Online markets advantages

the physical cost of changing prices is negligible for internet

retailers, and therefore internet prices could be fluctuating every
week, day or minute in response to shifting demand and supply
conditions.

Searching for best online prices for very narrowly defined goods is
particularly cheap and simple as consumers do not need to travel
anywhere, buyers can establish the distribution of prices with just a
few clicks, and pressure for price convergence is especially strong
with ubiquitous price comparison websites.

the geographical location of consumers and stores is largely

irrelevant in e-commerce, and therefore administrative borders and
similar frictions are likely to play a much more limited role.

Global e-commerce partnerships could become an alternative to

trade agreements

The sales giant has teamed up with another digital

marketplace, MallforAfrica.com, to open Africa to US vendors, while
allowing African artisans to sell products to Americans on eBay.

On African exports to the US, he referred to the trade

agreement’s approved duty-free goods list

Many of the product categories we are importing have nothing to do

with AGOA. And we did not have to speak to anyone in the US
government to get this done

Enter eBay and MallforAfrica. In August the two e-commerce

sites teamed up with DHL to allow vendors from African countries to
sell select products on eBay’s US shopping site. MallforAfrica
chooses the sellers and handles payments on its proprietary
platform. DHL is the shipping partner. Online shoppers can browse
the entire collection on eBay’s Mall for Africa Store.

AGOA created the duty-free access for the African products

MallforAfrica is selling
eBay and MallforAfrica are boosting commerce between the US and
Africa and creating jobs; and they’ve largely bypassed governments
and conventional trade policy to do it.

Africa Growth and Opportunity Act (AGOA) has been a boon for
African exports to America
The legislation created duty free access to the US markets for
over 40 African countries across many product lines.

E commerce worldwide statistics

n 2017, an estimated 1.66 billion people worldwide purchase goods

online. During the same year, global e-retail sales amounted to 2.3
trillion U.S. dollars and projections show a growth of up to 4.48 trillion
U.S. dollars by 2021. In Asia Pacific, e-retail sales accounted for 12.1
percent of retail sales in 2016 but only for 1.8 percent of retail sales in
the Middle East and Africa.

There are 3 main risks that influences cross border ecommerce:

 Fraud is arguably the biggest challenge faced by merchants who allow customer to
purchase from them outside the borders of their country. Thus picking a good
payment service that is aware of local customer behavior is critical.
 Logistics and reverse logistics is also just as important and can negatively impact the
perception of your business by local customers. Consistent and predictable logistics
is a requirement for a business that is wanting to capitalise on cross border
ecommerce.
 Regulations – local government and taxation needs thorough examination and could
potentially negatively impact your business.

How big is the size of the opportunity?

By 2020, over 2 billion e-shoppers, or 60 percent of target global population1, would be

transacting 13.5 percent of their overall retail consumptions online, equivalent to a market
value of US$3.4 trillion
Where are the opportunities for cross border ecommerce?

1. China – Chinese cross border ecommerce is worth $60 billion but legislation might
impact it. The reason for the potential government interference is due to brands
using cross border ecommerce as a way to circumvent the regulations of their
products with local agencies. Known as cross-border e-commerce, the booming
backdoor avenue allows Chinese consumers to buy overseas-manufactured goods
online and effectively circumvent the regulatory issues that have stymied access to
consumer products from cosmetics to Cognac. Faced with pressure from
conventional retailers at home, and the loss of tax revenue, the government is now
looking at overhauling the legal loophole.
2. South East Asia – Singapore, Indonesia. Reports state that the e-commerce market
in Southeast Asia will reach US $200B by 2025 with online sales growth at a CAGR
of 32%. With 600 million consumers and 260 million people online, it is the largest
market of Internet users in the world. It thus makes complete sense that
both Amazon and Alibaba have increased their interested in this area.
 3. Australia – Australians like buying clothes from online businesses from outside their
borders. Since March 2016, the Chinese authorities have published a series of
regulations aimed at extending normal import tariffs and regulatory requirements to
goods imported into China via cross-border e-commerce channels. The new regime
caused a backlash among the cross-border e-commerce sellers both in China and
abroad and was put on hold indefinitely just a few days before Premier Li ‘s visit to
Australia and New Zealand in March 2017. It is hoped that goods imported into
China via cross-border e-commerce can continue benefiting from the low tariffs and
regulatory exemption.
4. France – The fastest growing e-commerce segment in France is cross-border
purchases. Nearly half of all French consumers regularly buy from cross-border
merchants and 19% of all online sales in 2016 were made on non-domestic websites,
four point higher than the European average of 15%, most frequently Germany, the
UK, Belgium, the US, and China. The major problem with French customers is that
their transactions are relatively small in comparison to the countries mentioned
before it.
5. Mexico – is a long term market due to the staggering rate at which the market for
ecommerce is growing at (21%). The growth is hampered by security concerns over
payment. Amazon has partnered with a local retailer to ensure that customers can
pay for their purchases with cash. The market has low competition and with the rate
of growth, Mexico could long term become the most important market in Latin
American ecommerce.

As mentioned earlier cross border payments is difficult and should be managed to ensure
that customers are not surprised by additional government levies when items arrive at their
final destination. Understanding local taxation and ensuring that the customer pays
accordingly is crucial otherwise the purchase will be returned and create an aggravated
customer that will harm your business and brand.

In summary – cross border ecommerce is here to stay and needs to be considered

accordingly as a growth strategy for an ecommerce business. It needs investment (payment
processing, staff and logistics) and should be done in a staged manner for maximum impact.