In recent years, electronic commerce transactions with customers outside of Japan, commonly known as cross-border e-commerce, have become a core business model and a new growth opportunity for Japanese e-commerce businesses.

As the domestic market has become more stable and mature, selling to overseas shoppers can give companies a significant advantage. However, success requires a comprehensive strategy. This strategy must cover target-market selection, logistics, payment processing, and legal compliance.

In this article, we will explain why cross-border e-commerce is gaining attention, along with specific marketing tactics to help your business succeed and main points to keep in mind.

Key takeaways

• A cross-border e-commerce strategy includes a variety of initiatives, ranging from selecting target countries to establishing payment infrastructure, that are required to succeed in international online sales.
  
• Cross-border e-commerce is attracting particular attention today as demand for inbound tourism to Japan continues to grow.
  
• Offering payment methods that customers in targeted countries are accustomed to using daily is one of the most important cross-border e-commerce strategies, and doing so can lead to a significant increase in conversion rates.
  
• When engaging in cross-border e-commerce, there are several points that you must keep in mind to prevent unexpected problems.
  
• Because Stripe Payments supports global payment needs, using it can simplify your cross-border e-commerce payment processing and create a secure and user-friendly website.
  

Strategies for cross-border e-commerce

Cross-border e-commerce refers to online retailers selling outside of the domestic Japanese market by targeting customers overseas in places such as the United States, China, and Europe.

Therefore, a cross-border e-commerce strategy encompasses the various approaches and initiatives that businesses need to implement to ensure the success of their international operations. The primary initiatives to achieve this are:

• Selecting the target countries
  
• Building sales channels
  
• Localisation
  
• Establishing logistics systems
  
• Complying with laws and regulations
  
• Implementing customer acquisition and marketing strategies
  
• Creating a payment infrastructure
  

For cross-border e-commerce, planning and managing these operations is central to sustainable business growth.

Why cross-border e-commerce is attracting attention

The cross-border e-commerce market continues to grow every year. The internet, smartphones, and social media have become an integral part of daily life. This has made online shopping accessible to everyone, so cross-border sales are expanding worldwide.

According to data from the Ministry of Economy, Trade and Industry, the volume of cross-border e-commerce transactions involving Japanese products by consumers in the US and China in 2024 is shown below, with growth recorded in both countries from the previous year.

• Amount spent by Chinese consumers on purchases from Japanese cross-border online retailers: ¥2.64 trillion (8.5% increase from the previous year)
  
• Amount spent by American consumers on purchases from Japanese cross-border online retailers: ¥1.60 trillion (8% increase from the previous year)
  

Demand for international e-commerce is growing worldwide, not just in the US and China, and is attracting significant attention from Japanese businesses as a new growth strategy.

Sales opportunities can be expanded beyond the Japanese market to overseas markets

By not relying solely on the domestic market and instead targeting shoppers worldwide, you can expand sales opportunities, maximise revenue, and build sustainable growth.

In particular, as advances in digital technology have made it easier than ever to connect with international customers, reaching across borders to address the diverse needs of overseas markets has become a major factor in enhancing brand competitiveness and creating new value for businesses.

Brand awareness created during visits to Japan leads to purchases after returning home

The increase in inbound demand in Japan has increased awareness of Japanese products and brands among people outside the country. This presents a significant opportunity for domestic sellers engaged in cross-border e-commerce to expand by capitalising on the country's reputation for quality and unique brands.

For instance, by letting foreign tourists buy products or brands they discovered in Japan on a multilingual e-commerce site after they return home, you can turn them into loyal repeat customers.

Strategies for successful cross-border e-commerce

This section explains the key strategies businesses need to implement to ensure the success of their cross-border e-commerce operations:

Select the target countries and assess the entry phase

For cross-border e-commerce, carefully assessing potential target countries and the entry phase (the initial stage of selling products in overseas markets) is paramount.

First, narrow down the prospective markets and thoroughly research market size, the competitive landscape, and whether your products suit those markets. Based on that information, strategically set a small-scale launch date before you start operations to build a track record, then gradually expand into new regions and product categories.

Localisation and improvements to match the target countries and regions

Improving the website's visuals and usability to align with the language, culture, and business practices of target countries and regions is imperative to earning local customers' trust. By avoiding literal translations and using regionally appropriate expressions to improve site design and the purchase flow, you can achieve higher conversion rates.

Optimisation of logistics and delivery

Shipping costs and delivery times directly affect customer satisfaction. For that reason, along with shipping directly from Japan via services such as EMS (Express Mail Service), it is worth considering local third-party logistics (3PL) services and regional warehouses. This will help you establish a system that lets you ship products quickly after an order is placed.

In addition, a proven cross-border e-commerce support service can help minimise return-related issues and reduce the workload involved in handling them, allowing you to fine-tune the entire workflow.

Clearly state information about customs duties and consumption tax

Taxes such as customs duties and consumption tax are major factors Japanese businesses must check before pursuing cross-border e-commerce.

Clearly display transparent cost information on your e-commerce site, such as:

• "Who is responsible for paying customs duties?"
  
• "How much are the duties?"
  
• "How will the sales tax be handled?"
  

This will help deter issues such as returns, refused deliveries, and customer complaints.

By providing customers with useful information in advance, you improve your brand image and help create repeat customers.

Establish shipping and return policies in advance

As with customs duties and consumption tax, establish delivery and return policies and clearly state them on your website. Specifically, you need to establish the following in advance:

• Disclosure of additional charges: If there are additional charges, such as shipping and handling fees, at what stage are customers informed (e.g., on the purchase screen before checkout is complete)?
  
• Who bears return shipping costs: In which situations is the customer responsible for the return shipping costs?
  
• Return shipping address: Where does the customer ship an item they are returning?
  

By clearly stating this information, you can ease customers' concerns and stress, improve satisfaction, and, over time, increase profit margins.

Using social media and influencers

To increase brand awareness and build trust, engage local influencers with a strong presence in your target market and adopt effective social media marketing strategies.

Sharing content tailored to regional trends will enhance customer engagement and drive purchases.

Locally appropriate payment infrastructure

By adopting the main payment methods used in your chosen countries or regions, you can prevent cart abandonment. Cross-border e-commerce payment methods include PayPal and credit card payments for the US and Europe, and Alipay and WeChat Pay for China.

As shown above, by offering checkout options local customers are familiar with, you can create a convenient and reliable shopping experience that significantly increases purchase completion rates.

Key points to remember for cross-border e-commerce

While this is true for any business, cross-border e-commerce requires identifying risks in advance and preparing thoroughly to prevent unexpected problems and keep operations stable. This section outlines the main considerations when operating a cross-border e-commerce business:

Costs related to logistics and customs duties

When shipping packages overseas, international delivery fees and customs duties apply, pushing costs higher than domestic shipping. If these expenses are estimated incorrectly, it can squeeze profits and risk losses.

Effective solutions for maintaining profitability include setting prices that already account for delivery expenses and using 3PL warehouses.

Exchange rate fluctuations

If you set prices without considering the potential impact of exchange rate fluctuations, margins can drop significantly. When setting prices, keep the following two points in mind:

• Periodically review internal benchmark rates, and update as necessary
  
• Set the price with a built-in margin to account for exchange rate fluctuations (buffer)
  

Fraud risk

Securing cashless payments on your e-commerce site needs to be your top priority. Fraud tactics vary by country. To prepare for fraud methods different from those common in Japan, implement measures tailored to the local transaction environment, such as deploying security tools designed for global use.

Local laws and regulations

Import regulations, tax systems, and consumer protection laws vary significantly by country and region. For that reason, thoroughly check the legal regulations for your selected markets well in advance. Establishing a system to ensure compliance with laws and regulations is a core foundation for avoiding legal risks and protecting your brand reputation.

Language and cultural barriers

Not understanding the local language, culture, and business practices can undermine trust in your brand. Careful communication that considers cultural and historical contexts, along with proper localisation, is key.

Examples of adapting to different languages and cultures include translating websites into multiple languages, providing customer support in the market's primary language, and tailoring marketing efforts to regional values and customs. This helps businesses transcend language and cultural differences to build strong, trusting relationships with customers.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment UIs, access to 125+ payment methods, and Link, Stripe's consumer network.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments or get started today.

FAQs about cross-border e-commerce strategies