A recent industry study shows that in the first six months of 2020, the volume of global cross-border e-commerce grew by 21%. Cross-border e-commerce indicates an increasing demand for global digital payments.  A recent report by the London headquartered cross-border e-payment specialists PPRO  estimated that the worldwide market for digital payments will grow by 20% a year for the next three years. The second phenomenon is the disrupting impact of COVID-19 on brand loyalty. Research by McKinsey found that 77% of shoppers have tried new shopping behaviors, new retailers, and brands during the lockdown.

To get a more detailed view on this, we at Cashfree conducted a webinar on Running an International E-commerce store from India to engage merchants in conversations with the industry stalwarts. Industry leaders Reeju Dutta, Co-founder at Cashfree, Navin Mistry, Director of Growth, Paypal & Percy Avari, Country Manager, Aramex India joined the session. For everyone who wants a second look at everything that went down and for those who want a first look because they missed it, here’s a summary of the webinar held last month.

About the Speakers: 

Reeju Dutta co-founded Cashfree in 2015 with friend Akash Sinha with the vision to offer a digital payments infrastructure to businesses operating in India. Prior to starting Cashfree, Reeju has worked in real estate, at online furniture retailer FabFurnish and in analytics at consulting firm ZS Associates. With a deep focus on customer experience, marketing, finance, and hiring at Cashfree, Reeju is enthusiastic about the startup ecosystem and enjoys interacting with businesses that offer innovative solutions. 

Navin Mistry, Director of Growth, Paypal – Navin is the Director, small and medium businesses for PayPal in India. He is responsible for driving the strategy, acquisition and growth for the segment.

Percy Avari, Country Manager, Aramex India – Percy Avari is a Regional Manager (South, Asia) at Aramex based in Dubai, Dubai. Previously, Percy was a Corporate Manager, Finance at Elbee Services.

Unleashing the International markets

Industry statistics by Statistica from 2019 shows that the e-commerce trade will grow to around 4.8 trillion US dollars by 2021. Around 30 % of this was expected to come from cross-border trade. Data also showed that 82 % of the enterprises involved in cross-border trade are micro and small scale size companies. Cross-border trade gained prominence among many markets, whether it is UAE or Southeast Indonesia or Malaysia. USA and China lead the pack of cross-border E-commerce.

However, the question on everybody’s mind is – Why international markets? As we see a lot of D2C brands and homegrown companies emerge, it becomes critical for e-commerce platforms to expand internationally. A key reason being that ticket sizes tend to be on higher averages in foreign markets as compared to India. For instance, the average ticket size in India is 600 when compared to 6,000 in the US, a 10-fold increase. Cashfree has been trying to catalyze and ease international transactions from a product perspective which would offer a larger number of payment modes. 

International payments opens the doors to the global markets thus enabling exposure to a large customer base. A sneak  peek at the numbers for exports and imports of India reveals India exports a cumulative 550 Billion worth of goods and services over a year. The bifurcation being 330 Billion of merchandise and around 220 Billion of services export. The larger countries importing goods from India are the US, UK and Australia. The pandemic has turned the tables and put India under the spotlight for having the capacity, viability and feasibility to produce such high quantities and quality of goods. The digitization of the country has paved the path for Indian merchants to ship internationally. In fact the MAKE IN INDIA initiative has upscaled the manufacturing sector of the country. A lot of Multinational companies have set up offices in India for their manufacturing and other assemblies.  

Identifying the right markets

Over the last several years, cross-border e-commerce sales have skyrocketed due to an increased demand for foreign goods and a rising middle class, particularly in Asia and the Middle East. Ninety percent of e-commerce leaders said an international e-commerce presence will be essential to their company’s success by 2021. While new markets emerge amid the spur and try to carve a niche for themselves, finding the right time and space is key to capitalize and seize the opportunity. They need to now start researching the emerging markets abroad and try to see how their products fit into the expectations and the demands of that market. They need to check whether their products have any restrictions in the foreign markets they are looking to explore.

It is important to understand that there is a difference between the prohibited product and the product restriction. The first is where the sale of a particular product in a country is completely prohibited, not allowed. In the second case, where it is restricted, sale is allowed but in a controlled manner. A certain criteria of paperwork needs to be fulfilled by the seller to be able to sell his products in this market. So for a merchant to consider whilst looking at a cross-border e-commerce doing market research of the markets they want to enter and then listing down which markets they would like to prioritize based on their products,  product demand and regulation of those countries is the first and the most important thing.  Secondly, the merchant should have a key understanding of the taxation policies and devise a strategic pricing policy enabling the merchant to penetrate the market effectively. The absence of standardization across the countries in terms of customs duties and other taxes requires the merchant to be completely aware of the regulations pertaining to the trading country. It’s imperative to  keep  in mind these aspects while starting work on across-border business or when you’re at the crossroads of cross-border business. Lastly, incorporating the local language & currency into the catalogue thus providing a better customer experience to the consumers of that country.

Fathoming the buyer behaviour and ascending industries

We’re still recovering from the pandemic and there are certain industries, which are still about to recover from the pandemic, for instance, the apparel industry, or the travel or the merchandise industry. But as it is rightly said, every crisis is an opportunity in disguise, a few players have turned it around for themselves, Naveen shares the anecdote of the emerging trends as observed by PayPal. Naveen mentions that the EduTech space has thrived and a lot of Indian EdTech companies are now catering to the global students as well. These are not simply limited to educational syllabi but are focusing on upskilling courses too for a wider paradigm of skills. Nextly, Healthcare has been in the spotlight, the digitization wave has brought in Telemedicine and health apps which are truly transforming the whole sector at once. The self-care industry is soaring high. The self-care industry encapsulates mental health, spirituality, Fitness, Art forms and Hobbies. These individual fragrances have come together to add to the essence of the industry and helped it bloom. This indicates that consumers are willing to upskill and expand their knowledge over various domains to stay up to the competition. The pandemic has put all the offices and workspaces right into the living room for everyone, this catalyzed the work-from-home essentials market comprising of the streaming services, the communication apps, online modules to be deployed as an engagement platform for the corporates, and a tinge of the OTT platforms.

Payment modes and attested regulations

When a global seller from India considers global payments, there are a few things to consider. For instance, if a store is offering its product in India as well as internationally via a common E-commerce platform, then the payment mode should be catering to both geographies at the same time and usually with the same integration. Talking about India, we have payment modes of Credit cards, debit cards, Visa, Mastercard, Rupay, American Express, UPI and Net-banking. Globally, credit card and debit card are acclaimed ones for payments, this is something that the vendor should consider. Reeju also mentions how Cashfree has been offering Paypal express checkout payment option to boost the international trade from 190 countries and adding to the convenience offered by the merchants to their customers. 

CoD for international trade has been something intriguing for a while now but has a broad significance on the Middle East and India too. Cashfree has been able to solve the CoD conundrum and made the process seamless and convenient. 

The currency of transaction is another concern hanging in the corner for many merchants, INR is the default currency for trade in India, but Cashfree has enabled merchants to offer products in INR globally. How it works is – offering a checkout process where customers can pay in the local currency, which would be much more customer-friendly. This boosts the conversion of customer acquisitions for the vendors for international transactions. 

For payments specific regulations, FIRC is generated for every transaction for an invoice remittance certificate, that assists in claiming GST exemptions in international payments. The FIRC is made available offline to the customers making it easier to claim GST exemptions. 

IEC-Importer Exporter certificate is required to make any form of cross-border trade. For this the necessity being proprietorship, LLP or Pvt ltd. and a registered business. With all of this in place, cross border trade would be a seamless process for the merchant.