Your web store is a few clicks away, regardless of where those clicks geographically occur. International customers can help increase your online sales; many internet merchants are taking advantage of them. But several challenges are associated with selling products and services to foreign buyers over the Internet.
An April 2005 survey conducted by Internet Retailer indicated that in the United States, 71 percent of ecommerce websites sell outside the country, with 36 percent reporting that more than 10 percent of their sales come from abroad. Canada and the U.K. are the top foreign markets for America-based web stores. In the same survey, the stores that do not process international orders pointed to the difficulty and cost of shipping as the main reason for doing so. The second biggest concern was fraud.
Let’s look at these and other challenges associated with selling abroad.
Assume that you are selling products that need to be shipped. If not, feel free to skip to the next section. Shipping is a multifaceted issue.
- Calculating reasonable rates. The first challenge your store faces is ensuring it can properly calculate shipping charges on international orders. Many shopping carts include a dynamic shipping component that can connect to service providers such as UPS, FedEx, and the United States Postal Service (USPS) and automatically retrieve rates for a shipment based on the point of origin, the order weight, and the destination address. Some even include features that help you handle oversized items and multiple-package shipments. Since shipping UPS or FedEx to a foreign country can be expensive, many web stores offer their international customers cheaper USPS rates instead. Look for ecommerce software that gives you this kind of flexibility.
- Accounting for the cost of processing orders. Preparing and processing an international order is more time-consuming than a domestic one. Completing custom forms will not be your favorite pastime. Time is money, and more time spent on order processing means reduced margins on those orders. Therefore, a good idea can be to set a minimum order amount for international orders higher than the minimum for domestic orders (if any). If your ecommerce software cannot handle this automatically, just put a note in different areas of the store and let customers know that their order will be rejected unless it meets your requirements.
- Country-based restrictions. If shipping to select countries is too expensive or not easily done, you might consider removing those countries from the list of places where you deliver orders. Many shopping cart programs include a feature to easily edit the list of countries in the various registration or checkout pages.
Fraud is a huge issue, and it is not within the scope of this article to review the matter in detail. Let’s assume fraud is a problem for your store (it likely is), and let’s focus on the implications of selling abroad.
Studies have shown a higher likelihood of fraud in international orders. Especially if you are selling digital goods, fraud should definitely be a concern. How can you protect yourself? Let me describe what we do at Early Impact. Since we sell software that can be downloaded electronically, we see all kinds of fraud on our Internet store. Here is what we do:
- Orders are never processed in real-time. Credit cards are authorized via a leading payment gateway when the order is placed, but our system is set up to keep the order “pending” until it has been manually verified. Software licenses and download links are sent only when the order has been processed.
- All orders are manually checked for accuracy and legitimacy. In most cases, determining if an order is legitimate only takes a few seconds. If an order is clearly fraudulent, we quickly void the transaction and “lock” the customer account so that the same email address can never be used to place another order.
- If an order exceeds a certain amount, or there is any reason to believe it might be fraudulent, we telephone the customer. This has saved us in many cases. For example, we do this whenever the customer uses a free email address or the domain name is not a valid website.
If fraud is an issue, look at your order processing routine and make changes that will help you minimize the chance of processing a fraudulent order. Ensure your ecommerce software gives you the tools you need to accomplish this.
Ready for International Customers
Let’s now focus on the positive side of selling abroad: How can you prepare your store to be friendlier to international customers? Here are some things you can do to make international customers feel at home.
- Show product prices in a foreign currency. Regardless of the shopping cart software used on your store, it should be pretty easy to integrate a service such as the one provided by XE. (A web designer can help.) Customers can quickly see a product’s price converted into their currency. The ad-supported version of XE’s system is free. The ad-free version is $540 per year. Oanda offers a similar system, called FXCommerce™, for $40 per month. An alternative is to use ecommerce software that allows you to set up multiple currencies and conversion rates and allows visitors to your store to choose their currency. The problem is that this typically requires you to update the conversion rates regularly.
- Accept payments in a foreign currency. There are payment gateways that allow your customers to pay for an order in their currency and with a payment method they are familiar with. For example: have you heard of Switch? Some 23 million Maestro/ Switch cards in the U.K. WorldPay and 2CheckOut are two payment gateways that provide this feature. PayPal also provides this functionality.
- Provide language versions. Some ecommerce software packages allow you to enter product descriptions in different languages. This might not be a feasible solution for your store, especially when dealing with a large product catalog. If so, you might want to focus on other areas of your store. For example, translate your “Customer Service” page into a few popular foreign languages.