How Retailers Can Navigate Today’s Global Environment

This isn’t the first time we’ve seen market interruptions caused by a global event. We’ve seen many economic disruptions occur due to natural or man-made phenomena. In a globally connected world, with interdependencies spanning across borders, the impact of the current COVID-19 situation is having a particularly acute impact on the retail sector.

Recent social distancing guidelines have prompted a massive shift to online shopping, with e-commerce becoming a hero for many businesses. However, while some e-commerce businesses may currently appear to be struggling in their domestic markets, we're seeing opportunities emerge that can help these brands navigate the current circumstances and future-proof their businesses. One of these opportunities is entering new international markets to sell goods to consumers that are demonstrating stronger shopping behaviors and buying power. Cross-border e-commerce can help several brands kick-start sales, grow global business, or even recuperate sales. Here’s how:

Driving Demand and Expanding Revenue

In the event that a domestic market is saturated with many competing brands, ambitious businesses can look to international markets to drive demand. There are markets where the local availability of products is low, or the available alternatives are low quality and expensive by comparison. In the case of the current global environment, some markets may not be quite as impacted by the economic circumstances as others. As a result, consumers in these regions may demonstrate higher demand for goods, especially if the competition hasn’t yet entered those markets. Enabling your e-commerce business to sell cross-border means responding to global demand to grow revenue, while reducing dependency on one domestic market that may be seeing a decline in sales.

Mitigating Risks and Recovering Losses

Ultimately, cross-border e-commerce is a growth strategy, but it can also act as a hedge against unpredictable events or a strategy to help recover business. Expanding into several markets reduces a brand’s reliance on one market by presenting the benefits of geographic diversification. This approach gives businesses greater flexibility to operate so that when a setback occurs in one market, adapting to the new normal is easier and the business can more readily absorb the impact. Aside from reducing dependence on one market, having a presence in multiple markets is a way to recuperate losses that may have occurred in one locale. If a domestic market takes a turn for the worse, brands can invest resources into other markets to shore up sales and support the business as a whole.

Increase Reach and Improve Conversion

Many e-commerce brands in recent years have increased access to global audiences through social media and search. The global nature of these channels is indisputable, particularly as more consumers are online via mobile devices with easy access to both search and social media. If a brand’s online store can be found by anyone anywhere, then why not optimize the site for a global audience?

Since the start of the current global health pandemic, online retailers are seeing large percentages of their traffic coming from international sources, but only a small slice of that audience converts into customers. The upside for converting international traffic is enormous, but a website must be localized by offering multicurrency pricing, accurately calculated and clearly displayed duties and taxes, multiple local payment methods, and direct international shipping options. All of these functions are necessary for a consumer to feel like they're shopping from a local site. Brands and retailers should consider investing in automation technology to simplify the complexities in launching a cross-border business.

The path forward may be filled with unknowns, but certain facts are clear. We know that e-commerce will continue to be critical to retail’s future. Cross-border will become synonymous with online shopping as merchants and consumers realize that, like the internet, e-commerce should have no borders and will be among the leading trends of the new normal.

Juliana Pereira is vice president of marketing at Flow Commerce, an e-commerce solution for cross-border retailing.