A cross-border business is any company that operates in more than one country. This might involve trading goods and services internationally, making investments in foreign markets, or setting up operations such as manufacturing or service provision in multiple locations.

The internet and digital technology have made it much easier for businesses to become cross-border, with global cross-border ecommerce market value expected to increase from $2.8 trillion USD in 2023 to $16.4 trillion USD by 2032. By expanding beyond their home country, businesses can access new customers, diversify their operations, and potentially benefit from lower costs or different regulations.

While cross-border businesses offer many opportunities, they also present unique challenges. These can include navigating different legal systems and cultural norms, managing fluctuations in exchange rates, and ensuring compliance with regulations in multiple jurisdictions. Despite these challenges, the potential rewards of tapping into global markets continue to attract companies to cross-border operations.

Below, we’ll explain how to start a cross-border business, the potential benefits and challenges of selling across borders, how to decide which countries to sell in, and cross-border selling options.

What’s in this article?

• How do I start a cross-border business?
  
• What are some examples of cross-border commerce?
  
• Benefits of selling across borders
  
• Top challenges for cross-border ecommerce
  
• How to decide which countries to sell in
  
• Cross-border selling options
  
• Cross-border ecommerce glossary
  
• Marketplaces to consider
  

How do I start a cross-border business?

Here are some tips for how to start a cross-border business.

• Conduct market research: Determine where there is demand for your products or services. Learn about cultural norms and consumer behavior in the markets you are targeting, and examine the legal and regulatory framework of the countries where you plan to operate.

• Develop a business plan: Create a market entry strategy, deciding whether to enter through a subsidiary, a partnership, or direct exports. Prepare detailed financial forecasts including costs, revenues, and break-even analysis. Identify potential risks and develop strategies to mitigate them.

• Establish legal and tax structures: Choose a business structure (e.g., foreign branch, subsidiary, joint venture). Research tax regulations in each market where you’ll be operating and secure your intellectual property rights in every jurisdiction.

• Set up banking and finance: Set up bank accounts that can handle multiple currencies and understand foreign transaction fees. Research options for funding including international loans, venture capital, or government grants.

• Build a global team: Build a management team with international business experience and consider hiring local employees who understand the business environment. Provide cultural sensitivity training to your staff to improve communication.

• Create a logistics strategy: Develop a strong supply chain that can handle international shipping and customs. Establish efficient distribution channels to ensure your product reaches the market.

• Develop a marketing strategy: Adapt your marketing strategies to fit cultural preferences and local market conditions. Use digital marketing and social media to reach a broader audience.

• Implement technology solutions: Invest in technology that supports international operations, such as enterprise resource planning (ERP) systems. Ensure compliance with data protection regulations across different countries while using these systems.

• Manage compliance and quality control: Regularly review and comply with local and international regulations. Maintain high-quality standards for your products or services to build and retain trust.

What are some examples of cross-border commerce?

Cross-border commerce refers to transactions in which the buyer and seller are located in different countries. Here are some common examples of cross-border commerce.

Ecommerce platforms

International retailers: Companies such as Amazon and Alibaba facilitate the sale of products across borders. Customers can purchase goods from different countries and these platforms handle logistics, payment, and customs clearance.

Niche marketplaces: Platforms such as Etsy or Farfetch specialize in specific categories (e.g., handmade goods, luxury fashion), connecting international buyers with sellers from around the world.

Digital services

Software-as-a-service (SaaS): Businesses such as Salesforce and Microsoft provide software services globally, allowing users in different countries to subscribe and use their software online.

Content streaming: Services including Netflix and Spotify offer digital streaming, and are available in many countries. These services adapt content to regional languages and preferences.

Supply chain and manufacturing

Outsourced manufacturing: Companies such as Apple design products in one country and manufacture them in another to take advantage of lower labor costs and expertise in manufacturing.

Automotive industry: Major car manufacturers such as Toyota and Volkswagen operate production facilities in multiple countries, assembling vehicles and shipping them to many different markets.

Financial services

Cross-border banking and payments: Banks and financial institutions offer services that facilitate international trade and commerce, including foreign exchange services, international money transfers, and cross-border banking solutions.

Cryptocurrency transactions: Cryptocurrencies enable direct, peer-to-peer transactions across borders without the need for traditional banking systems.

Tourism and travel services

Booking platforms: Companies such as Booking.com and Airbnb enable travelers to book accommodations and experiences in different countries and support multiple currencies and languages.

International airlines: Airlines operate internationally, selling tickets to customers from different countries and navigating complex international aviation regulations.

Professional services

Consulting and legal services: Firms including McKinsey, PwC, and international law firms provide consulting and legal services to clients globally. Often, this involves cross-border legal, financial, and business strategies.

Educational services

Online education platforms: Coursera and edX offer courses from universities worldwide, allowing students from any country to enroll and learn remotely.

International student recruitment: Universities and colleges market their programs to international students, providing education services across borders.

Benefits of selling across borders

Selling across borders can create the following benefits for your business.

Market reach

• Broader audience: By entering international markets, businesses can expand their reach and access a larger pool of potential customers.

• Diversification: Selling internationally helps companies diversify their customer base, which can reduce dependence on their home market and provide stability against local economic fluctuations.

Revenue

• Higher sales potential: Access to more customers increases the potential for sales, often resulting in higher overall revenue.

• Premium pricing: In some markets, foreign products can command a premium price due to perceived quality, exclusivity, or brand prestige.

Competitive advantage

• Unique offerings: Businesses that offer products or services that are unique or superior to those available locally in other countries can capture sizable market share.

• Brand positioning: International presence can strengthen a brand’s image and reputation, and it can position the company as a global player.

Economies of scale

• Lower costs per unit: By expanding production or sales volume, businesses can achieve economies of scale—reducing the cost per unit of goods sold and increasing profit margins.

• Optimized resources: Businesses can optimize their production capacity and resources by supporting multiple markets, especially if domestic demand is seasonal or limited.

Innovation and learning

• Cross-cultural insights: Exposure to multiple markets creates a deeper understanding of different customer behaviors, preferences, and trends. This can inform product development and marketing strategies.

• Adaptability and flexibility: Operating in diverse regulatory and cultural environments encourages businesses to be more adaptable and responsive to change.

Risk mitigation

• Spread risk: By operating in multiple markets, businesses can spread out their risk. Economic downturns, regulatory changes, or market saturation in one region might be offset by better performance in another.

• Continuity and stability: Global operations can create business continuity in case of local disruptions—whether they are economic, political, or natural disasters.

Talent acquisition

• Global talent pool: Companies gain access to a broader talent pool, which can introduce diverse perspectives and skills necessary for innovating and maintaining a competitive edge.
  

Top challenges for cross-border ecommerce

Here are some common challenges that companies engaging in cross-border ecommerce face.

Regulatory compliance

• Customs and tariffs: Navigating customs regulations and tariffs in different countries

• Legal restrictions: Understanding and complying with local laws regarding online sales, consumer rights, data protection, and product standards in multiple jurisdictions

Logistics and shipping

• Shipping costs and times: Managing the higher costs and longer delivery times associated with international shipping

• Supply chains: Coordinating logistics across multiple borders, which might involve several transit points and different carriers

• Customs clearance: Dealing with the potential delays and complications in customs clearance processes

Payment processing

• Currency conversion: Handling multiple currencies for pricing, accounting, and revenue management

• Payment methods: Adopting preferred local payment methods, while managing the integration and operation of these systems

Culture and language

• Localization: Adapting websites, product descriptions, and marketing materials to local languages and cultural nuances

• Consumer behavior: Understanding and supporting local consumer preferences and buying behaviors

Market entry and competition

• Establishing presence: Building a brand presence and gaining trust in new markets where local competitors might already have a strong foothold

• Competitive differentiation: Differentiating offerings in a crowded market, especially against domestic products that might have the advantage of local preference

Taxation

• Complex tax structures: Managing different tax regimes and compliance with sales tax, value-added tax (VAT), and other local taxes without eroding profit margins

• Double taxation: Navigating double taxation, in which both the home and host country tax the same income

Technology

• Website optimization: Ensuring websites are optimized for international traffic, which includes load times, mobile responsiveness, and search engine optimization (SEO) for different regions

• Data security: Protecting customers’ data across different jurisdictions, each with its own set of cybersecurity laws and regulations

Customer service

• Multilingual support: Providing customer support in a variety of languages and across different time zones

• Post-sales service: Handling returns, refunds, and customer queries to maintain service quality and customer satisfaction

Economic instability

• Currency fluctuations: Managing risks associated with currency exchange rate volatility, which can affect pricing and profitability

• Market volatility: Responding to economic or political instability in a target market, which can affect consumer spending and market dynamics

Intellectual property

• Protection across borders: Safeguarding intellectual property in jurisdictions where IP laws might be less stringent or enforcement might be lax
  

How to decide which countries to sell in

Deciding which countries to sell in involves a strategic assessment of your business’s objectives and capabilities, as well as the relevant features of each potential market. You’ll need to ensure that the chosen markets align with your long-term business goals and strategic direction. You’ll also need to ensure that you have the resources necessary to enter and sustain operations in these markets—including financial resources, human capital, and local partnerships.

Here’s a brief overview of what to research and assess when considering new markets.

• Consumer demand: Identify markets where there is a strong demand for your products or services. Use market research data, consumer trends, and competitive analysis to gauge interest.

• Product fit: Consider whether your offerings meet the needs and preferences of customers in these markets.

• Economic stability: Look for countries with stable economic conditions, as they are more likely to provide a reliable environment for business operations.

• Purchasing power: Prioritize markets with higher customer purchasing power to maximize revenue potential.

• Trade laws and regulations: Understand the legal framework of each market, including import and export regulations, tariffs, and taxes. Consider countries with more straightforward regulatory environments.

• Intellectual property protection: Ensure the countries have strong laws to protect your intellectual property.

• Level of competition: Analyze the competitive environment. A market with fewer competitors, or where competitors are not fulfilling customer needs, could represent a good opportunity.

• Barriers to entry: Consider markets with lower barriers to entry to reduce initial costs and complexity.

• Cultural barriers: Evaluate cultural differences that might affect the marketability of your products or services. Consider language, customs, and consumer behavior.

• Localization needs: Assess the extent of product adaptation required to meet local tastes and legal requirements.

• Supply chain infrastructure: Choose countries with reliable infrastructure for logistics, including transportation, warehousing, and distribution networks.

• Shipping costs and times: Consider the impact of logistics on cost and customer satisfaction.

Cross-border selling options

When it comes to cross-border selling, businesses have a few different platforms to consider.

• International marketplaces: Platforms such as Amazon, eBay, and Alibaba have a vast reach and established customer base, making it easier for businesses to enter new markets. But competition can be fierce and sellers on these platforms might have limited control over their branding and customer experience.

• Localized websites: Creating dedicated websites for each target market gives businesses greater control over branding, messaging, and the overall customer experience. However, it also requires a bigger investment for translation, localization, and marketing efforts.

• Third-party ecommerce platforms: Platforms such as Shopify and BigCommerce offer a range of tools and features to support cross-border selling, including multicurrency support, language translation, and international shipping integrations. These platforms can be a good option for businesses that want a simpler approach.

• Direct-to-consumer (DTC) model: Selling directly to consumers through your own website or online store gives you full control over the customer experience and brand image. But it requires major investment in marketing, customer acquisition, and fulfillment.

• Partnerships with local distributors: Partnering with local distributors or retailers can help businesses overcome logistical challenges and gain access to established distribution networks. But those businesses might have to share profits and give up some control over the brand.

Cross-border ecommerce glossary

Here’s a glossary that covers key terms in cross-border ecommerce

A

• ATA Carnet: A document that allows a business to import goods temporarily, without paying duties and taxes

• Ad valorem tariff: A tariff based on the value of the goods

B

• Bill of lading (BOL): A legal document issued by a carrier to a shipper, detailing the type, quantity, and destination of the goods being carried
  

C

• Customs clearance: The process by which goods are inspected and approved for entry into a country by the customs authorities

• Country of origin: The country where the goods were manufactured or produced

D

• Duties: Taxes imposed by a government on imported or exported goods

• Delivered Duty Paid (DDP): An Incoterm where the seller assumes all responsibilities and costs of transporting goods until the buyer receives them

E

• Economic Operators Registration and Identification (EORI): A system for registering and tracking operators who are involved in customs activities within the EU

• Export license: A government document that authorizes the export of goods in specific quantities to a specific destination

F

• Free trade agreement (FTA): A pact between two or more nations to reduce barriers to imports and exports among them via elimination or reduction of tariffs, quotas, and duties

• Fulfillment: The process of storing, packing, and shipping merchandise to customers

G

• Gross domestic product (GDP): The total value of all goods and services produced over a specific time period within a nation’s borders

• Global value chain (GVC): A series of activities involved in designing, producing, and marketing a product on a global scale

H

• Harmonized System (HS) code: An internationally standardized system of names and numbers to classify traded products
  

I

• Incoterms: International commercial terms from the International Chamber of Commerce that define the responsibilities of buyers and sellers involved in international transactions
  

L

• Landed cost: The total price of a product once it has been delivered, including the original price, transportation fees, customs, duties, and taxes
  

M

• Market entry strategy: A planned method of delivering goods or services to a new target market and distributing them there

• Multichannel retailing: The practice of selling merchandise on more than one sales channel

P

• Payment gateway: A service that authorizes and processes payments in ecommerce transactions

• Pro forma invoice: An invoice sent to a buyer prior to the delivery of goods, detailing the kinds and quantities of goods to be sent

R

• Rules of origin: The criteria used to define where a product was made. These are important for implementing trade policies such as tariffs and quotas
  

S

• Supply chain management (SCM): The management of the flow of goods and services, including all processes that transform raw materials into final products

• Stock keeping unit (SKU): A unique identifier for each distinct product and service

T

• Tariff: A tax imposed by a government on goods or services imported from other countries

• Trade barrier: Any regulation or policy that restricts international trade

V

• Value-added tax (VAT): A tax on the amount by which the value of an article has been increased at each stage of its production or distribution
  

W

• Warehousing: The process of storing goods within a commercial building to accommodate bulk import, export, wholesale, or distribution
  

Marketplaces to consider

When choosing a marketplace for cross-border ecommerce, consider your specific business needs and goals. Choose marketplaces with a strong presence in regions where your target customers live and platforms that support your product type and brand image. Evaluate the costs of listing and selling on each platform—including commissions and shipping fees—and evaluate the backend support, ease of setup, and the level of customer service that the marketplace provides.

Here’s a breakdown of some of the major online marketplaces for cross-border ecommerce and what they offer.

• Amazon: Amazon has a strong global presence, with specific platforms for the US, Canada, UK, Germany, India, Japan, and more. It’s best for a wide range of products including electronics, apparel, and home goods. Key features include strong logistics (fulfillment by Amazon), a large customer base, and Prime membership benefits.

• eBay: eBay has a global presence in more than 190 markets. It’s suitable for a wide range of items, from new products to secondhand goods and collectibles. Key features include an auction-style sales model in addition to standard product listings and a broad array of categories.

• Alibaba/AliExpress: Alibaba/AliExpress are China-focused with a growing international presence. They’re best for manufacturers and business-to-business (B2B) sales, though Alibaba is popular for business-to-consumer (B2C) with more than 200 million active buyers worldwide. Key features include access to a large manufacturer base and bulk purchasing options.

• Rakuten: Rakuten has a strong presence in Japan, with additional presence in the US, Europe, and other parts of Asia. It’s best for a variety of products, similar to Amazon, but with a substantial focus on Japanese customers. Key features include a loyalty points system and personalized storefronts for sellers.

• Etsy: Etsy has a global presence that’s particularly strong in the US, UK, Canada, and Australia. It’s best for handmade goods, vintage items, and crafts. It’s known for supporting small artisans and crafters, and for its strong community environment.

• Mercado Libre: Mercado Libre is dominant in Latin America, including Mexico, Brazil, and Argentina. It’s best for a wide range of products, similar to Amazon, and features an integrated payment system (Mercado Pago) and logistics services.

• Shopee: Shopee has a strong presence in Southeast Asia and Taiwan, and it is expanding its Latin American presence. It’s best for electronics, fashion, household goods, and more. Key features include a mobile-centric marketplace, free shipping, and promotional support for sellers.

• JD.com: JD.com is mainly in China, with some international shipping options. It’s best for high-quality goods—from electronics to luxury items—and its features include a direct sales model, strong quality control, and strong logistics infrastructure.

• Zalando: Zalando is primarily focused in Europe, and it’s best suited for fashion and lifestyle products. Features include a large customer base interested in fashion and partnership with local and international brands.

• Cdiscount: Cdiscount has a strong presence in France, with offerings to other European markets. It’s best for a broad range of products, similar to Amazon, with a focus on French customers. Key features include competitive prices, strong seller support, and a loyalty program.