Step by Step Season 7 Episode 5
March 25, 2022

[Step by Step] What are the Common Mistakes to Avoid in Cross-Border Commerce?

Welcome to the LAST episode of Step by Step Season 7! We can’t believe we’re finally here and we’re wrapping up the series with Peter van der Westhuizen! We’ll be covering all the mistakes to avoid when you take your business cross-border. Tune in now!

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this episode sponsored by

A Lesson in Complex Systems 

  • Peter is the manager of Strategic Partnerships at BigCommerce and works to help solve the pain points of tax and cross-border 
  • “Tax is one of the more complex issues that merchants have to work through when it comes to cross-border commerce.” -Peter
  • Localization, offering the correct payment gateways, and fraud management are just a few things that will help make a seamless experience for your customers
  • Shipping can be a big problem when it comes to cross-border. You need to look at having the right partnerships and you also have to consider how you are going to manage returns.
  • “Returns is often overlooked as a really core component of eCommerce, but it's so important when you consider the cost to acquire a new customer versus retaining a customer and keeping a customer happy and coming back.” -Peter
  • There’s a risk in that part of your experience as a brand operator is fractured and part is localized. 
  • “If you just do a little bit of research, have your homework done and in place, and have the right partner stack, it's very doable and the opportunity becomes better every day as a lot of these markets continue to grow. So I wouldn't focus on the complexity. I would just get the right strategy in place, get the right partnerships in place to help you take advantage of the opportunity.” -Peter

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Phillip: [00:00:10] Hello and welcome to Step by Step, a podcast by Future Commerce, presented by Avalara. I'm Phillip.

Brian: [00:00:16] And I'm Brian, and this is Season 7 of Step [00:00:20] by Step.

Phillip: [00:00:20] Wooo.

Brian: [00:00:21] Yes, and not only is it Season 7, this is episode five of five. So if you're just jumping in, go back to the beginning. This is the end. You started at the wrong spot.

Phillip: [00:00:32] Don't start now.

Brian: [00:00:32] Go back. So here's the thing if you haven't already listened, this is a five-part series where we dive  [00:00:40]into experts on cross-border forms of technology that power innovation to go cross-border.

Phillip: [00:00:50] And on that note, OK, because we're talking to experts, right? You've heard me say in this process, it takes a village, right? Like we've talked to experts, but [00:01:00] maybe you're ready to take the next step. We've prepared a guide for you so that you'll have the checklist and you'll have all of the things that you need, including a little bit of a glossary of how to think about cross-border. And rather than make you wait, why don't you go get the guide right now? And that'll be one more tool in your arsenal for you to have a preparedness checklist. This guide is over [00:01:20] 40 pages. It is beautifully designed, and we put it together with our friends who help us put this podcast together so that we could have the definitive cross-border guide to help you make a decision to going international with your brand. Go get it right now at FutureCommerce.fm/Crossborder and get the Step by Step guide to [00:01:40] going cross-border. It'll be a great read for you. All 40 pages of it. Very comprehensive.

Brian: [00:01:47] If you've been listening to this show for all four prior to this and you haven't been following along with the guide, you've actually missed out on half of what we've built [00:02:00] here.

Phillip: [00:02:00] Yeah. It's one-half of the story. Yep.

Brian: [00:02:02] That guide is essential for understanding what it takes to go cross-border as a part of the series. We built them together.

Phillip: [00:02:09] Yeah, and they are companion pieces. Have we given you enough reasons to go download it? Go get it at FutureCommerce.fm/Crossborder.

Brian: [00:02:18] Why is this so important? Because the [00:02:20] opportunity is so big.

Phillip: [00:02:22] It's big.

Brian: [00:02:23] Cross-border while complex and you've got to do it right, which is why we built the series, the opportunity in cross-border is that you can go acquire new customers for less money than you're acquiring them right now locally. And so that's why [00:02:40] we built this series.

Phillip: [00:02:41] But maybe not for long. If you're looking at cross-border as an arbitrage opportunity, think again. This is an opportunity for an entire rethink of everything that you put into place. It's a doubling down on people and processes and platforms. And if you have some [00:03:00] misconceptions about what it's going to take, we're going to get you a set straight here today in this last episode. We are wrapping up the series with a conversation with the Manager of Strategic Partnerships at BigCommerce, [00:03:13] Peter van der Westhuizen. [00:03:15] And he has an unbelievable amount of experience from the eCommerce perspective, [00:03:20] which is what I think a lot of marketers care about is the CX part of the cross-border journey. And we're going to cover some common mistakes that folks make. Everything in fraud management and security to non-guaranteed landed costs and localization. All those things that you probably are considering first, but maybe should be considering here toward the end. We very specifically [00:03:40] put this pod at the end of the series. It's a fascinating listen, and I can't wait for you to hear it. If you're in ops, this is for you. If you're a marketer, it's for you. If you're in supply chain, it's for you. But hey, why do I have to keep talking? Let's just get right into it. Let's join [00:03:57] Peter van der Westhuizen, [00:03:58] who is the Manager of Strategic [00:04:00] Partnerships at BigCommerce, as he takes us on the cross-border journey step by step.

Brian: [00:04:08] Hello and welcome to Future Commerce, the podcast about next-generation commerce, I'm Brian.

Phillip: [00:04:13] I'm Philip and welcome back. This is the last episode of our seventh season of Step By Step, where we have been on this journey [00:04:20]. Speaking of cross-border, I feel like we've come across all kinds of borders of our own understanding of how businesses are expanding into new markets and to wrap up this last and final episode we have with us the Manager of Strategic Partnerships at BigCommerce. It is [00:04:38] Peter van der Westhuizen. [00:04:40] [00:04:40] How's it going?

Peter: [00:04:41] Hey guys, how's it going? Thanks for having me.

Phillip: [00:04:44] Yeah, very good. We have been on quite the journey. I know that you have a very specific perspective at BigCommerce. Most everybody should recognize the name these days. A very successful eCommerce platform that's [00:05:00] powering so much of the eCommerce experiences around the web these days. Give us a little bit of a primer on your role at BigCommerce.

Peter: [00:05:09] Yeah. So I'm on the strategic partnerships team at BigCommerce, and I manage a lot of our cross-border and tax partnerships and really work with those [00:05:20] partners closely to really solve the pain points around these areas for our customers.

Brian: [00:05:28] Makes sense. It's funny how tied cross-border and tax are together. Tax is integral, if you will, to doing cross-border commerce. [00:05:40]

Phillip: [00:05:40] It's funny, I go to Orlando not so infrequently, Brian, and I go on "It's a Small World, After All," and I feel like we're one global community. We just have global open for trade community. It's so easy.

Brian: [00:05:53] Oh my gosh, that's like, imagine what real "It's a Small World, After All" would looks like going [00:06:00] from place to place. It would be like all kinds of borders and barriers... {laughter}

Phillip: [00:06:07] {laughter} There are no borders in that dark ride. But Peter, when we're, you know, we're kind of coming to the end of this journey, many merchants are about to begin theirs. What are some of the kinds of [00:06:20] things that folks on the big eCommerce platform have to think about as they're expanding into new territories?

Peter: [00:06:26] Yeah, I mean, I think you guys nailed it. Tax is definitely one of the more complex issues that merchants have to work through, but there are a couple of others that they have to consider when looking to take advantage of international [00:06:40] markets. And we think about the opportunity and it's so good right now. You got 2.26 billion online shoppers worldwide. And many of those are buying outside of the US. And so the biggest barriers, though, or things that our merchants would have to consider would be shipping, which is, I think, standard even [00:07:00] domestically. But shipping times, the shipping cost, and how you manage the returns process. Are you making that as efficient as you possibly can? Are you offering multiple shipping options that really meet the needs of the customer? Duties and taxes, right? The complexity [00:07:20] there is going to depend on the market that you're going into, but understanding what the tax compliance requirements are for each market, making sure that you're registered within those markets in the EU, for example, and in the UK. Brexit. A lot of those changes [00:07:40] that have recently taken place are adding a lot of complexity there too. Localization is another area that merchants really need to think about creating a really seamless experience for buyers in those markets, whether it be having a localized language and checkout, making sure your currency is [00:08:00] being displayed, especially if you have rounding that's being considered there in part. It's kind of weird to see something that costs ninety-nine dollars show up, as you know, eighty-nine pounds and fifty-seven cents, right? It's just weird. And so making sure that that's a seamless [00:08:20] experience and making sure that you're offering the correct payment gateways or payment options that the local market is used to as well will just help create a great experience. Fraud management, a lot of merchants need to be able to instill confidence that the customer is going to get the packaging, get [00:08:40] their product, that they're ordering. And the last piece, I would say, is really understanding how you're going to grow that and that market. Have a sound marketing strategy. The interesting thing here is a lot of times it can be less expensive to acquire a customer internationally versus domestically here in the US. [00:09:00] When you look at digital ad spend and where you're allocating those dollars, if you are ready to go after it and acquire customers there, you could do so cheaply and can be really profitable opportunity for you.

Phillip: [00:09:13] Wow. Oh gosh, there's so much to unpack.

Brian: [00:09:15] Yeah, I can imagine that it could also be really [00:09:20] costly if you don't know what you're doing. {laughter} And so today's episode, I think what we're going to cover is how to avoid some of those costly blunders. And so Peter  [00:09:40]as you understand it, maybe take us through some of the most obvious ways where someone could just have their costs blow out of proportion or maybe get into a market in the wrong way or offend somebody along the way. What are some of the [00:10:00] biggest mistakes that someone might commit when they start going down this journey?

Phillip: [00:10:04] And let's start actually in the first thing that you mentioned there at the top of the list, Peter, was I have yet to hear on this show in this series so far, the concept of returns, which is paramount right for us to have [00:10:20] a great customer experience. I have never thought about how challenging it could be for an overseas, cross-border shipment to actually be undone, so maybe start from there and talk about some of the challenges around shipping and returns.

Peter: [00:10:36] Yeah, absolutely. Look, I think when, depending on the [00:10:40] brand sophistication and size, there are really two paths that they tend to take here, as it pertains to their cross-border strategy. One is they either outsource their international expansion to an end-to-end solution to really manage and help them manage the complexity [00:11:00] or they manage it in-house and they have the ability to do that and can manage the cost there. Shipping is obviously a big portion of that. One of the biggest challenges, right? Do you have the right 3PL fulfillment network that's going to allow you to reduce your [00:11:20] shipping times, as well as the cost associated with each of those? Do you have the right relationships with the carriers to be able to offer those options? And then that sort of lends itself into that returns experience as well? How are you going to manage when a customer doesn't pick the right size or wants to return item [00:11:40] for whatever reason? I think [00:11:43] returns is often overlooked as a really core component of eCommerce, but it's so important when you consider the cost to acquire a new customer versus retaining a customer and keeping a customer happy and coming back. So making sure that you're working with the right returns [00:12:00] partner to manage that experience and make it as seamless as possible to really drive that repeat purchase for you [00:12:07] as well.

Phillip: [00:12:08] And the returns partner is typically a separate sort of relationship to your original shipping partner. Is that does that come just through a label creation? What does that [00:12:20] look like versus domestic versus cross-border?

Peter: [00:12:23] I think it's a very similar type of process. There's just more complexity involved. Because you have to obviously then get the label created, manage that process. There are partners that we work with that can make that process a lot smoother, [00:12:40] especially as it pertains to offering a credit versus just having a return sent back so on and so forth. So just really understanding how you want to manage that and what your strategy is there to create the best experience possible for your customers, I think is the key there. But yes, there is an added layer of complexity, so making sure you have the right strategy in [00:13:00] place is vital.

Phillip: [00:13:01] And an added layer of CX cost right for managing those returns coming back. Another trip across the seas. Brian, security is the thing that we often worry about too. Right?

Brian: [00:13:14] Yeah, I would say like I was just thinking about that. Returns are one side of it, but security [00:13:20] on the front side you can't return something that you don't even get. I would imagine there were some things to watch out for here, too, Peter.

Peter: [00:13:32] Yeah. And we happen to have a pretty great partner network here, too, that can really assist shipping insurance. It's something that has [00:13:40] really, I think, come to fruition in the last year or so. And now merchants can either purchase additional shipping insurance on a lot of these products or they can allow the customer to do the same, whereas it covers the porch piracy that takes place or the risk that the package [00:14:00] is not going to be delivered. And again, the benefits of the merchant as product is replaced if it's lost and again, a lot of us would be covered by the carrier too, but I think working with a shipping insurance type partner would definitely elevate the confidence [00:14:20] that a customer buying cross-border would have, that they're actually going to receive their package.

Brian: [00:14:27] Yeah, it gets back to CX again. The customer experience is just paramount here. I think that you mentioned you can acquire customers potentially cheaply cross-border if you do things right, but that [00:14:40] cost can get really expensive if you don't have a good customer experience on the back end. And instead of making a sale, you may end up with a headache which headaches just put it an equal sign direct to cost, not [00:15:00] to mention damaging your brand. So having those types of options, whether you're paying for them and not making that transparent to the customer or passing those costs off and saying, "Hey, customer, you have an opportunity to make sure this gets to you." I think that's huge as a part of this chain. [00:15:20]

Peter: [00:15:21] Yeah, I mean, [00:15:21] one of the core, I would say, errors is not really focusing on guaranteed landed cost or sometimes referred to as DDU or DDP, duties delivery paid or unpaid. Each of those has different variables, [00:15:40] but essentially it's when it comes down to merchant experience, if they're going to have to pay more to clear the product through customs a lot of times they're just going to say, "I don't want their product anymore." And now you're stuck with a product that's at customs, which you would have to pay to get returned to you or [00:16:00] write off as a loss. And then the customer walks away with a pretty negative experience, and they're probably not going to want to come back and purchase something from you again. So making sure that you're factoring that in and that comes through from a tax perspective as well, so the customer knows what they are expected [00:16:20] to pay and it's all factored in, I think creates a really good customer experience which is really important here. [00:16:26]

Phillip: [00:16:29] Are you considering selling to international customers? I think you are because you are listening to this season of Step by Step. We have partnered with Avalara to create a 40-page merchant's [00:16:40] guide to cross-border commerce. This new Step by Step guide will take you through all of the things that you need to consider when putting people, processes, and platforms into place to have a winning cross-border strategy. Cross-border sales are a great way to increase your customer base and drive revenue and position your brand for the future, but it's [00:17:00] not without complexity. You have to consider the customer experience. You have to have a comprehensive timeline. You have to understand compliance, custom duties, and tax requirements, and you have to work with a wealth of partners. Our eight step 40-page guide will help you to do that and create a winning cross-border strategy. Download [00:17:20] the guide for free right now at FutureCommerce.fm/Crossborder.

Phillip: [00:17:41] It's [00:17:40] amazing how each of these is so intertwined. All of these decision points. You wind up with so many layers of decisions around either software choices or evaluating the existing partner platforms that you have to make sure that they can facilitate the new needs that you're growing into. [00:18:00] And I find that to be interesting when you're talking about, well, landed cost is one thing. Maybe my existing platform for tax calculation or shipping provider can help estimate that. Back on that topic of security, a lot of fraud orders look like international orders to begin with. So you can't really [00:18:20] then cast this broad net to say that even from payments fraud perspective now you have to deal with this added complexity of is my payments provider, even if I have a global payments provider, are they able to catch when I might be being used as a fraud for validating stolen credit cards? [00:18:40] So there are so many of these reevaluations of existing platforms you already have, or determining whether or not you need to go looking for new ones. These are all so intertwined. I find that really fascinating too. Brian, what are some of the next things we need to think about beyond landed cost?

Brian: [00:18:59] The one last thing [00:19:00] that we need to consider when we're making mistakes, or at least it could be something that's a challenge is actual localization, right? It's funny that's the last thing on our list. I feel like that's something that merchants often go after first, but it's actually like the last step in the chain. But Peter, what are some [00:19:20] things to avoid when you're thinking about localization and how to go about doing it?

Peter: [00:19:25] Yeah, I mean, look, I think this is paramount, right? Probably the thing that's going to drive the highest lift and conversion for you as you expand into these markets. You could have a localized experience on the front end of your  [00:19:40]site. But then when you hit cart, it's all in English and in US dollars. That's less than ideal, right? So that's not something that you want to really have in place. Again, when you're looking at offering things in US dollars, but then having them pay in the local currency and having rounding be an issue [00:20:00] there, it just kind of gets weird and awkward for the customers as it pertains to their experience. So again, really an end-to-end localized experience, I think, taking into account which payment provider the local market really lends itself towards. I know that these vary [00:20:20] a lot within different markets. And so do you have the right strategy in place there to be able to essentially meet the shopper and provide a shopping experience that the shopper is looking for as they look to get to know your brand, making that as easy as possible for them, allowing them to shop the way that [00:20:40] they want to shop and the language that they understand that they're comfortable with is really what's going to drive the best results for you and your business.

Phillip: [00:20:49] You didn't say it, and I just want to point out that you said that there's this risk, this possibility that parts of your experience are sort [00:21:00] of fractured. Some of them are localized. Some are not. My sense is that there are eCommerce platforms out there that aren't capable of delivering the full experience localized end-to-end. Is BigCommerce one of the ones that can help to drive a common single back end that has localized front ends for international [00:21:20] expansion?

Peter: [00:21:21] Yes, BigCommerce can and does allow you to manage that localized experience in quite a few markets, I don't believe at all. But, yes, you can do it and provide that experience that they're looking for. But again, there are going to be additional layers of complexity there as it pertains to the [00:21:40] payment gateways. And again, it also depends on the partner or some of the tech stack that you're using at the time and whether or not those partners can actually accommodate a lot of the localization that you're looking to incorporate into your experience. So I guess the answer to that question is it depends, right? [00:22:00] Because it really depends on a lot of factors and the complexity that you've built around your eCom experience.

Phillip: [00:22:06] Well, there's nuance and building businesses? And there's not just a blanket truism for everything? Oh my gosh, what the heck? We have a podcast here. You're not supposed to say that. The other thing that's very concerning [00:22:20] to me is that maybe you lucked out and you happen to choose an eCommerce platform that has this capability. A lot of brands are building and procuring software for their needs in the short to medium term and not necessarily the long term. Nowadays your ERP is a durable [00:22:40] asset, right? You build your ERP or your CRM or CDP, and you may never replace that. That'll grow with you in your business for 10, 20 years. I've certainly seen a lot of aged ERPs in my day. eCommerce platforms are more durable today, too, instead of being on [00:23:00] a three year replacement cycle, we're on five to seven year replacement cycles now, especially with the types of SaaS platforms that you get all this benefit of blind upgrades and value add over time. You kind of just have to have lucked out to some degree, right, Brian? That you chose all the right pieces. Otherwise, your cross-border [00:23:20] effort actually becomes a very large software evaluation effort.

Brian: [00:23:26] Yeah, I think that you've nailed that, actually. It's not lucking out if you plan. So if you do your research and you make good decisions, I think that this is how [00:23:40] you handle all of that complexity that we've been covering in this whole series. And Peter, you've been bringing it up yourself here. Complexity is actually the overarching theme here. If we were going to go back and retitle this whole thing, it might be like "Going [00:24:00] cross-border: A Lesson in Complex Systems." {laughter}  And so running all of that through in-house expertise is daunting. I mean, especially in the market that we're in right now. I think [00:24:20] that you know, you need to know how to do it, but you need the right partners along the way. And so you need to do a good job going through the process of vetting and understanding who those partners should be and getting good advice around that. [00:24:40] And I think that finding your trusted advisers, whether it be content, podcasts like the one we're on now, or an agency that knows what they're doing, having someone to come alongside you and be able to provide you with advice as [00:25:00] you make these decisions, I think is essential. And that's I think it's just for me, going through this whole show, going through this whole Season 7 of Step by Step, that's one of my biggest takeaways is you have to have the right partners to do this.

Peter: [00:25:21] Yeah, [00:25:20] I mean, I completely agree. I'll make a shameless plug here. BigCommerce was built for complexity. We're an open-source platform, extremely flexible, and we manage some of the largest brands businesses today, including the international expansion. [00:25:40] So we're built for complexity. And what we do is have a robust partner ecosystem that helps you manage that in the best possible way. When you look at the size of the opportunity to expand internationally, I can't tell you how much momentum I've seen, just sort of in terms of merchant adoption of partner [00:26:00] solutions that are helping them solve this problem because the opportunity is just too big. So whether you want to manage the tax compliance and really have a handle on that, Avalara would obviously be a great partner to help you get over the hump there. [00:26:20] But then there are all the other pieces, right? And how do you do? And that's kind of why I started with, "Are you going to be the type of merchant that needs an end-to-end solution that's going to help you manage this international expansion? Or do you just need help with some parts and you've got a lot of the other challenges [00:26:40] here to solve?" So I wouldn't want the take-home message to be "It's too complex and too hard to expand internationally" because it's really not. [00:26:49] If you just do a little bit of research, have your homework done and in place, and have the right partner stack, it's very doable and the [00:27:00] opportunity becomes better every day as a lot of these markets continue to grow. So I wouldn't focus on the complexity. I would just get the right strategy in place, get the right partnerships in place to help you take advantage of the opportunity. [00:27:16]

Phillip: [00:27:18] Yeah, and I think [00:27:20] the partners both can help and hurt, depending on which part of the life cycle they sit on. One of the pieces in this supplemental guide that we're producing along with Avalara for the series is there are pitfalls all along the way. For instance, just mislabeling in HS code can [00:27:40] completely set you up for some sort of failure and unknown unpaid duty taxes on the other side of the transaction. And that's completely it may even happen far away from you. So a small little mistake like that that you may have offloaded to a partner can completely disrupt not just your customer experience, [00:28:00] but you know the ability to retain a customer after you've already acquired their business and whether or not it's cheaper overseas or not. I think that that's the biggest risk is when you're offloading part of that, the knowledge and the responsibility to other people in the chain, you're adding more  [00:28:20]risk into the business. And that's the weighing the cost, right, Brian?

Brian: [00:28:28] I think sort of taking what you both said here. I agree, I wasn't trying to say that it's so complex you can't do it. I was trying to say it's complex enough where you do need to have partnerships and then you can unlock [00:28:40] that value. All the things we've talked about, it can be actually less expensive to acquire customers in new markets. The opportunity to build a new market from scratch is there. Back to episode one, the advantages of going cross-border are numerous. You just have to do it right. [00:29:00]

Phillip: [00:29:00] Oh yeah.

Brian: [00:29:01] You have to do it right. Peter, thank you so much for all of your insight into this. It's been such a pleasure to learn about things from an eCommerce platforms perspective and seeing all those pieces come together in one place, sort of holding the glass of that cross-border [00:29:20] move. And BigCommerce to so partner-oriented. I just love the approach. Thank you so much for providing us with the last notes on this five-part series.

Peter: [00:29:33] Thank you, guys. I appreciate you having me.

Phillip: [00:29:35] Yeah, thank you so much, and thank you for listening to this season of Step by Step. We [00:29:40] will see you next time around.

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