Cross-Border E-Commerce: The Gateway to the World

1. What is Cross-Border E-Commerce? Cross-border e-commerce involves buying and selling goods and services online between different countries. This allows businesses to reach global customers more easily and efficiently than ever before. It’s not just about selling products; it’s also an opportunity to build international brands and expand business networks.
2. Differences Between Cross-Border and Domestic E-Commerce The main difference between cross-border and domestic e-commerce lies in the complexity of legal regulations, taxes, and shipping requirements. Businesses engaged in cross-border e-commerce must comply with each country’s e-commerce and import procedures, and they face challenges related to language, culture, and international payment systems.
3. The Cross-Border E-Commerce Market in Vietnam According to Statista, the average share of cross-border e-commerce in Southeast Asia increased from USD 74 billion in 2020 to USD 120 billion in 2021. From 2016 to 2020, the growth rate averaged 37.7% per year, higher than the global average of 27.4% per year. Revenue from e-commerce in Southeast Asia is projected to reach USD 234 billion by 2025.

Amazon's recent report, "Local Sellers, Global Consumers: Trends in Exporting through E-Commerce in Vietnam," estimated that Vietnam's cross-border retail sales (B2C) grew over 20% annually, reaching VND 75.4 trillion (approximately USD 3.3 billion) in 2021. It is projected that Vietnam's B2C e-commerce will reach VND 256.1 trillion (USD 11.1 billion) by 2026. If viewed as an export sector, B2C e-commerce could be the fifth-largest export strength of Vietnam within the next five years.Moreover, Vietnamese sellers have sold over 17 million products on Amazon, with export value increasing by more than 50% year-over-year. Businesses of all sizes, including small and medium enterprises, can unlock global business opportunities through Amazon.These promising numbers show that Vietnamese businesses are increasingly aware of how to sell their products abroad, especially agricultural products, to reduce dependence on small-scale exports. In the era of the fourth industrial revolution, selling products internationally has become easier and more seamless, saving significant time and costs compared to previous periods.

4. Benefits of Cross-Border E-Commerce Engaging in cross-border e-commerce brings several clear benefits for businesses:

• Expanding the Consumer Market: Cross-border e-commerce allows businesses to easily reach millions of potential customers worldwide through global e-commerce platforms like Amazon, eBay, and Alibaba, expanding their customer base and market reach.
• Increasing Revenue and Profit: Access to international markets helps businesses significantly increase revenue and profit. The ability to sell internationally helps balance supply and demand and capitalize on different seasonal advantages worldwide, thereby maximizing revenue and profit.
• Enhancing International Competitiveness: Engaging in cross-border e-commerce not only opens opportunities to large markets but also helps businesses strengthen their position and power in the international market. This enables businesses to build and grow global brands, increasing their value.

5. Challenges and Risks in Cross-Border E-Commerce Despite its benefits, cross-border e-commerce faces many challenges and risks:

• Different Legal Regulations and Tax Policies: Businesses must navigate complex legal regulations and tax policies in each country they operate in. This can lead to high costs and difficulties in compliance, affecting business efficiency and profitability.
• Information Security and Transaction Safety: Information security and transaction safety are major risks in cross-border e-commerce. Building customer trust requires businesses to ensure the security of their systems and protect personal information, avoiding issues like data breaches or fraudulent transactions.
• Shipping Conditions and Delivery Times: International shipping often faces challenges related to delivery times, high shipping costs, and complexities, especially in industries with special requirements like perishable goods. These issues can affect customer experience and lead to losses in goods and profits for businesses.

Given the potential to expand markets and increase revenue for Vietnamese businesses, cross-border e-commerce plays a crucial role in reducing dependence on small-scale exports and promoting sustainable economic development. However, to succeed in this environment, businesses must overcome challenges related to legal compliance, information security, and shipping, thereby optimizing benefits and ensuring sustainability in an increasingly competitive international business landscape.