By 2021, there will be over two billion global digital buyers – and new businesses are being created every day to deliver innovative software, SaaS, and other digital goods to this growing market. That means the opportunities to sell digital products are limitless, but so is the competition. So to compete and win in the global marketplace companies must deliver a world-class e-commerce experience that meets the high expectations of impatient buyers around the world.
E-commerce myths for digital businesses
For growing businesses, this focus on the shopping experience often comes at the expense of building new and innovative products. More and more of their internal resources are diverted to building and maintaining their e-commerce ecosystem and leaves their teams understaffed, overwhelmed, and at risk of falling behind their larger, better-resourced competitors.
It sounds like a lot of doom and gloom, but it doesn’t have to be this way. Let’s demystify five e-commerce myths to help digital businesses selling globally make 2020 their best year ever.
1. All you need is a payment solution
It should come as no surprise that the first hurdle in selling digital products online is to accept online payments. However, simply adding a “buy now” button to your site is not enough to ensure success.
Going beyond PayPal: the importance of localized payments
PayPal is an incredibly popular payment method around the world. However, you are doing your digital business a disservice if you are relying solely on PayPal for collecting payments. Payment method preferences vary region to region, even from person to person.
For example, European consumers prefer real-time bank transfers while consumers in China want to pay using AliPay and UnionPay. With a full-service e-commerce partner, you can offer multiple payment methods in your checkout to prevent consumers from second-guessing their purchase decision.
Don’t forget about currencies and languages
While offering multiple payment methods is a great way to help global customers easily purchase your digital goods and services, there’s more you can do. Full-service e-commerce tools support multiple languages and currencies in the checkout based on your consumer’s geolocation. Removing the barriers to purchase by offering a truly localized shopping experience will drastically improve your conversion rates.
2. Taxes aren’t important
If you’re seriously considering scaling your business, like or not, taxes are going to play a big role. Plus, tax rules are never set in stone which means you have to be prepared for new rates and regulations for both domestic and international audiences.
Wayfair versus South Dakota
In 2019, the Supreme Court ruled that internet retailers are now required to collect sales taxes in states regardless if they have a physical presence in the state. While the full impact of this ruling is unknown, digital businesses must collect and remit taxes in every state that has sales tax. Each state has its own unique rules and tax rates. For e
Value-Added Tax (VAT)
The Value-Added Tax (VAT) is a consumption tax adopted by several countries around the world. This means if a consumer from a region like the European Union purchases your digital product your business is required to collect and remit the tax based on the rate for the particular area your consumer lives.
The intricacies of local, state, and international tax policies can be overwhelming. And simply ignoring these tax policies doesn’t mean they will just go away. Since managing taxes on a global scale can be a full-time job for a whole team, many digital businesses opt to partner with an e-commerce expert to manage it for them.
3. The checkout experience doesn’t matter
Almost 70 percent of online shopping carts are abandoned worldwide. And one of the top three reasons why visitors abandon their cart is due to a long or difficult checkout process. You work so hard to get visitors to your website, why let a complicated checkout process prevent them from turning into paying customers?
It’s time to streamline the checkout experience
Third-party hosted online stores and redirects are a thing of the past. Consumers expect inline popup checkouts that let them purchase directly from the digital business. The purpose is to maintain brand identity, instill trust, and save the consumer time.
On average, US checkouts contain as many as 14 separate fields. These extra steps can create the friction that drives website visitors away. So the key is to really understand what information is absolutely necessary for completing the purchase process. When the checkout is streamlined, your business benefits.
4. Compliance regulations aren’t necessary for companies outside the EU
While it would be nice to think that where your business is located doesn’t matter in the global economy, the truth is that it is actually very important. Below I am going to cover some of the key regulations all digital businesses must understand and follow.
General Data Protection Regulation (GDPR)
The GDPR was created to protect personal data for all European Union residents. The framework defines personal data as information that can be used to identify an individual like email accounts, IP and home addresses, dates of birth, and online financial information.
If your digital business is conducting business with, offering goods or services to, monitoring the behavior of, or has access to personal data of EU residents in any way, you must be GDPR compliant regardless of your company’s location.
Payment Services Directive (PSD2)
The PSD2 introduced new rules to provide protection for consumers when making payments online. Now any company accepting payments online from consumers based in the European Union must adhere to new payment authentication requirements known as the Strong Customer Authentication (SCA). Setting up the two-factor authentication to adhere to the SCA requires development work and resources to support consumer inquiries.
California Consumer Protection Act (CCPA)
The CCPA is a ruling that protects the rights of consumers based in California. Similar to the GDPR, the CCPA gives more rights to the consumer and requires businesses to adhere to the regulations regardless of their physical presence.
5. Building your own e-commerce solution or using point solutions is cheaper
There are an infinite number of tools out there to help with every aspect of the e-commerce ecosystem; however, any business looking to seriously scale in 2020 needs to stop settling for a subpar tech stack.
The importance of a Merchant of Record (MoR)
Starting out, many digital businesses think they have to do all the heavy lifting on their own to deliver a world-class e-commerce experience. But if your business is serious about growing globally in 2020, you need to consider partnering with an e-commerce solution that is also a Merchant of Record.
A Merchant of Record not only allows you to accept debit and credit card payments, but it also:
Calculates and applies the region-based tax and displays this amount for your customer during the checkout process
Allows customers to securely enter their credit/debit card information in the payment portal
Securely transfers customer information to the payment processor used by the merchant bank
Negotiates and manages ongoing credit card processing fees
Manages all tax calculation, collection, and remittance
Maintains relationships with merchant banks and payment processors
Ensures compliance with country-specific payment laws and regulations
Stays up-to-date with ever-changing card association regulations
Handles refund requests and chargebacks
Get rid of these e-commerce myths if you want to achieve success
All of these processes are essential to successfully selling internationally. It can require full teams to oversee and execute which is why many companies choose to partner with a full-service e-commerce solution to manage it all for them.
As the saying goes, the truth will set you free. And knowing the truth about these e-commerce myths will help your digital business grow in 2020 and beyond.
Looking for an e-commerce platform to grow your digital business? Find all available solutions on G2.
Caitie Gonzalez is the Marketing Communications Manager at FastSpring. When Caitie isn’t busy managing the communication channels for FastSpring, you can find her walking her dog, watching movies, and playing video games.