Turn cross-border commerce challenges into global opportunities

Overcome six ecommerce challenges as you scale your business worldwide

Ecommerce remains on a strong growth trajectory worldwide and is now a permanent part of the way people shop for a wide variety of goods and services. In response, retailers are jumping at the chance to expand their operations worldwide and gain clientele. And if they’re truly savvy, these retailers make extra effort to cash in on the rise of cross-border commerce.

In most markets, more than half of all digital consumers will buy from cross-border sites. But for these bargain-hunting shoppers, a successful online purchase goes beyond scoring finds on the cheap. Along with lower price points, cross-border buyers hunt for a seamless experience that personalizes tax rates, rules, and exemptions, so they’re not surprised with unexpected charges at checkout.

Meeting these expectations is easier said than done. Focusing on going global can feel like a full-time job. To successfully scale, businesses must stay compliant with international tax regulations while personalizing the journey for armchair-traveling purchasers. Without streamlining tax collection, manual processes greatly interfere with these business imperatives — and often can land you in hot water when key tax considerations are overlooked.

While these regulations might sound like a major hindrance to cross-border opportunities, they need not be. Companies are restoring confidence in accurate taxation, eliminating administrative burden, and automating how they file returns each month.

Based on our conversations with myriad brands, we’re revealing six common tax challenges faced by expanding businesses — so you can excel past them and enjoy cross-border opportunities.

Who wants to be a trillionaire?

Trends left and right suggest that the time to tap into the cross-border market is now. Online retail sales are expected to reach $6.17 trillion by 2023, with 57% of online shoppers having made at least one cross-border purchase. Moreover, cross-border purchases are expected to reach a value of $2.25 trillion by 2026. But if the cross-border hype sounds more daunting than doable, it might be prudent to consider the state of your customer experience and scalability.

For businesses already grappling with growth, that means crunching numbers on top of one-to-one catering. One retailer, Event Network, experienced that challenge firsthand. The company had to manage tax collection in more than 35 jurisdictions across two countries. Keeping track of changing rules was so time-consuming, it impeded Event Network’s efforts to expand.

Event Network knew it had to streamline tax collection and management to come out on top. This involved eliminating manual tax collection and record keeping. As a result, the brand felt more confident in its compliance with tax collection rules in each of its jurisdictions. Once Event Network achieved these objectives, it was able to grow without getting overwhelmed.

Getting there was impossible without identifying the tax complexities they were facing. But when growing brands can get past their tax collection hang-ups, they can focus on what’s most important — satisfying consumers who eagerly fill their shopping carts and hit “Purchase.”

Six common tax challenges in ecommerce

Avoiding these cross-border pitfalls ensures your business can grow its ecommerce channels with ease.

1. Delivering inconsistent customer experiences

An engaging, seamless customer experience helps drive purchase intent and cultivate a loyal customer base. Unfortunately, as brands scale into new markets, there may be growing pains — and touchpoints across the customer journey may grow apart in the process.

You can’t scale without increasing your volume of customers. With those customers comes the necessary evil of tax collection and compliance with global government regulations. Unless brands are working to personalize and integrate the customer experience, everything from the visual experience to tax calculations can become irrelevant to international consumers.

If you can find ways to turn manual processes into streamlined tax operations, you can provide a unified experience to the customer — regardless of channel or region.

2. Making taxes an afterthought

It’s imperative to factor in all applicable tax rates, rules, and tariffs in each country, region, and locality where you do business. Accurate taxes are critical to staying compliant — whereas failure to do so comes with fees, audits, regulatory fines, and tax claims.

Subsequently, customers experience inaccurate or inflated pricing, which significantly and negatively impacts the overall customer experience. You need to consider the wide range of tax rates and rules for every country and region that they sell into — and it’s critical to consider them prior to scaling online business so as not to end up with penalties.

Online retailers need accurate, up-to-date tax rates and rules for each of their transactions — no matter where their online followers call home.

3. Not navigating government regulations

In addition to tax considerations, each region and country has specific considerations with regard to the types of products that can or can’t be sold within each jurisdiction. As such, taxes, compliance, and government restrictions can often pose significant barriers to scalability.

Expanding commerce operations and engaging in cross-border selling takes persistence. Small to mid-sized organizations in particular must get past prohibitive mandates to avoid getting hounded by complexity. The more dated a merchant’s processes are to alleviating these burdens, the more likely it is that adhering to strict regulations will fall through the cracks.

You must consider new, more modern processes to lift the complexities associated with ensuring compliance and maintaining accurate tax rates.

4. Not personalizing experiences for global consumers

Personalizing the customer experience has become essential to success. Customers today expect a perfect, tailored journey that aligns with their unique buying habits and interests. But investing in personalization pays for itself by driving repeat sales and long-term brand loyalty.

Online commerce businesses can satisfy more customers by personalizing every component of commerce operations. You can deliver relevant:

• Product recommendations
• Personalized marketing — in terms of visualization as well as messaging
• Personalized payment options
• Personalized fulfillment options

You must do this while also factoring in personalized tax experiences that entail all applicable tax rates, rules, and exemption certificates for each customer.

5. Not managing data privacy

Protecting customer data is important not only for maintaining customer trust, but also for ensuring regulatory compliance. Some regions have very stringent restrictions on how to manage customer data, where customer data can be hosted, and where to send that data.

Some considerations to make when evaluating data privacy and sovereignty include determining where customer data is being stored, what types of customer data are being collected, what government regulations are in place for customer data, and how your tools and processes work when it comes to data residency.

Being aware of — and able to support — the breadth and scale of data residency and customer privacy requirements is vital to success.

6. Not offering the right payment options

Payment methods and options vary greatly across the globe. It’s imperative for businesses to consider the preferences of consumers that span continents, such as micropayments, the smallest units in which to collect payments, or what local currencies are used.

By providing support for multiple payment options, you can sell into new markets while also fully meeting and fulfilling customer expectations. But it doesn’t end there — merchants also need the ability to calculate tax based on the relevant currency for each market, which can vary since individual line items may require different rates or currencies.

Because it’s impossible to memorize all these factors, it’s important that you gain peace of mind by deploying tools that ensure each online transaction is 100% accurate.

Give tax challenges the axe

Delivering scalable, personalized online commerce experiences often means treading lightly to weigh various complexities. With Adobe and Vertex, digital retailers gain strategies to sprint toward scalability, knowing that automating the steps to ensure compliance takes care of the many intricacies of cross-border selling.

To get the full scoop on scaling commerce operations globally with ease, read our full eBook on best practices for scaling online commerce into new markets.