Visa’s Kereere: eComm Firms Say X-Border Growth Critical — But Daunting

A decade ago, an antiques dealer with a shop in Kenya couldn’t have imagined selling to customers in the U.K., or anywhere outside the confines of the domestic market in which their shop was located. Now, with the tap of a keyboard or click of an app, selling to customers outside one’s domestic market is not only possible, but has become vital for the antique shops, jewelry makers, artists and millions of  firms in developing and emerging economies that see the world as their customer base.

“But there are real challenges,” Suzan Kereere, Visa’s global head of merchant sales and acquiring, told Karen Webster in an interview. “International commerce is not a level playing field, and it’s more complex, especially for the long tail of merchants, to get access to customers across borders.”

That gap between the desire to jump full-fledged into the global eCommerce market and the confidence to do so was on full display in Visa’s Global Merchant eCommerce study. The study surveyed 1,000 firms across 10 global corridors, and the results of that work came today (Oct. 29).

Kereere said that, according to the study, as much as 87 percent of firms want to sell internationally, but only two-thirds that sell online do so cross-border. As much as 51 percent think they need help when making the leap from selling in their domestic markets to selling digitally in international markets. For the companies that had yet to enter new markets, Kereere said preparedness was — and is still — lacking.

“Firms want to be sure they are getting into markets where they understand the dynamics,” she told Webster.

The Challenges And Determination To Forge Ahead

The companies that took part in this study shared a range of challenges in making that cross-border leap, Kereere said, challenges that are not top of mind when retailers invest to scale in their own domestic markets. Executives cited a host of other concerns that span the global stage. Ongoing trade disputes were cited by 34 percent and 54 percent of U.S. and Chinese executives, respectively. Others pointed toward lingering macro uncertainty in Europe. The holiday season also looms large — and a majority of firms, at 86 percent, get at least a quarter of their sales during this end-of-year period.

Drilling down a bit, there’s also recognition that operational frictions can hinder sales opportunities across borders. The companies that have yet to expand internationally said they were discouraged by the challenges of accepting and processing foreign transactions (a factor noted by 37 percent of companies), and 42 percent of respondents said shipping issues were a barrier to entering new markets.

Despite those near-term issues, Kereere acknowledged that these small businesses recognize the long-term need to expand internationally. Of the businesses that do not yet sell cross-border, 66 percent plan to do so in the “near future,” with 90 percent of that tally intending to do so within the next three years.

“These firms can see that their peers and competitors are probably doing more than they are. But the same concerns were in place with those firms that already are doing eCommerce cross-border — one of the key things they want to do is plan for expansion,” said Kereere.

The Power Of The Marketplace

To tackle the challenges that span everything from deploying efficient online checkout pages to grappling with new languages to currency conversion (in short, all the things that complicate sales conversions cross-border), Kereere said smaller firms can find cross-border success by being part of a marketplace that streamlines access to aggregated demand for a variety of products, including their own.

At a high level, she noted, marketplaces offer universal access to a customer base that would be out of reach for companies, especially smaller ones, to target and acquire on their own.

“Cross-border eCommerce is a difficult venture,” Kereere told Webster, “and marketplaces can be the key to taking a lot of the heavy lifting out of it, in particular for small [and] mid-sized merchants.”

Access into new markets alone does not guarantee success.  Firms targeting international sales must do more than just make their products appealing. They must also provide payment options that can turn a browser into a buyer. Kereere said that is where Visa has invested to enable those seamless and secure checkout experiences — whether that is easy checkout inside of an app, the ability to tokenize digital credentials for secure transacting or installment payments for those that might like to offer an alternative form of credit to buyers, who may want to pay for a purchase over time.

“The ability to break the transaction into six equal payments is a big idea for the seller,” Kereere said. “The sale closes, and the merchant gets paid immediately, and the buyer gets credit without having to take out a line personally.”

Marketplaces, added to the general rise of new payment technologies, she noted, “are leveling the playing field to address these issues in both a structural and systemic way.”