John Lewis is calling a halt to its international expansion strategy and will stop accepting orders for international delivery next week.
The department store, ranked Elite in RXUK Top500 research, first started selling abroad online almost 10 years ago, launching at first to 11 European countries before adding destinations beyond Europe.
In 2016 it stepped up its strategy of international expansion, following a year in which international traffic had grown by 15% and online international sales had grown by 50%. It expanded the number of countries to which it delivered and at the time of writing shoppers could order for delivery to 30 international markets. But from December 9 it will deliver to just one – the UK.
In a statement, John Lewis says: “As part of our Partnership Plan for the next two years, in John Lewis we have decided to focus on areas of the business that will deliver products and services for our local UK customers. As such, we are no longer pursuing international expansion and so from the 9th December we have decided to cease our online international delivery service.”
The department store did not restrict its international strategy to online. It opened a store at Heathrow Terminal 2 that it said would help to raise its profile with international shoppers. But that had to close during the first Covid-19 lockdown, and this summer the company announced that it would shut permanently, one of of its eight shops that did not reopen from lockdown in June. It also opened stores within five branches of Australian department store Myer.
InternetRetailing asked John Lewis if the decision to stop shipping internationally was as a result of Brexit. That is not addressed in its statement. But the move comes just weeks before the Brexit transition period comes to an end. It is not yet clear on what terms the UK will trade with the EU and with many countries that it previously traded with under the terms of treaties signed via the EU.
Over the last decade, UK retailers from Asos and AO to JD Sports and Next have looked overseas for ecommerce sales growth in new markets. The lack of clarity around Brexit and what it will mean for retailers has led to many deciding to open separate logistics operations in the EU or to ensure that there is little overlap between existing operations within the EU and in the UK. John Lewis may represent a rare step in the other direction.
Commenting, Neil Kuschel, chief executive Europe at Global-e, said that John Lewis revenues from international sales – of about £10m – might seem insignificant in the context of £3.8bn annual turnover, but that its decision to pull out of international sales would be problematic.
He said: “Cross-border ecommerce is growing at over 20% year-on-year and the overall economic uncertainty means that retailers can no longer just rely on domestic sales to drive growth. Aside from the fact that a domestic-only strategy still means you have global competition as the British consumer is able to shop internationally online anyway, the prospect of further lockdowns and uncertainty means that relying on one market for revenue is like putting all your eggs in one basket and playing a game of catch with it. John Lewis only shipped to 31 countries, offered no local payment methods and no ability to provide shoppers with the final cost of their purchase including all taxes and duties, which suggests that the issue is more about how they were managing international operations rather than the market opportunity.
“Whilst it’s true that Brexit will make it slightly harder for British retailers to sell to Europe, it doesn’t signify the end of international trade. The European ecommerce market has grown significantly this year, making it a profitable opportunity that no British retailer should miss out on regardless of Brexit. It is imperative that British retailers don’t allow themselves to be put off by the implications of a no-deal Brexit as the pros greatly outweigh the cons of cross-border trade with Europe. The key is setting up the right international ecommerce strategy and operations, to maintain sales to European markets, not to mention accelerate revenues from other global markets that are growing tremendously. With research showing that more than half of global online shoppers making purchases on foreign websites, retailers that have a strong international strategy in place are seeing spikes in global conversion rates and sales.”