Cross-border ecommerce is a form of international trade that involves buying and selling goods and services online across national borders.
Per DHL, about 59% of global shoppers are happy to buy cross-border and 35% do so at least once per month. They estimate that global cross-border ecommerce could grow to more than $4.81 trillion by 2032.
As WOLFpak’s founder Michael Henderson summarizes: “If you don’t sell internationally, you’re limiting your opportunity for growth.”
Despite the potential, there are logistical considerations to ponder before taking your ecommerce business global. This guide outlines a cross-border ecommerce strategy to thrive across the global market, with tips and technology to do so efficiently.
What is cross-border ecommerce?
Cross-border ecommerce is the online sale of goods and services across borders. These transactions occur on digital platforms, global online marketplaces, and websites. They’re facilitated by payment processors that can handle currency conversions, as well as shippers that transport orders to different countries.
Here’s what a typical cross-border ecommerce transaction looks like:
- International customer visits your online store.
- They view local currency and shipping options.
- Duties are calculated at checkout.
- The package is shipped and clears customs.
- Shipping carriers deliver the product to your international buyer.
Typical components of a cross-border ecommerce setup
Key building blocks used by ecommerce businesses to sell cross-border include:
- Localized storefront: Choose an ecommerce platform that supports localized content, navigation, and product information. A unified platform, like Shopify’s unified data model, lets you manage customer, order, and inventory data across regional storefronts from one system.
- Multi-currency pricing: Display prices in multiple currencies to reduce friction and ensure shoppers know exactly what they’ll pay before checkout.
- Local payment methods: Use an integrated payment system to handle cross-border payments. It should let customers use familiar regional methods like local wallets, bank transfers, or cash on delivery (COD).
- Duty/tax calculation: Display the full landed cost up front to prevent surprises at delivery and recoup the 39% of carts abandoned due to unexpected costs.
- Cross-border shipping and tracking: Work with reliable carriers or local distributors to strengthen your international supply chain. This ensures customers get transparent delivery timelines and end-to-end tracking.
- Returns workflows: Handle this internally, or outsource to third-party logistics services (3PLs) that can process international returns efficiently and keep costs predictable.
Benefits of cross-border ecommerce
Market expansion
International ecommerce opens access to a global customer base, allowing businesses to reach new customers beyond their local market. This is particularly helpful for businesses facing domestic market saturation, where gaining market share is difficult, expensive, or unprofitable.
Diversification and risk mitigation
Operating in multiple foreign markets reduces dependency on a single market or economy, spreading risk across different regions and local currencies. Cross-border selling gives your ecommerce business a buffer against economic downturns in any one market.
Increased revenue potential
Expanding into global markets can lead to increased ecommerce sales and business growth given that 59% of global shoppers buy cross-border.
Tap into regions with higher demand from online consumers and less competition. You may also increase sales with lower customer acquisition costs (CAC) in less saturated international markets.
Economies of scale and cost efficiencies
Scaling cross-border operations can lead to cost efficiencies through bulk purchasing, streamlined logistics, and optimized production. This means a global cross-border ecommerce presence can result in lower per-unit costs and stronger profit margins than your business could achieve by limiting operations to your domestic market.
Challenges of cross-border ecommerce
Although an online business can greatly benefit from expanding internationally, the effort does pose challenges. As you consider orienting your ecommerce website toward the global market, pay attention to these potential issues:
Shipping costs, duties, and logistics
International shipping involves several complexities, including customs restrictions, import and export regulations, varying shipping costs, and longer delivery times. Retailers must navigate potential difficulties with tracking, warranty claims, and returns, all of which can impact customer satisfaction.
A significant challenge is complying with international import restrictions, as products prohibited in certain countries may be returned at the border.
Moreover, tax compliance, particularly duties and import fees, presents a major hurdle. Three-quarters of customers rethink shopping with a retailer after facing surprise customs duties and taxes, while 49% refuse delivery altogether.
While you can opt to charge duties at checkout and remit them to government authorities, this process is complex and often avoided, shifting the burden to the buyer. This is particularly problematic during last-mile delivery, the final leg in a parcel's journey to the customer.
To mitigate some of these challenges, selling via international marketplaces like AliExpress can help connect retailers with shipping vendors in target countries.
💡Tip: If you’d rather maintain brand control, profit margins, and customer data, selling on your own cross-border ecommerce website remains the top option—as SuitShop demonstrates. They rely on Shopify’s Managed Markets to handle the logistics of international delivery, duties, and taxes.
The brand went from experiencing problems on 50% of international orders—like return to sender, duties delays, and delivery failures—to practically zero with Shopify using Global-e as the brand’s merchant of record.
Currency and payment issues
Handling multiple currencies, payment methods, and cross-border transaction fees poses additional hurdles when entering a new market. You’ll have to navigate everything from currency conversion rates to the elevated risk of payment fraud.
Enter the process knowing that your cross-border business will have to adapt to different payment preferences while ensuring secure international transactions. That includes:
- Accepting local payment methods like digital wallets and buy now, pay later (BNPL)
- Absorbing cross-border transaction fees and foreign exchange (FX) market volatility
- Reducing declines by routing payments locally where possible
Shopify’s Managed Markets supports automatic currency conversions that adjust in line with market exchange rates. You can also enable rounding rules and local payment methods—for example, Bancontact for Belgian customers—for each international market.
Regulatory and legal compliance
It takes considerable time and effort to navigate the various legal frameworks, tax laws, data privacy regulations, and trade restrictions across different countries.
For instance, a foreign government may have one set of regulations for online sales between a corporation and an individual, and a different set for cross-border transactions between two private persons.
Some countries have specific requirements for ecommerce businesses. For example, the United Kingdom, Australia, and Norway require foreign sellers to register and file taxes in their jurisdictions.
This level of complexity often necessitates hiring local experts who are well-versed in the laws and codes of new markets, ensuring compliance and smooth operations in each country you serve.
Language and cultural differences
The best way to enter new markets in other countries is to learn about the local tastes, preferences, and culture. This understanding should inform your approach to marketing, customer service, and product descriptions on your ecommerce platform, which may need to be available in multiple languages.
You'll need specialized expertise, whether that’s specialized agencies or built-in Shopify tools/apps like Shopify Magic to translate copy. (Note that any localization efforts should always be reviewed by a human editor or translator before they become customer-facing.)
Start by localizing the highest-impact parts of the experience: your top-selling collections, product detail pages for hero SKUs, and the checkout flow. These are the pages most likely to influence conversion and revenue.
Run A/B tests on these priority pages to compare localized versus. nonlocalized versions. This can highlight nuances—such as preferred phrasing or local slang—you can lean into for the remainder of your international website visitors.
Customer trust and brand identity
It takes time for potential customers to warm to a new brand. Complications can arise in cross-border purchases related to customer service, returns, refunds, and warranty claims, all of which can have an impact on customer trust and loyalty.
How to be successful in cross-border ecommerce
Assess whether cross-border ecommerce is right for your business
The complexities attached to cross-border ecommerce mean expansion isn’t always the right idea for every business.
Even if you have the goal of going global in the future, timing is key. The last thing you want is to rush in before you’re ready and set the wrong first impression with overseas customers.
Assess readiness by asking the following questions:
- Are your products suitable to sell internationally?
- Do you have existing international traffic to sell to?
- Do profit margins and average order values (AOV) support international expansion after accounting for additional expenses such as duties, taxes, and shipping?
- Do you have the infrastructure to manage international operations, including returns, support, and localization?
- Can you handle the regulatory complexity required to sell cross-border?
Conduct market research and refine targeting
Make use of your existing data by checking out which regions already have an interest in your business.
Use Shopify Analytics to see which countries or regions you’re getting organic traffic from, their share of total sales, and the conversion rate of website visitors in that area. It can reveal markets where your products are already well known, so you can potentially expand internationally into those markets.
Cross-check your findings against external indicators—such as gross domestic product (GDP) growth, cross-border shopping rates, consumer spending, preferences, local competition, and regulatory landscapes—to shortlist which regions offer the strongest potential.
Pursue a localized strategy
Customize your strategy for each target market. This may include modifying product offerings, pricing, marketing materials, and providing a customer experience that values the local language, culture, and expectations. Tailoring your approach to your customer base can help you build goodwill with your desired audience.
Optimize logistics
Transparency helps prevent unexpected charges on delivery. Give shipping costs and delivery times up front. If you take care of these things, especially the often-problematic surprise duties, you'll have a much better international customer experience.
Managed Markets handles these complexities for you, offering:
- Unified inventory management across all overseas territories
- Exclusive discounted rates on reliable providers for international shipping
- Package tracking on every order
- Express shipping that delivers worldwide in one to five days
- Customs pre-clearance to deliver overseas orders without holdups or surprise fees
Caden Lane is just one brand using these features for cross-border ecommerce—which CFO Kristin Jerry-Swarek says allowed the brand to start selling in over 180 international markets overnight.
“The speed of delivery that we can offer with Managed Markets is really great,” Kristin says. “The fact that orders can get to Canada in a day and to the UK in two or three days still kind of blows my mind, especially since the shipping costs are lower than what we were used to.”
Since relying on Managed Markets, Caden Lane has more than doubled the number of countries they sell to. The result: a 692% lift in international sales.
Set up secure international payment solutions
Offer a variety of secure payment methods for each market. Shopify Managed Markets simplifies this process by automatically activating local payment methods for over 150 countries. This allows global buyers to check out confidently with payment options they recognize.
Managed Markets also handles currency volatility, guaranteeing exchange rates to protect your profits against fluctuations, especially for international returns.
Comply with local laws
Legal compliance is crucial for any ecommerce store, and it may require legal expertise or advisors versed in international laws. Ensure compliance with international trade regulations, tax laws, data privacy rules, and consumer protection regulations in each market.
With Managed Markets, compliance concerns are largely taken care of. Using Global-e as a built-in merchant of record, it handles VAT, duties, and local taxes, which are prepaid by your customer at checkout and remitted on your behalf.
Managed Markets also protects you from fraudulent purchases, and filters your product catalog based on regional import and carrier restrictions, so you stay compliant.
Invest in customer service
Provide excellent customer service for your global consumers, tailored to each market's needs, by offering multilingual support, understanding cultural nuances in customer communications, and addressing concerns promptly to build trust and loyalty.
International customers of jewelry brand Made by Mary, for example, previously had to wait two to four weeks to receive their orders. Unexpected taxes and duties were added when the shipment arrived, because the brand’s previous platform didn’t support international checkout. The result was an influx of support tickets.
“Any time the customer has to come to us to ask where the order is, we've already lost,” says CEO and cofounder Taylor Moody. “International customers typically aren’t repeat customers; which means that first experience was probably their last experience.”
If the shipment didn’t arrive within a month, Made by Mary refunded them to make up for the delay. Given that just 1% of all sales were cross-border, Taylor says it created a disproportionate amount of work for their customer service team relative to sales.
Made by Mary turned on Managed Markets to solve these customer experience issues. Now, they can display local currencies, translate website copy, and enable customers to prepay duties at checkout. The results speak for themselves:
- 90% growth in international orders
- A 180% increase in international order conversion rates
- A 50% decrease in support tickets from overseas customers
Practice continuous evaluation and adaptation
Regularly monitor performance metrics, customer feedback, and market trends. Adapt your strategies, product offerings, and operations based on insights gained from running an online store.
Sell cross-border with Shopify
Cross-border ecommerce opens a world of opportunities for businesses seeking global expansion. By conducting thorough research, localizing strategies, and prioritizing customer service, you can successfully tap into international markets and boost revenue.
If you want to sell into new countries without becoming an expert in customs codes and tax rules, Managed Markets can handle the following components for you and let you focus on products and marketing:
- Acts as a merchant of record to calculate duties and taxes at checkout.
- Supports local payment methods and currencies.
- Manages international shipping, tracking, and customs clearance.
Cross-border ecommerce FAQ
Does Shopify support cross-border ecommerce?
Yes, Shopify is set up to handle cross-border ecommerce. You can use your Shopify sales channel to increase your brand visibility and client base without incurring hidden costs that squeeze profit margins.
What is an example of cross-border ecommerce?
An example of cross-border ecommerce is when a buyer in the US purchases handmade crafts directly from a small artisan's online store based in India. This transaction involves the sale and shipment of goods between different countries via a digital platform, with the artisan using Shopify Managed Markets to handle international payment processing, customs documentation, and regulatory compliance.
Why should you consider cross-border ecommerce?
Cross-border ecommerce expands your market reach, potentially unlocking new online customers and revenue streams beyond domestic borders. Breaking through could result in exponential international growth for your business.
How do I start cross-border ecommerce with Shopify?
To start cross-border ecommerce with Shopify, first identify overseas markets to expand into (you can do this with Shopify Analytics). Then enable Managed Markets, configure duties, choose international shipping providers, and test checkout before launching overseas.
How does Shopify handle customs duties and taxes for international orders?
Shopify handles customs and duties by acting as the merchant of record for international orders. It can prepay duties and handle VAT to prevent delays for cross-border transactions.
What is the difference between cross-border ecommerce and opening a local entity?
Cross-border ecommerce lets a brand sell into another country using its existing legal entity, website, and operations while tailoring only what’s necessary (pricing, duties, shipping, payments). Opening a local entity means formally establishing a business in that country, which requires local registration, taxes, compliance, and localized operations.
