GUEST COMMENT Ecommerce changes everything for international trade – Governments need to climb aboard

There is a long and storied history of governmental trade commissions helping their domestic companies to sell products overseas. When it comes to dealing with local legalities, putting brands in touch with buyers and distributors and sorting out supply chains, they’re either experts themselves or know exactly who to call.

The issue is that retail has changed – and is changing still – at an unprecedented rate. It’s not just about getting Spanish or Brazilian or Indian brands on the shelves of Tesco and John Lewis any more. Digital commerce is the fastest-moving trading environment in history and many governments are floundering.

They are often better at reacting, and even if they have been proactive, might not be up to the task. It’s important to have marketing specialists at a trade commission, but will they know about the intricacies of advertising on Amazon, or about social commerce on Instagram? (Let alone on TikTok, given the platform wasn’t even around five years ago?).

It’s a particular challenge for foreign governments dealing with companies looking to sell in the UK, where mobile commerce is a given and nearly 90% of shoppers use Amazon, with more than 15m members of Prime. And yet it’s also a G7 country with 67 million highly ecommerce-literate and English-speaking consumers eager for new brands to try.

Who does this impact?

For some overseas retailers, it’s less of an issue. Many fashion or technology products are much the same whether they’re being sold domestically in the EU or exported to Africa (cables and plug types notwithstanding). But in categories like FMCG, particularly food and drink, legal requirements differ hugely from one nation to another.

For example, you can sell alcohol on Amazon in the UK, but not in the US. Similarly, each US state has its own tax regime for ecommerce and some even require local distribution.

Plus, brands from overseas are often facing significant challenges if they’re moving from a country where ecommerce is not as deeply embedded (France or Spain, for example) to one where it is.

They can therefore suddenly find themselves wondering if the in-store shopper journey that has served them so well before is the right thing to do in the UK, where practically everyone shops on their smartphone. Sometimes it will be – but often it won’t.

The factors to consider

Overseas brands that already have a domestic ecommerce presence will need their governments to help them understand how to optimise that footprint in a new market. Those that don’t will have to think long and hard about using ecommerce in the UK because it’s, frankly, expected.

They’ll need to build a business case and that means understanding the costs, the margins and how they will have to change their packaging and marketing.

And yes, ecommerce has cultural nuances all its own. It’s one thing to have the ‘right’ picture of a family on the package on the supermarket shelf, and another to make sure the rich video content on your Amazon page has people speaking with the right accents.

Build a better playbook

Governments and trade commissions are going to have to expand their knowledge base and update their playbooks when it comes to helping overseas retailers sell in the UK – or indeed, any digitally-literate market. Some, like Japan or South Korea, are already quite some way ahead of the West.

Amazon might be a low-hanging fruit for some due to its scale as the UK’s largest marketplace, but trade bodies will need to help domestic companies decide if they should be on it at all. It won’t be the right fit for everyone.

If it is a good place to start, brands will need guidance in understanding if they should be a first-party or third-party seller, how to register for a Seller Account, how best to advertise, and how to identify and top the right search terms. And that’s not even counting the tax and legal issues.

Looking at the broader digital commerce picture, brands looking to target younger consumers in the UK may want to look at TikTok Shop in particular – and again that brings a host of questions many governments will probably be ill-equipped to answer: How does it work? Is it the right channel for our brand? Is it better to livestream or create our own videos? Should we offer discounts? Do we partner with existing creators on the Affiliate programme?

Not to mention the other social platforms like Facebook or Instagram, each with its own approach to making the feed shoppable, and brands that want to make their existing ecommerce channels more appealing to UK consumers.

Children of the evolution 

Governments and trade commissions are going to have to step up their game if they want to provide the best possible guidance to the domestic brands looking to sell overseas. A process that was broadly similar for decades, if not centuries, has suddenly had to change out of all recognition – and it’s continuing to evolve faster than most can track.

International trade is going to have to adapt as borders become fuzzier, retail becomes increasingly global and more younger shoppers, for whom digital commerce is the norm, acquire greater levels of disposable income. The onus is on governments to help brands build their ecommerce footprints abroad, otherwise those brands are going to slip behind.

Author:

Peter Martin, managing director of digital commerce agency SMP