Breaking down barriers: mastering seamless international trade

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Business as usual: how leaders can unlock global e-commerce growth

As e-commerce sales surge globally, business leaders must know how to tackle complex cross-border challenges around customs, returns and local preferences to unlock growth opportunities

As consumers increasingly swap traditional brick-and-mortar stores for online shopping experiences, the opportunity for cross-border e-commerce is continuing to grow. 

Market research company Forrester forecasts that global online retail sales will grow to $6.8 trillion by 2028—up from $4.4 trillion in 2023. Yet despite this huge opportunity, as many as 82% of business leaders said cross-border complexities are impacting their plans to expand into new markets, according to an Avalara survey on cross-border complexity.

“E-commerce businesses face significant challenges and pain-points with customs and duties, which can bring financial pressures,” says Caroline Churchill, a partner at law firm Womble Bond Dickinson. “Incorrect product classifications can increase tariff costs, making it crucial to stay updated on specific product regulations.”

Navigating the customs process can be one of the trickiest steps in selling goods internationally, as not having the right documentation in place can mean the goods get stuck in the customs warehouse or even get returned to the seller. 

Considerably, about three-quarters of consumers would also reconsider future purchases from a retailer if they were hit with unexpected customer charges on delivery, according to the Avalara survey on cross-border complexity.

“You need to be clear about what the requirements are, so either you develop all of this knowledge yourself, or you pick a partner that you can work with such as an agency or freight forwarder that has experience in this space and can help you with the requirements that you need to meet,” says Torsten Schäfer, managing director for Europe at e-commerce accelerator Pattern.

Businesses in the UK are also still feeling the effects of Brexit and the increase in red tape when sending goods into the European Union, impacting everything from taxes to logistics and traditional distribution channels. 

A recent study from the e-commerce platform Tradebyte and Retail Economics found that UK exports of apparel to the EU fell by 63.7% between 2019 and 2023, partly due to increased trade frictions and regulation.

“The biggest challenge has been Brexit, no matter how you tackle it—and it’s still ongoing,” says Alexander Otto, head of corporate relations at Tradebyte. “This is just something you need to rebuild, and you need to find ways to deal with it.”

Managing returns can also be a challenge for e-commerce businesses selling to international customers, particularly for UK businesses that are shipping goods out from a non-bonded warehouse. 

Not only would the business need to pay local duty and taxes in the UK, they would also need to pay local duty and taxes in the market they are sent to, says Stuart Greenfield, a director at retail logistics company Advanced Supply Chain. This can cause issues when trying to reclaim local market duties and taxes on a returned item, he says.

By contrast, businesses that operate within a bonded warehouse in the UK will only pay duty and taxes in the local market, and having systematic solutions in place makes it easier to reclaim the duty and taxes as part of that process, Greenfield adds.

To avoid surprises and reduce basket abandonment, it’s crucial to offer clear pricing that includes all costs, such as shipping and customs duties

Given this broad set of challenges, e-commerce businesses need to better identify and quantify any vulnerabilities in their cross-border sales operations. For Churchill, this should start with an audit of a business’s supply chains and a review of its compliance processes, including in areas such as sales tax and customs duties.

“Undertaking thorough market research to understand the specific needs and requirements of your key markets is a way of reducing this risk,” Churchill says.

Gathering feedback from international customers is also a way to better understand local needs and analyse potential issues around basket abandonment and low sales conversion rates. 

E-commerce businesses should also seek to better analyse why they are getting returns.

“Looking at the different reasons for items being returned and identifying those as early as you possibly can is a big way of dealing with returns and trying to avoid them where possible,” Greenfield says.

Taking steps to shore up supply chains is also vital to limiting any cross-border sales weak spots.

“Given the frequency and risk of macro shocks around the world, making sure that you can always source goods is critical,” says Tim Shell, head of enterprise at SME and e-commerce finance business Stenn. “This means not relying on just one supplier, but having a breadth of suppliers to access and to tap into.”

Given the growth in cross-border online sales, businesses are also increasingly under pressure to offer the same frictionless experience for international customers that they can offer to domestic buyers.

“To avoid surprises and reduce basket abandonment, it’s crucial to offer clear pricing that includes all costs, such as shipping and customs duties,” says Churchill. “Providing multiple payment options popular in your target markets can also enhance the customer experience.”

Returns processes also need to be aligned with local expectations. Working with local logistics companies—often a local post office—can improve the customer experience, but having one in each region can be difficult and time-consuming for a brand or retailer to set up themselves, says Greenfield.

“Working with a partner who can offer a returns solution that gives you access to those local entities in each market saves messing about with all the different complexities around sourcing and managing all those contracts,” he says.

This approach can also help ensure customers receive refunds for their returns as they would from a domestic seller. In Germany, for example, consumers expect to get any money owed three days after the return has been processed, whereas, in Italy, consumers expect refunds to be applied after the goods have been collected, says Greenfield.

A good cross-border sales strategy therefore needs to be informed by an understanding of local nuances, cultures and customer preferences, starting with distribution.

“The most important element in e-commerce is being very, very diligent about the distribution strategy,” says Schäfer.

This means researching the international markets a business wants to target and then figuring out how to get the goods into customers’ hands.

“Over the years I’ve worked with loads of different brands and different categories and the ones that took most ownership and responsibility for the distribution and where their product was being sold had the most success,” says Schäfer.

Understanding local nuances also extends to writing product descriptions on a business’s website to better resonate with local audiences rather than merely translating the text. For example, some countries prefer more rigid product specifications, while other countries might prefer more emotive language, says Schäfer.

Some businesses are also turning to AI to optimise content generation in a way that is more personalised.

“In the past you could come up with lots of very specific ideas for how to target a micro segment, but the typical barrier was now I need 600 versions of the banner ad but we don’t have the capacity to make them,” says Roberto Longo, a partner at McKinsey. “They would then be forced to scale down their personalisation ambition. AI helps solve that.”

Not having the right strategy for dealing with the complexities of cross-border sales can ultimately lead to poor customer experiences and lost sales, reducing revenue and potentially increasing costs.

“Without a strong cross-border strategy, companies find themselves at a competitive disadvantage, struggling to compete with well-prepared businesses that offer a localised customer experience,” says Churchill.

Businesses therefore need to develop a robust plan to overcome these cross-border challenges if they want to unlock the opportunities of global e-commerce growth.

Commercial Feature

A taxing time: how digital tools can drive smarter digital trade

Digital tax tools are revolutionising cross-border e-commerce, helping retailers improve compliance and deliver the streamlined experience international shoppers demand

As digitisation efforts continue to accelerate around the world, consumers are increasingly shopping across borders, with 55% of shoppers globally now willing to buy goods internationally according to a DHL eCommerce cross-border buying report.

Customers want access to choice, quality and the best price possible for a product, and more shoppers are willing to look beyond their own borders for those opportunities, says Holly Parker, regional sales manager at Avalara.

“If a business wants to invest money in generating those international sales, then it’s got to be cost effective,” says Parker. “They’ve got to have a return on investment and create a positive experience so that the customer is likely to come back and purchase in the future.”

Customers also increasingly expect the same level of service when buying internationally as they receive in their domestic market. 

About 70% of consumers would prefer to have a fully landed cost at checkout, while 78% of consumers would be unlikely to return to a retailer if they had to pay customs duties and taxes that they weren’t expecting according to a cross-border complexity survey by Avalara.

This can be a problem for businesses that are still relying on manual processes to manage cross-border sales because they might not be sure what duties apply if they are sending goods into a new market, says Parker. It can also be challenging just to stay on top of ever-changing rules and regulations, she adds.

“We sometimes see companies that have had a spike in growth cross border, but they’ve expanded faster than they can research, so before they know it, they’ve crossed tax thresholds,” says Parker. 

“So they maybe need to register for tax, but also they might be getting feedback from customers about the process and the duties they are having to pay for their goods upon delivery. There’s no way businesses can research everything, so there are often some surprises.”

To better manage this process, businesses are increasingly turning to tax technology to support their cross-border sales activities. 

For businesses that are sending physical goods across borders over a certain value, they might need help on the duty side. But when it comes to tax compliance, it touches everyone, says Parker.

Avalara, for example, has built AvaTax, a modular tax technology system that is designed to adapt and change to different customer scenarios as they evolve over time.

“The premise is it’s one integration, and that can support a business to calculate the landed cost of a transaction that includes any sales or import taxes and duties,” says Parker. 

“It can ingest product data to help with the classification of physical goods for that duty calculation piece, and then we offer different compliance solutions thereafter. So if you’ve had to register for tax in a region because you’ve met a threshold, we then also offer support around filing tax returns and sometimes remittance as well.”

The role that tax technology plays is getting a business in a position where they can scale up, expand and grow in an efficient manner

Aside from tax compliance issues—which can land businesses with penalties and interest charges on any tax that is overdue because they were unaware they had breached a tax threshold—there are several other reasons why businesses might consider such a platform to support their cross-border sales operations. 

The first is improving the customer experience. When shipping internationally, businesses have the initial step of converting the sale, so they want to remove as much friction as possible from the checkout process and be transparent about costs, says Parker.

“The vast majority of international customers want a transparent pricing model,” she says. “If you can’t provide a landed cost and then it gets to destination and the customer is asked to pay additional fees that they weren’t expecting, they’re very unlikely to return to you as a retailer and buy again.”

Second, businesses want to ensure that once the customer has purchased the goods, they receive them in the expected timeframe. 

If a business sends the goods without the right information on their customs papers, such as the HS code, that can cause delays, she says. In some cases, if the information is wrong, customs may just return the goods or even destroy the consignment.

“That has an impact on customer experience but also a financial impact to you as a seller, because if you’ve sent something to a cross-border market, there’s the expense of shipping it there and then potentially the expense of that being sent back and the sale being lost,” Parker says.

Using a unified platform like AvaTax can also help businesses with scalability because it is easier to add new countries to an organisation’s tax coverage rather than having to implement a new platform each time they enter a new market.

“The role that tax technology plays is getting a business in a position where they can scale up, expand and grow in an efficient manner,” says Parker. 

This not only helps drive business growth, it ensures improved compliance and better customer experience while also reducing time spent on manual tax and duty calculations, ultimately helping save costs.

Preparing for peak: a leader’s guide to navigating seasonal success

With holiday sales making or breaking annual profits, smart e-commerce leaders need to master a new playbook to win at peak season without sacrificing margins

Seasonal sales events can often make or break a retailer’s profitability, and it has never been more challenging for e-commerce businesses to navigate these peak periods. 

Economic uncertainty means consumer demand is harder than ever to forecast, while increased cross-border sales opportunities have added to operational complexity—from logistics to tax compliance.

The cost of generating awareness, particularly in online advertising areas such as performance marketing, is also getting more expensive—and materially so during peak periods, says Richard Chapple, chief growth officer and co-founder of retail growth consultancy agency The Growth Foundation.

“If the cost to reach a thousand eyeballs outside of peak trading might be £5 on average, suddenly during peak periods that is now £15 to £20,” says Chapple.

At the same time, many UK brands feel pressured to follow seasonal sales trends imported from the US such as Black Friday and Cyber Monday, where retailers jostle to offer steep discounts or limited-time offers. 

This is a headache for finance leaders at e-commerce businesses because, in an environment where ads cost more and products are retailing at a discount, the contribution margin—revenue generated from product sales after deducting variable costs—is much lower, Chapple says.

Given this backdrop, e-commerce businesses must take a more sophisticated approach to preparing for seasonal sales peaks.

Businesses need to think about product availability, often months in advance — which means forecasting demand in an unknown economic environment. How far in advance a company starts this planning process will typically depend on its line of business.

“Some retailers we work with are already planning for Christmas 2025, while others have already put their orders in for the summer season, such as barbecues and sunloungers and so on,” says Tim Shell, head of enterprise at SME and e-commerce finance business Stenn. 

“In general you’re looking at six to 12 months in advance for some seasonal stuff, if not 18 months in some cases.”

Once businesses are clear on the quantity of goods to order, they then need to think about pricing strategies.

“For example, what is the discount you want to offer for those seasonal periods, if at all?” says Torsten Schäfer, managing director for Europe at e-commerce accelerator Pattern. “If you don’t want to offer a discount, then you will need to find a different traffic-driving strategy.”

Another critical consideration during seasonal peaks is deciding how you will deliver the product to the end customer, for instance using a marketplace like Amazon or selling to the consumer directly and handling individual shipping in-house.

“At seasonal periods, you cannot rely on your usual shipping lead times,” says Schäfer. 

Even when using a marketplace like Amazon, which would typically increase warehouse capacity during seasonal peaks, employees will be focused on shipping rather than receiving goods, which means businesses need to send inventory well in advance. 

Business leaders should also seek to annotate and capture what went well and what didn’t in real-time so that when they start to plan for the next seasonal period, they can easily recall what tactics and actions worked best, says Chapple.

Return policies are also an area e-commerce businesses must pay extra attention to during seasonal peaks to avoid returns abuse and fraud. 

A recent report from fraud tech business Riskified found that three out of four online retailers say they feel overwhelmed by returns policy abuse, with the total cost of returns, refunds and exchanges costing UK businesses alone an equivalent of $45.5bn a year.

That can range from abuse such as customers over-ordering items to various types of returns fraud, including sending goods back that have been worn—a practice known as wardrobing—to returning empty packages or buying a counterfeit version of the same product and sending that back instead, says Aviram Ganor, general manager for EMEA at Riskified.

To counter this, retailers can add more friction to the returns process, such as limiting the number of items or only allowing customers to return in-store, which can both deter returns but also ensure the right products are being returned.

Businesses are starting to go earlier with their seasonal offers to flatten operational demand

Businesses can also use technology to better track customer identity and implement a dynamic returns policy based on a consumer’s profile, Ganor says. This becomes even more important during seasonal sales peaks when volumes are elevated.

“Because the sales traffic is so high it just makes it much harder to manage if you are processing 10,000 orders a day compared to 10 orders a day, so your focus will definitely be more diluted,” says Ganor.

E-commerce businesses must also be able to react quickly to changes in consumer demand. This means having a backup plan in place if sales activity doesn’t pan out as expected. 

For example, Schäfer says Pattern might order slightly more than needed so that if demand is higher, the company can take action. If Plan A was a marketplace fulfilment strategy, then Plan B might be keeping some stock in its own warehouse and then switching to a direct-to-consumer offering.

“If you’re learning during the peak period that one product is selling out, it’s very hard to work upwards through the supply chain and get it produced and shipped in time, but you can still play on the pricing side or on the traffic side,” says Schäfer. 

That might mean raising prices or reducing advertising exposure to buy time to replenish stock. Likewise, if a product is not selling as expected and there is too much inventory left over, companies can also look to boost ad traffic or explore other sales or discounting options.

That latter approach is especially relevant during seasonal peaks such as Black Friday where there is so much noise that it can be hard for ad campaigns to cut through. This is increasingly leading to seasonal shopping periods being stretched out for longer.

“Businesses are starting to go earlier with their seasonal offers to flatten operational demand,” says Chapple. “If you put everything into one day or a very short period of time, it puts a lot of pressure on your business.”

Therefore a good strategy for navigating seasonal sales periods involves planning early and balancing expected demand and supply chain pressures with a dynamic pricing strategy and an ability to quickly pivot if things aren’t going to plan. 

By following these steps, e-commerce businesses can give themselves a better chance of setting up for peak season success.

Going global: the future of trading across borders

What drives success in cross-border e-commerce? How can strategic tax tools simplify compliance, elevate customer experience and empower businesses to thrive in global markets?

Ben Edwards
Ben Edwards A freelance journalist specialising in finance, business, law and technology with more than a decade of editorial and commercial writing experience.