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Over the last few years, several UK retailers have begun to target overseas markets, with some success.
For example, overseas sales made up 67% of ASOS sales in Q1 2012, contributing to a 31% growth in overall sales.
I've been asking FusePump's George Besly about why cross-border marketplace sales should now be a serious consideration for e-commerce retailers in the UK.
Why should companies be selling overseas?
Online retailers, both large and small, should be looking to increase their global sales reach for a number of reasons. There is decreased competition in non-UK markets, making it easy to win new customers.
Practically this has been facilitated via almost universal adoption by the public of marketplaces such as Amazon, eBay and Play.com. Logistically, the growth and competition for business between global couriers means that cross border sales outside the UK market are feasible.
New technologies have become more universal making it easier to sell products overseas. This has also increased the number of channels, and therefore consumer touch points, the online marketer can exploit.
Commercial advantages of selling into new markets include stock reduction, market creation, currency arbitrage, minimisation or spreading of risk and extension of sales seasons.
What are the markets with the biggest opportunities for UK firms?
Europe is experiencing rapid growth in terms of online e-commerce adoption. Forrester estimates that European online retail sales will average 12.2% growth over the period to 2016.
Southern European countries like Spain (19%) and Italy (18%) are playing catch up with northern Europe and are growing faster.
Further afield, Australia has seen a very significant upward trend in the volume of online sales. The southern hemisphere, with its diametrically opposite seasons, allow fashion retailers, in particular, to create a 24/7/365 sales strategy for all their stock.
What are the advantages of using marketplaces like eBay and Amazon for overseas e-commerce?
Each marketplace site has a loyal customer base that visits the site on a regular basis to browse and purchase products. This ready-made audience eliminates the effort of setting up localised websites and the cost of driving traffic to it.
Large marketplaces are trusted brands, security of payment and purchaser/supplier protection has improved for online purchases
Secondly, it is relatively simple to do if you have your product data easily accessible to third parties for integration. Stock can be allocated between the different territories, this can be easily monitored their inventory across all territories.
Pick, Pack and ship product can all be managed from one central location (The UK). As the brand(s) become known in the territories more localised e-commerce sites can be added.
Is this something smaller online retailers could do?
Absolutely, smaller retailers face different challenges to those of larger retailers. For example, the ability to be price competitive on products versus the profit margins they need to make.
As long as the retailer is set up to ship internationally, they have the ability to enter new markets where they may find the completion is less, or possibly non-existent.
This allows the retailer to set price points they are comfortable with, rather than based on retailers who can potentially be far more price competitive. Returns, compliance with marketplace rules and local taxes need to
How important is localisation of content, product descriptions etc?
Localisation of your product descriptions and content is essential. A German speaking visitor to eBay.de will use German keywords and search terms, and if your content is not in the local language your products will not be displayed.
Displaying products in English when all the other listings are in another language can affect your brand image in that country too. This can be easily overcome if you have the product content translated on your website using data feeds to integrate into the relevant country marketplaces.
Amazon and eBay have both launched their ‘daily deals’ service, clearly to participate in this you need to be able to localise your offerings.
What are the main challenges companies face trying to sell online in other countries?
The main challenges are around supply chain logistics, localisation and understanding the culture and market strategy for each new territory. There are certainly steps that can be taken to mitigate large risks in these areas.
Finding a reliable, global courier service and ensuring you have a robust supply chain to get your products from the warehouse to the customer’s door within the specified time scale is very important.
As we’ve highlighted, it is absolutely essential your product listings are in the local language and that what you have translated makes sense. There are a number of reliable third party translation services who can work with your business to achieve this.
Finally, knowing who you are selling to and identifying demand through market research is essential. Some initial research into what works and why will help you to ascertain the best way forward and prioritise your market place listing strategy.
Can you give three main recommendations for companies thinking about internationalisation of e-commerce?
Research your desired markets.
What information can you collate to help you formulate your businesses’ cross border strategy? It is essential to consider supply chain: Localisation, Product Price Points, P&P price points, delivery times, returns policy and Customer Service.
Understanding the VAT and tax rates in each country and the impact this would have on your sales is also essential. For example, Denmark has a VAT rate of 25% - 5% more than the UK, therefore consideration of margins and the impact selling into Denmark will have on your bottom line is important.
Allow time for trial and error.
This is inevitable when setting up in new markets. Once you are starting to refine your strategy the next step is to have a think about exactly how you are going to link everything together and get your products live into all these countries.
Managing multiple stock levels, countries, sales reports, listing optimisation and languages can seem quite daunting. You also need the technical resource manage this effectively.
Ensure from the outset that you a) are able to extract and integrate your product data into marketplaces and b) that you are able to do this consistently and to the required marketplace listing criteria.
Failure to do this will mean that your products can’t be found. Decisions need to be made on whether this can be managed in house or by using a third party integration expert.
How can companies appeal to mobile shoppers in overseas markets?
Marketplaces like eBay and Amazon have fully functional mobile sites which are yielding significant growth, so it is vital your product listings appear on them.
Particularly with eBay, if your templates are too HTML heavy, it can create a bad user experience for your potential customers. There are ways round this that involve optimising the data you supply to them so that it renders effectively in mobile devices.
You can download FusePump's cross-border e-commerce whitepaper here.