Cross border e-commerce: How this new trade model is disrupting online shopping ecosystem

By: | Published: November 21, 2018 3:26 AM

With India witnessing rapid strides in terms of digitisation, now is the correct time for small medium enterprises (SMEs) to get along the force and reach out to a larger pool of customers.

Cross border e-commerce, india, online shopping, small medium enterprises, e-Commerce, e-Commerce in india, industry newsCross border e-commerce. (Picture for representation: Reuters)

With India witnessing rapid strides in terms of digitisation, now is the correct time for small medium enterprises (SMEs) to get along the force and reach out to a larger pool of customers. Online shopping, also known as e-Commerce, has disrupted the traditional shopping model and has brought a significant evolution in the way people used to shop. Shopping today is no more an occasional activity and we Indians love to shop, till we drop! However, millennial consumers love to experiment with trends and there is a new phenomenon that has quietly gained huge momentum as people prefer purchasing products from outside their borders.

What is cross border e-Commerce?

Cross-border e-Commerce is the new disruption in the ecosystem which refers to international trade between a business (retailer or brand) and a consumer or between two businesses and even with brands and wholesalers – via marketplace platforms such as Amazon or eBay. In simple words, cross border e-Commerce is process of purchasing products from outside borders.

According to a recent report by digital payment firm Paypal, Indian online shoppers will spend around Rs 55,000 crore buying products from other countries and that is expected to rise by more than 75 per cent in 2016. Likewise, in countries such as China, US and the UK, cross border e-Commerce is in full swing as consumers have become more conscious about affordable pricing with no compromise on product’s quality. A study conducted by Acapture states that India exports 16 per cent products to the US, 4.3 per cent to China and 3.3 per cent to UK using cross-border e-commerce channel. Similarly, when it comes to import, India gets 14 per cent of products from the USA, 6 per cent from the UK and 5 per cent from China.

“Across the globe Cross Border E-commerce is growing at 17% compared to domestic E-commerce and is projected to reach US$ 1 trillion by 2021. SMEs contribute to approximately 50% of domestic e-commerce but are able to get to only 5% when looking at exports. India, with 50 million registered SMEs stands to gain most by the momentum due to the large range of diverse categories that Indian artisans are able to churn out,” said Sanjay Keswani, Director (Global Platform and Strategic Alliances) of Eunimart, a cross border E-commerce startup using Artificial Intelligence (AI) technology to enable small merchants sell internationally.

Above mentioned facts and figures certainly proves that cross border e-Commerce is the future of online shopping and Indian SMEs can the prime beneficiaries of this new-age retail model by overstepping the geographical barriers to access global market with higher margins and larger chunk of consumers.

Major challenges of cross border e-Commerce model

Segments such as smartphones and other tech gadgets are popular in Arab countries and local consumers have strong purchasing power. But the oil-rich countries lack textiles and other light sectors, offering cross-border e-commerce opportunities for products like apparel. Acting as a catalyst, companies such as Eunimart helps Indian SMEs to reach out to a global audience. “By breaking down the operational barriers that revolve around Cross Border e-Ccommerce, Eunimart accelerates SME growth and launches them into the global marketplace. Through a thorough market research and experience, the platform caters to solve the 4 critical challenges faced by sellers such as payment, logistics, data intelligence and market access. “Through a deep study we were able to identify the roadblocks and issues that confronted merchants and sellers when they looked to expand their horizon globally. Widely speaking – lack of knowledge was the biggest challenge. This lack of knowledge spread – Where to sell, what to sell, what price to sell at, how to sell and other such significant aspects,” keswani said.

According to a report by Accenture, by 2020, over 2 billion e-shoppers, or 60 per cent of target global population, would be transacting 13.5 per cent of their overall retail consumptions online, equivalent to a market value of US$3.4 trillion (Global B2C GMV, growing at CAGR of 13.5 percent from 2014 to 2020).

In summary – Though the cross border e-Commerce model has just hit the tip of the ice-burg, but it is here to stay. The model is the need of the hours and both businesses and investors have sharp eye on it. Cross border e-Commerce needs a certain push in terms of investment as several SMEs have it already on their radar.

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