From Counterfeits to Blacklists, these are the Greatest Barriers to Online Shopping
Online retail is a global phenomenon.
Annual online retail spending is expected to reach nearly $2 trillion by the end of 2017, with double-digit growth for the online market projected at least through 2020. It’s easy to see why this would be the case; online shopping offers many advantages, including convenience, more competitive prices, and access to products that are not available in local markets.
However, the openness and accessibility of international online retail is not without its challenges.
1. Language Barriers
Perhaps the first and most obvious barrier to international eCommerce is the language barrier.
Dynamic in-browser translation services such as Google Translate made great progress in recent years, enabling real-time communication between people speaking two completely different languages. However, this service is not available in all languages, and there is no guarantee that the service will capture the original intent and meaning of each message.
Attempting to communicate using different languages can easily lead to misunderstandings, which can in turn complicate the ordering process or may even lead to the wrong items being shipped.
Remember to carefully review each message before you send it to ensure that it can be easily translated and your intended meaning will be understood. In turn, you must also carefully read each message you receive, and be willing to ask for clarification on any points or items which you do not completely understand.
Ultimately, it’s better to take extra time to get the facts straight than to wing-it and hope for the best.
2. Understanding Foreign Transaction Fees and DCC
When you make an international purchase, the bank will need to convert funds from the merchant’s currency to yours, and there are two ways to do that.
First, you could simply proceed through the checkout process in the merchant’s currency. Then, before charging your card, the bank will convert the total to your local currency. Unfortunately, banks don’t always provide this service for free. Usually, there is a fee—typically around 3% of the total transaction cost—that gets passed on to the cardholder. This is called a foreign transaction fee.
Before shopping internationally, consult your issuing bank. Does this particular card charge a foreign transaction fee? If so, how much?
The other method is Dynamic Currency Conversion (DCC), which automatically converts the currency used in a transaction from the merchant’s currency to yours. This increases transparency, meaning you’ll know exactly how much you’re being charged. You won’t have to calculate the conversions yourself and speculate as to the final amount.
However, this service comes with a fee too, typically 3-5% of the transaction’s total cost. Merchants are required to disclose this fee and ask shoppers if they’d like to use the DCC service or proceed with the merchant’s currency. However, not all merchants comply with this rule and your account may be charged extra without your knowledge. Look for alternatives that might be labeled “other conversion options” or “billed in the seller’s currency.”
If your credit card doesn’t have a foreign transaction fee, it is always best to decline DCC. However, if your card does charge this fee, you’ll have to compare the percentages, see which option is most cost effective.
3. Different Payment Methods for Different Markets
Online shoppers in the US and Canada expect a consistent range of options at checkout—Visa, MasterCard, Amex, Discover, and increasingly, PayPal and Apple Pay.
Those same options are often available with international sellers, but not always. It’s important to be aware of international payment methods before committing too strongly to a purchase.
To demonstrate, let’s compare preferred payment methods among online consumers in the world’s largest economies outside the US:
As you can see, the preferred payment methods vary widely from one market to the next. If the merchant you want to shop with transacts with a different payment method than you’re accustom to, you might have to abandon the purchase.
4. Shipping Costs & Delays
Merchants often list estimated delivery times on their website as part of their general shipping information. These days, it’s common to offer multiple shipping methods, each promising delivery within predetermined timeframes.
Rather than assume posted estimates apply to your region of the world, ask for specific delivery times and a more realistic estimate for your individual order. International orders tend to increase rapidly in shipping time and cost, so the more removed you are from the seller, the more time and money will be necessary for the goods to arrive.
It’s also worth noting that the greater the distance, the wider the margin of error in accurately predicting shipping time. For example, it’s easier to predict when an item will arrive with relative accuracy when shipping to an adjacent neighboring country. However, shipping to the opposite side of the world will likely result in a margin of error that is days–or even weeks–wide.
5. Blocked Sales from Certain Markets
Of course, the above-mentioned issues are only relevant if a merchant is willing to ship to your location in the first place.
This issue tends to occur more frequently with small businesses and private sellers who decide that it is simply not financially viable to offer shipping to every country or international region. Buyers in major markets like the US won’t experience this problem as frequently, but those who live in more remote or less-developed parts of the world have likely experienced this issue on several occasions.
One of the most common reasons why merchants decline sales from certain parts of the world is the fear of online fraud. They might use blacklists to automatically block transactions from countries known to have high instances of online fraud such as Indonesia or Venezuela.
Keep this in mind if you live in a country or region commonly associated with eCommerce fraud attacks, as your location may interfere with or slow the processing of the sale.
6. Paying Duties & Taxes
It’s possible that the final purchase total is significantly more than you anticipated once extra fees, duties, and taxes are added in.
Previously, US citizens would be required to pay import duties for international orders valued at over $200. A 2015 law raised this threshold to $800, giving US shoppers significantly more leeway in shopping online before the tax liability kicks in. Canadian consumers, on the other hand, are not so lucky.
Under Canadian law, many online purchases valued at more than CAN $20 are subject to duty fees, along with general Goods and Services Taxes on-top of the cost of the original good and other duties imposed. Not only that, but some items call for additional taxes and fees depending on the product category. For example, luxury items are typically subject to an excise tax in addition to the duties, GST and provincial taxes already paid.
Regardless of where you live, you’ll want to check for any specific rules and regulations imposed on your purchase, remembering to convert currency when necessary in calculating price thresholds.
7. Authenticating the Goods
One of the primary draws for online shoppers is the prospect of scoring premium products at low cost. Unfortunately, tens of thousands of unsuspecting shoppers every year find those “too good to be true” prices are exactly that.
Luxury goods and consumer electronics are prime targets for counterfeiters attempting to pass-off imitations as authentic name brand merchandise. This is a massive problem and is still growing fast; as of 2016, the annual trade in counterfeit goods reached $461 billion.
While you don’t have to cut-out shopping in certain markets or product categories entirely, one should be wary of retailers located in markets known for producing and selling counterfeit goods. The most obvious of these is China, which produces roughly two-thirds of all counterfeit goods on the market. In contrast, the closes runner-up, Turkey, produces just 3.3% of the global total.
8. Return Policies
While free, fast returns are becoming increasingly standard in North America and Europe, the same isn’t necessarily true in every corner of the global marketplace. This can make international orders for certain products like clothes and electronics especially tricky, given that clothes may not fit in the way to which you’re accustomed and electronics may not be compatible in your region.
If these or other problems arise, you might find yourself on-the-hook for costly return shipping.
It’s wise to check return shipping policies before completing an online purchase. Weigh the risks against the benefits, then decide whether it’s worth it to complete a purchase.
If for whatever reason you believe the merchant in question has not lived up to the service guaranteed by their policies, contact eConsumer Services®. We’re more than happy to help resolve disputes between merchants and consumers, delivering the best possible result for all parties.
Join the Conversation
International eCommerce is a trans-border concept, bringing together people from thousands of different backgrounds and walks of life in a common, shared market. However, the rapid development of global eCommerce leads to uneven adoption of different technologies, procedures, and protocol from one country to the next.
Have you experienced problems making an international purchase? Share your story below.