Digital cross-border trade is the main engine of international trading today.

Because digital cross-border trade circumvents most of the costs we typically associate with international trade—shipping costs and import taxes being the most prominent—even smaller local companies can thrive by exporting their products and services to new markets abroad.

With lower entry barriers, digital cross-border trade is becoming even more competitive.

Due to the global shift from traditional exports towards digital cross-border trade, companies that pivoted adeptly to this new environment have achieved tremendous growth.

Industry experts believe that digital cross-border trade will reach $1.25 trillion by the end of 2021—with an average annual growth rate of 25.6%!

Given the promise of digital cross-border trade, governments and companies both have a great incentive to develop successful strategies for international trade.

In this article, we are going to take a closer look at digital cross-border trade and what it means for businesses in the future.

Photo by StartupStockPhotos on Pixabay

What is Digital Cross-Border Trade?

Digital cross-border trade is the online sale and purchase of goods and services between buyers and sellers across different countries.
While digital products like e-books, music downloads, or software can be purchased from suppliers located anywhere in the world, physical items such as hardware or raw materials require a supplier that’s close to hand, such as a supplier in the same country—at least, that used to be the case.

Due to massive improvements in international supply chains and logistics, as well as the development of online marketplaces like Alibaba, Taobao, and Amazon, global trade is now becoming more and more cost-efficient for consumers.
If you are an avid online shopper, you likely already know this: lots of products are already cheaper to source abroad than locally.
Digital cross-border trade is growing exponentially because it provides new opportunities for businesses to expand their market reach, increase sales, and grow revenue more quickly.

However, digital cross-border trade also has its downsides. Customers can easily compare prices on international markets which puts pressure on companies to be competitive. Shipping costs and import taxes can also get out of hand, particularly for companies new to cross-border trade.

What Can Businesses Do to Compete?

Digital cross-border trade expands the playing field considerably. What used to be a rather local market is now an international one, meaning that companies will have to adapt their sales and marketing strategies to take advantage of the new opportunities.

Successful export sales depend not only on price but also on service and delivery.

For example, nascent companies might want to offer free shipping to increase their sales abroad or outsource some parts of their supply chain to a provider that is already successful in their target market.

In addition, conducting a price survey can help companies find suitable suppliers abroad and keep up with changes in prices on international markets.

Additionally, successful digital cross-border trade will require a deeper understanding of international markets, as you’ll be competing with a wider variety of businesses from all around the world.

Conducting a pricing survey before you make the jump into digital cross-border trade will help you understand price trends and learn more about how to address the needs of the local market—while accounting for all the extra costs of cross-border trade.

With every business ruthlessly cutting prices to stand out amidst the digital cross-border trade market, successful companies will need to find a unique selling proposition that allows them to stand out from the crowd.

The faster businesses adapt their business model and embrace successful strategies for international trade, the sooner they will be able to benefit from successful digital cross-border trade.

Providing 24/7 support across several international languages, being available on multiple marketplaces worldwide, offering multilingual websites or apps, and enabling cross-border payments are no longer enough.

International customers today expect to be able to find the right product quickly, regardless of where they live or what language they speak.

Furthermore, customers need reassurance that their purchase is secure at every step of the way—from browsing products on a website or app all the way to receiving their product in the mail.

If companies want to meet these high standards, they can either outsource all of this expertise or develop it themselves. However, the latter is usually much more resource-intensive and requires an overhaul of existing business processes that may not be worth changing if your company isn’t already well-established.

What’s Next for Digital Cross-Border Trade?

Successful companies realize that successful digital cross-border trade is not just about product listings and price comparison websites, but also finding new ways to communicate with customers beyond their preferred languages or across borders.

Digitalization has already transformed every aspect of the economy—and successful digital cross-border trade will only continue that trend, with companies forced to adapt their business models and go beyond product listings if they want to stay competitive in this new reality.

By: Bash Sarmiento