What is the difference between cross-border and global EC? Explaining the advantages and disadvantages of cross-border and domestic EC operations

Cross-border EC and global EC are similar terms, but what are the differences between them? In conclusion, there is no significant difference in meaning between the two. To begin with, cross-border EC refers to EC in which products and services are sold from Japan to overseas markets. Since “cross-border” means “crossing borders,” it refers to the sale of products from Japan to foreign countries.

Until now, e-commerce sites have generally been geared toward the Japanese domestic market, but recently cross-border e-commerce, selling to the rest of the world, has been attracting a lot of attention. The rise of cross-border EC is a hot topic not only in Japan, but also in China, the U.S., the U.K., and other countries around the world.

On the other hand, in the case of global EC, “global = worldwide scale,” so the essential meaning is the same. In detail, it refers to “EC sites targeting countries other than Japan.

From the above, we can see that “cross-border EC = global EC.

Cross-border EC and global EC can be considered separately.

As I explained earlier, “cross-border EC = global EC,” but the two can also be considered separately.

For example, when we dare to use the term “global EC” instead of cross-border EC, we often mean EC where transactions are completed only overseas, without involving Japan.

The term “cross-border” refers to crossing over from Japan to overseas, and thus means directing sales through EC operated in Japan to overseas markets. On the other hand, global EC does not include the meaning of crossing borders, so it can be used to refer to EC that is developed only in overseas markets.

Cross-border EC and global EC have the same essential meaning, but they can be used as different terms depending on the situation.

Differences between cross-border and domestic EC

Cross-border EC and domestic EC, as the term implies, have very different conn otations.

Domestic EC refers to EC sites that sell products to the Japanese domestic market. Typical EC sites include Rakuten, Yahoo! Shopping, and ZOZOTOWN.

Cross-border EC, on the other hand, is an EC site that sells products from Japan to foreign countries, so the applicable laws and rules, as well as the customer base to be dealt with, are very different.

In other words, “cross-border EC = EC sites for overseas markets” and “domestic EC = EC sites for domestic markets,” each of which has many different aspects such as operational methods, costs, and marketing techniques.

Advantages and disadvantages of operating cross-border EC (global EC)

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This section explains the advantages and disadvantages of operating cross-border EC (global EC). In the next section, we will explain the advantages and disadvantages of domestic EC, so please compare the good and bad points of both.

Advantages of Cross-border EC

The greatest advantage of operating a cross-border EC is the ability to increase the target audience to which you can sell your products and services. If you sell products only to Japanese, you can only reach a population of about 126 million people, no matter how many you sell to.

However, if you use cross-border EC to sell your products worldwide, you can reach approximately 7.875 billion people. This number is only a theoretical figure, so it does not mean that this number of people can actually be reached, but it does not change the fact that more people can be made aware of your product.

As a matter of course, the more products and services you sell, the more sales you will generate, which in turn will lead to expansion as a company.

Disadvantages of cross-border EC

The disadvantage of operating a cross-border EC is that the hurdles are higher than those for selling to the domestic market. When selling products through cross-border EC, common sense in Japan does not apply because you are doing business with overseas customers.

In addition to different laws, rules, values, needs, and transportation costs, the speed at which goods reach the customer is also completely different. As a result, unexpected problems are likely to occur, such as a product taking a long time to arrive or a product being damaged in transit.

In addition, since you will be selling products overseas, you will need to have a good understanding of the country you are entering. Without a deep understanding of languages in particular, it will be difficult to make effective sales.

Against this backdrop, we can expect to face a variety of challenges when operating a cross-border EC to sell products overseas.

Advantages and disadvantages of operating a domestic EC

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Following cross-border EC, we will explain the advantages and disadvantages of operating domestic EC. Compare the advantages and disadvantages of each, and find the operation method best suited to your company.

Advantages of Domestic EC

The advantage of operating a domestic EC is that anyone can easily enter the market. When selling products to the domestic market, descriptions are basically written in Japanese, making it easier to sell than in cross-border EC, which uses English or Chinese.

In addition, there are many successful examples of domestic e-commerce, so if you have any questions about marketing techniques, support response, shipping procedures, etc., you will be able to quickly resolve them.

Other advantages of operating in the domestic EC include the following

  • Easy to understand customer needs
  • Easy to promote products on SNS, etc.
  • Less trouble when shipping goods.
  • Low cost to get started
  • Easy to work with actual stores

Disadvantages of Domestic EC

The disadvantage of operating a domestic e-commerce business is that there is not much hope for business expansion. China, the U.S., and other countries around the world are increasingly focusing on overseas business using online.

Due in part to the impact of the new coronavirus infection, a more effective way of selling products to the world can be expected to increase sales than if products are sold only domestically. On the other hand, if you stay only in the domestic EC market because it is easy, you will lose the opportunity to enter into overseas businesses that are attracting worldwide attention, and you will not be able to significantly increase your EC sales.

In addition, not only large companies but even small and medium-sized companies are focusing on cross-border e-commerce these days. In other words, not jumping on this bandwagon is a risk that will result in lost opportunities.

Three ways to enter cross-border EC (global EC)

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There are three main ways to enter cross-border EC

  1. Build your own e-commerce site
  2. Open a store in a domestic online mall
  3. Open a store in an overseas online mall

Each has very different characteristics. If you are considering entering the cross-border EC market, please be sure to read the details below.

Method 1: Build your own e-commerce site

The first method of entry is to build your own EC site. To build your own e-commerce site, you will need to hire a domestic e-commerce vendor to handle multilingualization.

Because an e-commerce site is built from scratch, the hurdle is higher than other entry methods and is accompanied by disadvantages such as high initial costs.

However, the major advantage is that you can promote only your own brand. Selling exclusively under your own brand name will lead to long-term sales because you will have an ongoing relationship with the customers who purchase from you.

Another advantage is the freedom to decide on the design of the e-commerce site, which should be considered based on your company’s budget.

Method 2: Open a store in a domestic online mall

Another option is to open a store in a domestic online mall.This is the lowest hurdle method, as all you have to do is open a store in an existing domestic mall.

Using a domestic mall is an easy way to enter the market, but the design of the e-commerce site basically cannot be changed. In addition, there is a possibility of being buried under other companies’ products, and there are also disadvantages such as additional fees.

Nevertheless, the low-cost starting point is attractive, so if you are worried about your first cross-border EC operation, please consider opening a store in a domestic mall. The following are two representative domestic malls.

  1. Shopify
  2. Launchcart

Even those who have “no knowledge of cross-border EC” will be able to realize cross-border EC operations by researching the procedures as they proceed.

Method 3: Open a store in an overseas online mall

The third method is to open a store in an overseas online mall. The difference from domestic malls is that it is easier to attract customers from the country in which you are expanding. In addition, the advantage of shorter delivery times can be expected with the use of bonded zones.

However, overseas malls are basically written in English or Chinese, so it is necessary to understand the language of the country you are entering. In addition, it will take time to get used to them, as their convenience is very different from that of domestic malls.

Please refer to the following for representative overseas malls.

  1. Amazon (Amazon.com)
  2. eBay
  3. Lazada
  4. Tenmao International
  5. Gyeongdong Business City (Jindong)

Since there are multiple overseas online malls for each country, we recommend that you understand each one in detail and enter the market according to your products.

summary

This article explains the differences between cross-border and global EC, as well as the advantages and disadvantages of both cross-border and domestic EC.

Both cross-border EC and global EC have essentially the same meaning. However, they can have other connotations depending on the situation, so a bit of caution should be exercised when using them.

In addition, since cross-border EC and domestic EC each have their own merits and demerits, consider the appropriate method of entry based on your company’s objectives and business model.

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