Why data is driving success in cross-border ecommerce

Blog by Martin Palmer, Chief Content & Compliance Officer at Hurricane Commerce (SEKO's Official Data Partner)

The world of cross-border Ecommerce is an exciting and fast-moving environment.

The figures speak for themselves with the total sales in the global cross-border eCommerce B2C market hitting $780billion in 2019 and expected to grow to a staggering $4,820billion by 2026.
In 2016, cross-border accounted for 15% of online retail sales – today it is 22% and in Europe it is said to be as much as 25%.

Many retailers and marketplaces have been established in this space for some time. Many more are either entering or seeking to scale up their cross-border operations to ensure their businesses are future-proofed.

Consumer buying habits were already increasingly moving – and staying – online, but the events of the last 18 months have only served to dramatically hasten this irreversible trend. But while the opportunities for growth in cross-border eCommerce are vast, success is by no means guaranteed.

Confronting retailers, brands and marketplaces is an increasingly complex regulatory landscape. In just a few short months, we have seen Brexit, the roll-out of the Import Control System 2 (ICS2) and a more rigorous enforcement of the US STOP Act. Most recently, as of July 1 this year, the EU removed the exemption from VAT on low value items under EUR0 22.

There were two principal drivers for this – firstly to level the playing field between its own retailers and marketplaces and third country sellers, most notably from China and the UK, and, secondly, to generate much needed tax revenues which will be more vital than ever as we emerge from the pandemic.

At the same time, the EU launched the Import One-Stop Shop (IOSS) simplifying the declaration and payment of VAT on distance sales with an intrinsic value of less than EURO 150.

Over the last couple of months there has been a scramble to register for the IOSS because of the advantages it promises to give retailers and marketplaces, particularly in terms of faster transit times, smoother passage through customs and the resulting increased consumer satisfaction.

But while there are early adopters of the IOSS, the likelihood is that the transition to the new system will continue to evolve over the coming months. This is particularly the case in China and the wider Asia Pacific region and where SEKO and Hurricane are working closely to support customers.

Increasing regulation and compliance brings with it the need for greater operational efficiency. Central to this is the need for complete and valid advance electronic data (AED).
Having the right product and shipment data doesn’t just aid compliance – it is also an enabler in helping businesses achieve scale in their cross-border eCommerce. Accurate data means giving yourself a clear competitive advantage and putting your business in pole position to share in the spoils of cross-border ecommerce trade.

Core data requirements in today’s world of cross-border ecommerce include:

• Accurate and detailed product descriptions;
• Correct HS6 codes;
• Full details of shipper and consignee name and address data, including collection and importer details if relevant;
• Licences or other specialised paperwork for goods where they are required to be shipped into and out of a country;
• Correct value of contents – values should represent the actual transaction value or a realistic market value;
• Country of Origin (COO) - customs need to know where a commodity was manufactured as well as where it was exported from. The COO may influence the amount of duty and tax that may be applicable to be paid.

It also means being able to comply with the regulations governing prohibited and restricted goods and denied parties, all of which vary from country to country and for which the fines and penalties for non-compliance are substantial as well as damaging to a brand’s reputation.
To access the IOSS means being able to meet the requirements of the so-called Super Reduced Dataset. Complying with the US STOP Act means providing Advance Electronic Data (AED) of the highest possible quality.

The direction of travel is now firmly set with enforcement set to get stricter over the remainder of 2021 and new regulations on the horizon in 2022 adding further pressures.

SEKO has invested significantly in ensuring that it is able to provide its customers globally with best-in-class Ecommerce logistics. Hurricane is delighted to have been selected as the company’s cross-border data partner covering the areas of product classification, data enhancement, duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

With online retail and, in particular, international online retail, growing exponentially, harnessing AI-driven, real-time data solutions to ensure frictionless trade has never been more business critical.

www.hurricanecommerce.com