Can you give a brief introduction about ModusLink and then elaborate a bit on your business model?Bram Barendregt: ModusLink offers an integrated set of supply chain, logistics and e-commerce services that are designed to work together to improve our clients’ revenue, cost, sustainability and customer experience objectives. We are a trusted provider to many of the world’s leading companies in consumer electronics, communications, computing, medical devices, software and retail. Our operating infrastructure annually supports more than USD80 billion in clients’ revenue and we manage approximately 451 million product shipments through more than 25 sites in North America, Europe and the Asia/Pacific region. I would say in summary that it’s our mission to simplify the complexities of global end-to-end business process management for our clients.
What are the key trends in cross-border ecommerce and payments, in your opinion?Bram Barendregt: We see global cross-border e-commerce continue to take a growing share of total retail sales as more consumers shift to shopping online and like to buy things that are not available in their local markets. This increases the attractiveness of online retail as an additional channel for traditionally pure brick and mortar merchants who have been adversely affected by the general economic conditions. Interestingly enough, while the developed markets continue to command a significant share of global online retail sales, these markets are showing signs of maturity relative to the developing parts of the world. This trend suggests that online merchants should consider looking beyond their domestic and developed markets. To capture a share in this growing space, the payment industry has been developing new products and services to reach even unbanked consumers.
Do you see any differences in terms of payment innovation at a regional level (Europe, North America and Asia)? Bram Barendregt: There certainly are differences among various regions and even at the country level. For example, e-banking is particularly well accepted in many parts of Europe, where card and credit payments are less popular. In developing online markets like China, where e-commerce is relatively new, escrow payments play a critical role. The online merchant must account for these variations as they develop an expansion strategy.
Ecommerce taxation is a complex and dynamic field. What upcoming regulatory changes are about to happen in the different regions and what is the expected impact on merchants? Bram Barendregt: You’re right – this is a constantly changing arena and merchants have no choice but to be diligent and flexible. Legislation change is currently undergoing U.S. Congressional review, as current tax rulings have given online merchants an advantage for out-of-state sales, which presently don’t require online merchants to collect sales tax. This will change shortly and add to the overall complexity in the U.S. as online merchants will have to deal with the widely differing tax treatments of multiple states when selling cross-border.
A similar trend can be seen in the EU. As of 2015, an EU VAT ruling changes the rules for e-services such as downloads. Both EU and non-EU merchants will have to collect applicable VAT rate based on where the consumer resides. This is being introduced to level the playing field and remove country-based disadvantages that currently occur when selling across borders in the European Union.
What are the payment-related challenges merchants struggle with when expanding internationally?Bram Barendregt: Challenges rise from handling foreign currencies, offering local payment options, dealing with differences in tax and regulatory framework and many more variables. Online merchants operate in a buyers’ market and have to offer relevant payment options to reduce basket abandonment. They must find the right mix between consumer preferences and the cost of handling increased complexity in back-office operations.
What are the organizational challenges a merchant will encounter when optimizing the consumer experience (e.g. by adding payment methods as installments or cash on delivery)? Bram Barendregt: After an online merchant has identified the payment options relevant to an expansion strategy, he needs to develop the banking infrastructure, considering the overall cost and time-to-market. While setting up a local banking relationship provides the maximum consumer convenience, it needs to be balanced with the risks and capital requirements required to establish local business entities. It needs to fit into the existing value-chain, specifically in areas of customer service, finance and logistics. Every activity in a merchant organization needs to be thoroughly coordinated across different function groups.
Given the upcoming changes in tax regulations, how can an online merchant leverage a pricing advantage by not having to charge sales tax/VAT for out-of-state and/or international sales?Bram Barendregt: In the light of these changes e-commerce merchants need to review their business strategy. Markets which were unfavorable may now become favorable now and vice versa. These developments are complex, but can become new growth opportunities and open new possibilities for international expansion. Making use of an experienced partner who is well-versed in this area can provide huge benefits, immediately and long-term.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now