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As retailers begin to ramp up their online presence overseas, two weeks ago at a conference in San Francisco I was asked to examine the benefits – and challenges – of international e-commerce.
Entitled: The Global Push, I took the audience through a statistics rich presentation that should be an aid to any brand considering global e-commerce expansion.
For those of you who weren't there, Fiona Gandy, Key Account Manager at 7thingsmedia, will cover a rundown of the session, summed up in seven takeaway tips.
1. Make your website local in every way, shape and form.
When a brand has grown in the UK, internationally-based customers who click on the site can cope with the site being in English and sterling – they half expected that already.
However beyond ex-pats and tourists, there's trouble in targeting far-flung audiences as they'll inherently expect their own language, verbiage, and currency. From our research, just having local language landing pages make very little difference. It needs to be the full website.
Although 40% of UK shoppers make purchases from “foreign” websites, only 21% of Germans, and 23% of French do.
This demonstrates the absolute need for the site to be local in every sense, not just a replica of the UK website with a currency converter and some poorly translated landing pages.
Only small percentages of the world's online customers are willing to shop in unfamiliar territory so make it as easy as possible for them to do it successfully.
2. Distinguish between the key market differences.
Although a step in the right direction, it's not enough to have a website in the local language and then sit back and expect the traffic and sales to come flooding in. You need to immerse yourself in the local market and identify the key differences between there and your home turf.
These are often differences businesses find tough to overcome, but the effort will ensure rewards are there.
In the US, one in 10 products are restricted from leaving the United States. Case-in-point: a crate of Bath Ducks were destroyed before they could reach their destination because an automated scanner identified them as 'livestock'.
Arguably more astonishingly, the average online shopper in the United States spends $1,450 less than the average European online shopper ($550 versus $2,000 per year – with electronics showing most significant growth).
In China, leading Chinese retailer Taobau.com accounts for 79% of e-commerce value and deliberately doesn't appear in the top search engine (Baidu). Compare this to the fact that 50 - 70% of referrals (paid and un-paid) in UK and US come from Google.
7% of China’s online shoppers are responsible for 40% of total online spend, demonstrating the dominance of a particular type of shopper!
In Europe, 60% of payments in Holland are made via a direct debit system, 50% in Czech Republic are made via cash on delivery and 46% of Germans use online banking transfers when they buy online.
3. Invest adequate time in a strategy for each country individually – including data and budgeting.
There are some exceptional market differences between territories, showcasing the need to spend time researching and implementing a solid localised launch plan as opposed to a knee-jerk reaction to a few international orders.
In an ideal world, merchants would like to see their products and services making waves in every territory. But there’s so much to consider with expansion and one-size-fits-all is not an appropriate approach.
Although there are some ground rules common to establishing a brand in new climes – such as finding the right partners on the ground to stock and representing your brand, assessing demand, and finding competitors to indicate your market position – we are dealing with metrics, markets and demographics that weren’t covered in Marketing 101 and are expanding and developing at an exceptional rate.
The rudiments may be similar, is the climate right? Are logistics and delivery cost-effective/possible? Do we speak the language? but a significant body of research is required to assess demand and who to target products at.
Conducting this research and considering potential demand based on different performance indicators could ultimately determine the scalability of your business in that region.
4. Don’t block the payment gateways of potential new customers.
Preferred payment methods differ from country to country i.e. cheques are still commonly used in France, as are direct debit transfer and local post office payments in Germany and Poland, whilst Paypal has had a significant rise in Spain & Scandinavia.
Implementation to support different payment gateways is a costly process and unsurprisingly, a recent CHASE study found that a massive 77% of UK business surveyed didn’t have the systems to support European expansion.
Brands need to be at least planning and budgeting for how they would approach new territories now so that they are not left trailing behind and miss out on a much wider consumer base.
With current EU stats showing Germany and France together represent around 13% of US retail trading in 2012 these markets are not to be ignored.
5. Localise all marketing communications, customer service interactions and offices.
Chris gave great examples of this during the session which covered both the lack of localised marcoms and customer service. It can't be stressed enough how crucial these are.
We ensure that with any global campaign we have someone on the ground in that territory reviewing all aspects of the communication being sent out, to even basic examples as using the word 'pants' and 'sweater' in the US!
Chris's example was regarding Mother's Day: when he went to buy a card from a store in San Fransisco, they looked at him like he was crazy as Mother's Day US is in June.
We saw no US brands with UK-targeted sites advertising Mother's Day, opting instead to promote St. Patrick’s Day, but huge numbers of UK brands target US customers with Mother's Day.
Customer service is just as crucial as local marcoms as the main vocal touch point with your buying public and how you are perceived.
One example from the session was when he ordered from a global brand online only to find their customer service HQ was based in Germany culminating in a lengthy hold time to wait for one of just two employees who dealt with English-speakers. And a massive phone bill.
A key take-away is that, realistically, a brand that's hitting revenue of £2m per year or more in any given country should localise their business – including customer service team – and open a separate office to cater for consumers on the ground.
6. Make shipping terms affordable and handle your own returns.
The significance of efficient shipping is vital as this is essentially your first physical touch point with a new global customer. Interestingly, there are some savings to be made in shipping as it costs just $1 in Asia to ship one kilogram, opposed to $6 in the US.
This is not always the case, so Shipping or and introducing Free Shipping can be a considerable cost when entering new territory but staying competitive is just as crucial.
7. Set short, medium, and long term goals and recognise their value.
Until local ingredients are added to your newly relocated online business, marketing efforts are unlikely to resonate beyond the ex-pat community.
Therefore it is crucial you have a road map in place where you are incorporating and budgeting for all local requirements (language, marketing communication, currency, payment method & customer service) so that you – from a customer point of view – don't burn bridges before you've built them.
Brands who will win in this area will be those that research heavily and have long term commitments to trade internationally; whether that's offline or online.
There are some barriers to international expansion, but we make the point again – that you're asking customers to change their behaviour, so it fits that the expanding company is prepared to shift, adapt, and change theirs.
If the above hasn't convinced you to start your global expansion then maybe this final stat will: By 2015, China will surpass the US to become the largest e-commerce market in the world, with an astounding 30m consumers expected to shop online for the first time every year until 2015.
That's the population of Canada ready to engage with e-commerce every year. The customers are there, reaching them is the sensitive part; and to the winners belong the spoils.
Please also find a video interview of Chris Bishop by Peter Hamilton, CMO, HasOffers below: