by Phil McGriskin
Business secretary Vince Cable recently placed retail at the forefront of the government’s plans, stating that it “has an important role to play” in developing the UK’s multichannel, export-led growth. Speaking at Retail Week Live, Cable stated that the government will assist up to 1,000 businesses to grow internationally by 2015. It is extremely promising to see the government encouraging retailers to consider overseas expansion and cross-border strategies as they aim to drive growth – international markets offer an extremely lucrative channel for growth if approached correctly.
UK Trade & Investment (UKTI), which compiled the UK Retail Industry International Action Plan, has identified gaining access to overseas markets as a central theme in its quest for driving growth. As part of its multichannel campaign, UKTI is committed to helping British retailers target the ever-increasing middle-class consumers in regions that place great emphasis on acquiring luxury western goods. Consumers in rapidly growing economies such as China, India, Russia, Brazil, Mexico and Turkey are likely to be the target of focused marketing and advertising efforts for such goods.
The government has heralded the retail sector as a “shop window” for driving investment into the UK. Crucially, such a shop window also exists for UK retailers seeking to increase their revenues in international markets – ecommerce offers a fantastic opportunity to drive the sort of profits that the government is seeking for UK retailers.
According to WorldPay’s Global Online Shopper report, a global study into the online shopping habits of 19,000 consumers, just under a quarter of disposable income is spent online, with shoppers spending an average of 22% over the internet. That figure is significantly higher in fast-growth economies that UK retailers could sell to. Leading the way is India, whose shoppers spend an average 36% of their disposable income online, closely followed by China (31%) and Brazil (27%). With the growing availability of internet access in these regions – many of which are 10 years behind the UK in terms of uptake – ecommerce demonstrates an unrivalled channel for UK retailers to drive interest and sales of their products.
While ecommerce and the route through which consumers shop will continue to change at the rate it has since the beginning, nearly 20 years ago, one point that remains vitally important is the payment experience. As a defining point in a consumer’s buying experience, a poorly-handled payment process can be a major turn-off, and can easily lead to abandoned shopping carts if not handled properly. Even if the product, price or promotion is perfect, if a consumer is unable to complete the transaction simply and quickly, the overall experience can quickly turn sour. For ecommerce retailers, particularly those based in the UK looking to establish a presence overseas, it has never been more important to get this right. The internet may have given retailers access to a wider audience than ever before, but it has also created fierce competition. It is therefore critically important that retailers are developing a suitable payment proposition for international markets – WorldPay’s report found that nearly two-thirds of online shoppers had increased confidence in a website that offered them a more varied choice of payment methods.
With international reach on the agenda, it is therefore imperative that UK retailers are catering to regional preferences in everything from fulfilment and customer service to the payment experience. Understanding consumer expectations and preferences in each region is vital if UK businesses are to thrive in these burgeoning international markets – simply applying the same rules to every market will not be successful. WorldPay’s Optimising your Alternative Payments report found that alternative payments (APs) types account for 22% of ecommerce transactions across the world, contributing to a total value of €165 billion – but who is using APs? The answer to this question is largely determined by the culture and geography of the consumer. It is not uncommon for one alternative payment type to be used by the majority of consumers in one country, only for that method to be unrecognised in another. In today’s share of AP usage, eWallets account for the highest percentage (36%), followed by paper-based (22%) and offline credit systems (20%). While more traditional ecommerce markets, such as the UK and the US, are still heavily reliant on card schemes, the use of alternative forms of payment to purchase online is on the rise. In China, for instance, APs account for €20 billion in revenue. It is essential that retailers offer the payment methods that consumers in each overseas market prefer. For instance, payment methods such as Alipay and China UnionPay are central for businesses looking to expand into China.
Understanding local preferences for payments internationally will be key for UK retail merchant growth overseas, and providing a broad portfolio of payment types will ultimately generate more revenue. By implementing an optimum acquiring set-up, retail merchants can maximise transaction rates. Processing payments quickly and securely across all territories, sales channels and card-not-present devices is a reality. Moreover, going global but acting locally – giving customers their preferred payment options is a tangible possibility. The opportunity to maximise potential revenue is available to those retail merchants that are prepared to invest in their payment strategy.
Phil McGriskin is chief product officer, WorldPay