Are your online assets ready to transact global e-commerce? Although the Internet has broken down the national boundaries of retail marketing, enabling even extremely small startups to sell their wares in channels far beyond their physical boundaries, globalization carries with it a number of pitfalls.

Beyond linguistic challenges, some of the logistical hurdles include import/export regulations, real-time currency exchange, tax and fee implications, and increasingly sophisticated fraud.

Sellers entering the global marketplace must ready themselves for the unique -- although not insurmountable -- challenges that stand in the way of success.

One of the first stumbling blocks in your ability to transact international business will be working with and converting multiple currencies.

To date, few online merchant Web sites offer any type of currency conversion from the native sale price. If you've ever bought goods through one of these ill-equipped sites, you'll know this leaves you in a bind for assessing the "true" purchase price of the item. It's not until your credit card statement arrives that you know what the item actually cost you.

For many customers, bidding blindly in a foreign currency is a risk they won't undertake. And the result is lost business.

More and more sites, such as CDnow, for example, have begun fitting their sites with a default currency selection in which to display the sale prices. CDNow presents 25 currency options, from the Euro to the Venezuelan Bolívar, that give customers the buying information they need to shop with confidence.

An increasing number of payment-gateway providers are following suit, offering merchants comparable capability to sell in the currencies of many nations. Although the number of merchants currently taking advantage of this option is low, VeriSign, SurePay, and CyberSource offer merchants a good starting point for easing the currency exchange in international transactions.

Another area of increased risk and cost in global transactions is fraud.

In the United States, one of the first lines of defense for testing the validity of a transaction is through an address-verification service. Address verification provides a confirmation of the customer's address against the billing address listed on the customer's credit card account. Although only rudimentary, this method can offer an indication that the transaction might be fraudulent.

Unfortunately, address-verification services work only for cardholders living within the United States, leaving foreign transactions unchecked and at risk.

It is also unfortunate that many merchants who set out in the first rush of global commerce came back with their tails between their legs. As the art of fraud increases in sophistication, the only alternative for many was to shut down their acceptance of international transactions.

When victimized by fraud from beyond our national borders, merchants are often left with little recourse. And credit card thieves know that merchants rarely attempt to recover goods stolen internationally. The cost and effort necessary to adjudicate each transgression could quickly outweigh the value of the transgression itself.

Additional twists in the process come by way of items such as government export restrictions, tax structures, and fees that differ from country to country and from product to product. Customs documentation and payments to customs offices can become extremely complicated when dealing in high volumes across national borders.

Helping to ease some of the logistics and barriers to global e-commerce are companies such as myCustoms.

The company plays the part of an automated diplomat in the exchange by integrating with your back-end services to provide a complete picture of the total landing costs and compliance verification with government regulations, while facilitating the document-filing and customs-payment process.

Another area where offerings such as myCustoms' plays an important contribution is in collecting tariffs and value-added taxes.

Many countries levy import fees on goods purchased from beyond their borders. Although the customer can get a picture of the initial sales price of goods, figuring in the additional tariffs requires extra, often hand-tooled steps, and can substantially affect the final purchase cost (as well as the buyer's decision to complete the transaction).

Although many companies may have found their initial attempts at transacting sales on foreign soil a complicated task, often with adverse effects to the bottom line, the technology is finally catching up to our needs. With proper insight and preparation, you can save your company from many of the pitfalls faced by its predecessors.

» posted by ITworld staff

InfoWorld

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