipment cost will be high.

In short, distinguishing cross-border e-commerce and e-export to start the job is the half of the job. Let’s wrap up with a comparative simulation. Let’s compare an e-commerce company in England and Turkey in the same product category.

 Average Cart CostDaily OutputAnnual Output Annual Revenue
Turkey (Lira)27050018250049275000
England (Pound)8650018250015695000

According to Statista, average cart amount in England was 86 pound for mobile and 95 pound for desktop in England. Let’s consider mobile cart average since mobile is rising. An e-commerce company with daily 500 packages will gain 15 billion 695 thousand pounds revenue which is 131 billion lira. In the same category, if we calculate the average cart amount for an e-commerce company in Turkey from 270 lira, we have 49 million 275 thousand lira annual revenue. The successful players prove that success is not that hard when you plan your game right. Now it is your turn!

You can click here to fill the form if you want WORLDEF ENTERPRISE senior consultants to reach you to clarify your cross-border e-commerce roadmap.

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed

Daha Fazla Yazı

Menu