Advertising costs

In a situation where sales performance and name recognition are lacking at overseas, it is impossible to sell products simply because they are made-in-Japan, instead the key is to make the most of your domestic track record and name recognition, while reducing the amount of advertising to promote your business.

Many people think that Internet advertising means search advertising on Google, etc., but j-Grab have also taken measures to increase your businesses’ exposure and matchmaking by help you to open a shop in overseas EC malls such as eBay, which has 184 million active users per year. In addition, we will use our official Facebook page "JAPAN CRAZE" to promote your businesses through word-of-mouth marketing by foreign influencers (KOLs), and "j-Coupon", which distributes timely coupons exclusively for cross-border EC, to promote EC cart purchases. It is necessary to consider when, where and how much to spend on advertising, and then to use it proactively.

Legislative and institutional changes

In China's cross-border EC, the introduction of the cross-border EC tax system has been postponed for more than a year, and will be implemented in 2019, and other major changes to the tax system and regulations are frequently implemented. In particular, cosmetics, which are popular in cross-border EC, are required to be registered with the NMPA (formerly the CFDA-China Food and Drug Administration), and the tax system is being revised continuously. The possibility of sudden changes to the system that would be detrimental to your businesses cannot be ruled out.

Other of China, the legal system regarding cross-border EC does not change frequently, but it is necessary to keep a close eye on it on a daily basis to ensure that there are no problems if and when the legal system changes.

Food Import Regulations

Following the accident at the Fukushima nuclear power plant, imports of food, agricultural products and feed from 10 prefectures, including Fukushima, Tokyo and Tochigi, have been banned in order to ensure the safety of food and agricultural products exported to China from radioactive contamination. Other countries must be investigated to determine whether they can export on a country-by-country basis.

For individual investigation, it is necessary to carry out procedures with the latest information on cross-border EC and trade, such as checking with the consultation service of the Plant Protection Station and the Animal Quarantine Station. Basically, in cross-border e-commerce, proof of origin is not required for non-commercial exports, but the rules vary from country to country and are constantly changing. It is important to take extra care and seek advice from a cross-border EC or trade expert to ensure that you are not trading illegally.

Delivery times and costs

In cross-border ecommerce, it is important to keep the time between ordering a product and its delivery to the consumer as short as possible. Due to the recent surge of Amazon Prime members abroad, we take it for granted that our orders will be delivered the same or next day. Therefore, when a purchase is made in the cross-border e-commerce, it is compared not only in terms of delivery time, but also in terms of the total amount paid, including customs duties, taxes (such as VAT) and international shipping costs. A longer delivery times also increase the risk of cart abandonment and order cancellation.

In the case of food with a short shelf life, it is important to note that delays in delivery can lead to returns and complaints if the expiry date is exceeded or the consumption date is shortened.

Customer service

Although most of the cross-border EC is conducted in English, there are times when it is necessary to deal with customers in local languages other than English. This is particularly important in China, where it is common to use social networking messaging tools such as WeChat for real-time chatting, and messaging tools provided by e-commerce malls.

In addition, it is not uncommon to have to routinely return goods that have been dispatched.The return rate is particularly high for clothing, and on Singles' Day (11 November) the return rate can be as high as 60 percent in the clothing sector. The rules of some Chinese e-commerce malls do not allow you to even open a shop in China unless you have a returns warehouse there, so you have to work with your Chinese partner. On the other hand, the rate of returns, refunds and complaints from Europe, America and South East Asia is often lower than in China, but you need to bear in mind that returns and refunds will occur, you will need to set the proper selling price and run the operation.

Exchange rate fluctuation risk

The impact of exchange rate fluctuations on sales is not small and cannot be directly controlled by the business, so many businesses nowadays sell their products in Japanese yen. The majority of cross-border e-commerce company websites set the product price in Japanese yen, which has no exchange rate fluctuation risk, and settle the transaction with the amount automatically converted to the buyer's home currency, such as dollars or euros.

However, in the case of your own cross-border EC site Shopify or Magento, you can decide the overseas price, so you can set the Japanese sales price of 10,000 yen products, such as 120 US dollars, and then receive the payments in foreign currency. There are also techniques to keep exchange and transfer fees low when transferring sales proceeds held in your payment account to your Japanese bank account.

Fraudulent orders

There have been cases of people using other people's credit card details to place fraudulent orders on e-commerce sites. This is also the case in domestic e-commerce, but also not less in cross-border e-commerce, where credit cards issued overseas are used, so there is a greater risk of fraudulent use than in Japan.

In order to prevent fraud, it is essential that you take steps to mitigate the risk of fraudulent orders, for example by installing fraud detection systems and chargeback insurance.

Settlement of high value items

The maximum transaction amount for PayPal is 1,000,000 yen in Japan, and the transaction amount cannot exceed 1,000,000 yen for luxury brand goods. However, by implementing Stripe payments on Shopify or Magento, it is possible to carry out transactions in excess of 1 million yen.

In addition, many businesses wish to send money to a bank account for BtoB transactions, and it is necessary to have an overseas bank account for cross-border EC transactions.　Even in B2C, when opening a shop on eBay, Amazon, Shopee, etc., you need to have an overseas bank account with Payoneer to open a shop.

Authentication

In cross-border e-commerce, the distribution of unlicensed products has also become a serious problem, as buyers receive counterfeit products as a result of the diversification of sales channels, and are deceived by malicious sellers, and only some of the items in the package are changed to fake ones.

By introducing a service that allows you to verify the authenticity of your products, you can offer your customers peace of mind and improve your brand image. (Introduction Example: Canon IT Solutions C2V CONNECT, etc.)

Acquisition of trademark rights

Please don’t think that it is not related to you unless you have a strong brand. There have been a number of cases, particularly in China, where people being victimised by products that are not so widely recognised or known.

It is expensive to obtain trademark rights, but we encourage you to do so whenever possible. In addition, it is necessary to carry out a preliminary search in the target country to ensure that the trademark has not been acquired by another company prior to selling.

The future of cross-border EC

The Japan External Trade Organization (JETRO) conducted a questionnaire survey of companies on their willingness to expand exports, and found that the number of respondents who said they would "expand further" or "make new efforts in the future" dropped from 80.4% in 2019 to 76.7% in 2020. In the context of the spread of the new coronavirus, the willingness to export has decreased.

On the other hand, there is a positive attitude towards cross-border EC, with 35.9% of companies stating that they will expand their use of cross-border EC for overseas markets in the future in 2018, increasing to 43.9% in 2020. In the context of the spread of the new coronavirus, companies are less willing to export, but there is an increasing willingness to expand cross-border e-commerce, particularly among small and medium-sized enterprises.

Countries to enter for cross-border e-commerce

In the domestic survey on overseas sales destinations, China, the United States and Taiwan were the top destinations, followed by Singapore, Vietnam, Thailand, Hong Kong, France, Malaysia and Indonesia, with ASEAN countries coming in fourth and higher, indicating high expectations for ASEAN countries.。

However, China's cross-border e-commerce market has the world's largest number of entrants, and purchase prices are severely discounted, with only a few companies achieving the sales targets set by the entrants.

On the other hand, it will be necessary to respond to multiple countries with an eye on a wide range of target markets, such as Europe and the United States, which are stable and have low barriers to entry into cross-border EC, ASEAN countries, where consumer spending is expected to rise in the future as the economic scale expands, and Russia, where the market scale is rapidly expanding.

As the target market expands, so does the cost and effort required, so it is important to choose a cross-border EC platform that allows you to expand into multiple countries and markets in a one-stop operation, use a "cross-border EC specialist consulting company” or "cross-border EC one-stop service" that is familiar with cross-border EC and trade.

Choosing the right cross-border EC business model

There are multiple business models available for cross-border EC, but they can be divided into two categories: the "direct delivery" model, in which orders are shipped directly from Japan after the sellers received orders, and the “destination country delivery” model, in which stock is held in the destination country and orders are then delivered from a warehouse in that country. When selling products via the cross-border EC, what type of business model to choose is a troublesome consideration for businesses, but the important thing is the inventory risk.

As for the “destination country delivery” model, it is possible to deliver the products to the consumer promptly after receiving the order. However, the hurdles are much higher as the goods are exported to the other country by trade, which the general trade rules apply. The inventory risk and warehousing costs increase if sales are not satisfactory. The opposite is the case with “direct delivery”, where the inventory is held in Japan, reducing the inventory risk compared to store the inventory at the destination country.

However, there is a disadvantage in that it takes longer lead times for the goods to reach the consumer. It can be said that the choice between “direct delivery” and”destination country delivery” is left to the business operator's way of thinking, how to view the inventory risk and delivery lead time, but it would be good to make a decision while gathering the opinions of experts and consultants in cross-border EC.

Certification systems in the destination country

Certification schemes for products vary from country to country and must be thoroughly investigated and considered in advance. In the case of cross-border EC sales, in many cases product certification is not required for direct shipments from Japan, as they are treated in the same way as personal imports, but in some countries product certification is required even for direct shipments.

Setting the right selling price

Setting the right selling price is an important topic in cross-border e-commerce. The selling price is set by adding the necessary expenses and profits to the cost price, but based on the actual situation of cross-border EC sales, it is necessary to set a competitive price based on a comparison with competing local products.

Sales commission (margin) adjustments are also necessary. Setting a selling price is not always easy, especially at the start, when demand is often not visible. Many e-commerce malls and shops offer a "final total price including international shipping costs", but if this seems too expensive in the eyes of the consumer, they may hesitate to buy. You will also need to keep up with coupons, loyalty points and sales that take place at events, so you will need to set an appropriate selling price, taking into account the opinions of consultants and experts who are familiar with cross-border EC.

Clarification of the scope of responsibility in case of trouble

You must be prepared for the unlikely event that the goods do not reach the consumer, or if they do but the customers say they have not arrived, or that the goods are defective.It is advisable to anticipate specific events that may occur in advance and clarify the extent of your company's responsibility and to include this in your terms and conditions and on your product pages.

In the event of damage or defacement of goods in the course of delivery, it is necessary for the delivery service provider, such as Japan Post or International Courier, to provide compensation. If the goods are delivered without any damage or stain on the exterior, the seller will be required to take action. As different countries have different cooling-off and returns rules for e-commerce malls, it is also important to know how to deal with these, including the primary contact point.