Question

Amazon as with other ecommerce retailers struggle with cross border solutions and continue to be country specific operations. Why is this?

Answer 1

Amazon and other e-commerce retailers struggle with cross border solutions and continue to be country-specific operations due to the following reasons:

• Shipping costs- Shipping items from one country to another country is a costly affair. If a customer wants to buy a product from another country, it may be possible that the shipping costs are as high as the product price, making it a very expensive proposition for the customer. There would be a high probability that the customer shall not go ahead with the purchase and shall look for some other options. This makes it very difficult for Amazon and other e-commerce retailers to offer cross border solutions as there would be hardly any customers who would utilize the solutions.
• Customer choices- Customer choices vary significantly from country to country. For example, clothing and food choices of customers in Asian countries would be very different from those in Western countries. E-commerce retailers would not be able to offer effective cross border solutions in such cases, as customers of each country have their own distinct choices based on the country's culture and traditions.
• Taxation policies- Some countries may have stringent taxation policies for imported and exported products, to promote manufacturing in the country and to improve the economy. Cross border solutions in such cases may not be economically viable for E-commerce retailers as they would be taxed heavily.
• Economy levels- Each country's economy is different, some may be very rich and some very poor. In poor countries, most people would not be able to buy much more than their basic requirements, while in rich countries, there may be many people who would regularly do expensive buying. Therefore, cross border solutions may not be effective in such cases.

Based on the above points, Amazon and other E-commerce retailers are not able to offer effective cross border solutions and as a result, they stick with country-specific operations.