How Can Marketplaces Address Global Expansion Challenges?

Digital marketplaces currently account for two-thirds of global online shopping volumes and have an impressive influence on the way businesses sell products and consumers make purchases. However, despite their popularity and reach, these eCommerce platforms still have plenty of untapped potential that can be unlocked by addressing some key challenges.

This article reveals the main obstacles that marketplaces face on the way to global expansion and highlights potential approaches to addressing them. Read on not to miss out on all the practical insights!

What Are the Main Hurdles Faced By Marketplaces?

Some of the key challenges that marketplaces tend to encounter on the way to global operations are as follows:

1. Regulatory Compliance

Navigating complex international legislation is another major obstacle, as it ranges from data protection regulations like GDPR to varying tax laws and import and export restrictions. Failing to comply with all relevant rules is likely to lead to severe legal issues, penalties, and reputational damage, so it’s crucial for marketplaces to adhere.

To stay on top of legal aspects, marketplaces need to employ local legal experts and invest in compliance management tools. Besides, regular audits and compliance protocol updates must take place for such eCommerce platforms to stay ahead of regulatory changes.

2. Cultural Differences and Localization

To address such cultural nuances, it is crucial to conduct thorough market research and recruit local staff to help tailor the best customer experience. Besides, marketplaces can also benefit from dynamic CMS tools that facilitate the creation and management of localized content effectively.

3. Logistical Complexities

Efficient logistics and supply chain management are crucial for timely deliveries and customer satisfaction. However, dealing with international shipping, customs, and local delivery networks can require a lot of resources from the marketplaces’ side.

To overcome supply chain management-related obstacles on a global scale, marketplaces need to build a robust logistics network by partnering with reliable local and international logistics providers. Besides, it is vital to utilize tech solutions like real-time tracking and inventory management systems to streamline operations and improve efficiency.

4. Local Competition

Entering new markets means facing established competitors who have a better understanding of the local dynamics.

Fortunately, marketplaces can differentiate themselves by offering unique value propositions, such as exclusive products, rare payment methods, or outstanding customer service. What’s more, strategic partnerships with local businesses can also provide a competitive edge.

5. Diverse Payment Preferences

To tackle this challenge, marketplaces must invest in a comprehensive and flexible payment processing system. Thus, it is crucial to partner with local PSPs and adopt advanced technologies like AI to enable purchase process customization. It is also critical to offer consumers alternative payment methods. Keep reading to find out which APMs marketplaces should not miss out on!

Alternative Payment Methods for Global Marketplaces

Marketplaces, with their diverse consumer bases, must integrate a variety of APMs to accommodate regional preferences and ensure a seamless payment experience for a wide range of customers. Some popular APM categories that should not be overlooked include:

• Direct debits like ACH in the US, EFT in Canada, and SEPA in Europe are the perfect choice for recurring payments within marketplaces, such as the monthly subscriptions for Amazon Prime.
• Bank transfers allow consumers to send funds directly to marketplaces. This tends to be a preferred payment method in Europe, as it aligns with the PSD2 Open Banking initiative, with iDEAL in the Netherlands and Giropay in Germany being the most prominent examples.
• Digital wallets accounted for approximately 50% of the global eCommerce payment value in 2023. In Asia, Alipay and WeChat Pay are prevalent, while PayPal is widely used in over 200 jurisdictions worldwide. Marketplaces that offer this payment option simplify purchases for users who prefer not to enter card details for each purchase without compromising transaction security.
• Buy Now, Pay Later (BNPL) services enable consumers to split the cost of a purchase into parts that can be paid over time. Offering this payment option allows marketplaces to attract budget-conscious clients as well as shoppers who choose not to use traditional credit.

It is important to note that offline payments also remain relevant in some regions with lower credit card penetration and older demographics. Thus, marketplaces that wish to reach consumer groups that rely on cash need to look into this APM category.

Summing Up: Unlocking the Full Potential of Marketplaces

All in all, global expansion offers marketplaces the opportunity to tap into new customer bases, diversify their revenue streams, and solidify their presence in the competitive eCommerce landscape.

While the journey to this major goal does not come without challenges, addressing these key areas can unlock the immense potential of digital marketplaces. By understanding and overcoming these obstacles, eCommerce platforms can not only expand their reach but also enhance their overall efficiency and customer satisfaction.