It’s one of the biggest misconceptions that many online sellers have — that it’s too hard to sell internationally. Despite the fact that more than three-quarters of all global e-commerce sales happen outside of US borders, an extensive 2016 PayPal e-commerce survey finds that only one in three US merchants plan to start selling in a foreign market over the next twelve months.
The perceived reasons for not expanding globally – which range from high international shipping costs to foreign taxes and pricing hassle — are understandable. But the simple truth is the opportunities from selling abroad far outweigh any of the complexities or costs.
To prove it, let’s look at some of the most common reasons why online sellers don’t go global, and how they can overcome them to keep their sales growing strong.
Myth #1: Marketplaces like Amazon charge too much to open shop in each country.
A marketplace’s setup fees are nominal when you see what you’re missing out on by not selling globally. Consider this: out of the world’s 10 largest e-commerce markets in 2015, around 75% of all e-commerce sales were made in non-US countries according to a report by Remarkety.
And there’s plenty of room for growth, too. In fact, e-commerce giant Alibaba Group is expecting cross-border e-commerce sales to quadruple in size to $1 trillion by 2020 and account for almost 30% of all global B2C transactions.
Myth #2: The costs involved with selling internationally are too high.
But the potential profit to be had by selling overseas could be much higher. For starters, a late 2014 Payvision survey found that almost 80% of global merchants agreed that selling their products or services overseas is profitable (with 45% strongly agreeing), which already tells you the overseas water is warm even with the costs involved.
Also think how much higher your profit margins could be if you expanded into places where your US competitors were unwilling to go. Remember, PayPal’s 2016 survey found that only one-third of US merchants planned to start cross-border selling in the next year – which could help you get noticed by international shoppers and keep you out of competitive pricing wars. It’s no wonder why the survey also finds that 18% of current cross-border sellers expect their overseas sales to grow faster than their domestic sales over the next year!
Myth #3: International shipping costs may scare off shoppers.
While not every one of your shoppers want to pay for international shipping, it could be foolish to ignore the growing popularity of cross-border shopping for that reason alone. PayPal’s survey found that 40% of shoppers out of 29 countries said they intend to begin shopping from foreign countries for the first time over the next 12 months. Among those that were already shopping overseas, a staggering 48% planned to increase their cross-border spending over the next year – which suggests shipping costs may not be a problem for many shoppers.
Better yet, the large pool of shoppers around the world are especially receptive to US-based online sellers. PayPal’s 2015 Annual Global Report, which surveyed the purchasing habits of 23,200 online shoppers in 29 countries, found that a staggering 50% of shoppers purchased from a foreign country. And half of those shoppers bought from US-based websites over the prior 12 months – making the US the top cross-border market in the world.
Myth #4: Foreign taxes or VAT on my product shipments are complicated.
Foreign taxes such as value-added taxes are often no more complicated than a state sales tax, especially if you know what to expect. And you typically only need to pay them if your sales reach a certain point – which means you’ll likely be doing well sales-wise in a foreign country before you need to worry about paying your foreign taxes.
Think you might do well enough selling in a foreign country to qualify for VAT? Check out our four-step VAT guide to see where you might owe and how to price your items with VAT. We also share a tip on how to avoid double-conversion charges when it’s time to pay the tax bill.
Myth #5: Foreign exchange pricing is way too hard.
With PayPal’s survey finding around 25% of shoppers abandoned their online carts because they were not willing to buy products listed in a foreign currency, it’s crucial to list your items in shoppers’ home currency (i.e. if you’re selling in the UK, list your items in pounds) if you want them to buy.
It’s easy to get on track. Start by finding your competitors’ prices in foreign markets so you know the going market rate of what you’re selling. Then use our currency conversion calculator to see how much that price translates to in US dollars (or whichever home currency you use). From there you can make your crucial decision – will you undercut the competition with low prices or keep your prices at market rates to keep your profit margins up?
Don’t miss out
Simply put, if you’re not selling outside the US, you could be missing out on 75% of the global e-commerce market. And with user-friendly global marketplaces like Amazon, Rakuten, and Yahoo Shopping making it easy to sell in foreign markets, there are more opportunities than ever to start growing your sales and profit margins.
Ready to start selling internationally? We can help you get started by setting you up with a local receiving account in the countries where you’re selling, from which you can directly collect your foreign sales and pay your expenses. When you’re ready to bring your profits back, we can convert and send your money quickly and inexpensively with our competitive exchange rates. Click here to learn more.