Expanding into new markets is an exciting opportunity for ecommerce brands. And when it comes to selling on marketplaces throughout South East Asia, cross-border selling presents a compelling option.
Many of the marketplaces operating in the South East Asia region encourage brands to sell cross border, giving their customers access to a wider range of products. There are several benefits of cross-border selling for brands, particularly when they’re first testing and building demand for their products in a new market.
Below, we’ll delve into the benefits and challenges of selling cross-border into this region, shedding light on why it can be a strategic move for your brand.
Benefits of Cross-Border Selling
No Local Entity Required
Setting up a business in markets like Japan or China can be a time-consuming and paperwork-intensive process. However, cross-border selling eliminates the need for a local entity, saving you from lengthy legal procedures. By leveraging cross-border platforms like Tmall, JD.com, Rakuten, or Lazada, you can establish a store and receive payments in the local currency.
However, having a local trade partner is still necessary to handle marketplace interactions, represent your brand, and manage tasks conducted in the local language, including product listings and customer service.
No Local Labeling
One advantage of cross-border selling is the exemption from local labeling requirements. Since the product is sold as a cross-border purchase, there’s no obligation to re-label goods in the local language. This flexibility can help you navigate local product standards, such as avoiding animal testing requirements for cosmetics in China.
Although local labels aren’t mandatory, it’s recommended to accurately translate product descriptions in listings and provide clear information on sizes, weights, and volumes.
Enter Large Markets at Relative Ease
With its burgeoning population, growing economies, and rapidly increasing consumer purchasing power, the South East Asia region offers a plethora of large marketplaces waiting to be tapped. As the middle class swells and urbanization accelerates, demand for diverse products and services continues to soar.
Moreover, 94% of the urban population of digital users in South East Asia adopts ecommerce. The highest income group saw ecommerce as an integral part of their lifestyle. Since many US brands are still new to the marketplaces like Shopee and Lazada, the competition is relatively low. With the right regional partner, like Pattern, brands can position themselves to capitalize on this vast and dynamic market.
Challenges of Cross-Border Selling
Stock Pool Decisions
When engaging in cross-border selling, you need to determine the location of your stock pool for fulfilling orders. One option is to have a nearshore stock pool, such as in Hong Kong (for orders destined for China), minimizing delivery times. Alternatively, you can fulfill cross-border orders from your main stock pool in the Western region.
While not ring-fencing stock offer benefits, it’s important to consider that delivery times may extend to one or two weeks. Alibaba has attempted to address this challenge by enabling brands to store goods in its Western warehouses and utilizing its robust logistics infrastructure to expedite product delivery in China once orders are placed.
Selling cross-border means additional costs, including higher delivery expenses and potential sales tax or duties on personal imports. These factors will influence your pricing strategy. It’s essential to conduct pricing analysis by market to optimize your approach for the South East Asian region.
Keep in mind that consumers in markets like Japan expect higher prices compared to the West, necessitating careful consideration of your pricing strategy to meet market expectations.
Explore Ecommerce in South East Asia With Pattern
Cross-border selling into South East Asia offers numerous benefits for ecommerce brands aiming to tap into new markets. By eliminating the requirement for a local entity, bypassing labeling restrictions, making strategic stock pool decisions, and optimizing pricing strategies, brands can seize opportunities and expand their reach.
At Pattern, as a global ecommerce accelerator, we understand the complexities of cross-border selling and can provide the expertise needed to navigate these challenges successfully.
To learn more about how Pattern can support your ecommerce growth, reach out to us today.