What are the priorities for retailers when moving into new international markets?
While the UK ecommerce market continues to offer huge opportunities for retailers, especially with the rise of cross-channel retail, it’s mature by international standards. Small wonder then that many retailers are now looking for new ways to grow revenue base and expand brand reach.
Looking overseas is an obvious way forward, especially when you consider the sustained high rate of growth in international ecommerce, which according to consultants AT Kerney has been running at 13 per cent CAGR (compound annual growth rate) over the past five years. Looking ahead, industry association IMRG’s B2C Global e-Commerce Overview 2012 predicts that France, Italy, Spain, Russia, Turkey and Poland will be the fastest-growing markets in Europe.
This tallies with what we’re seeing at Barclaycard. Whether or not it is an explicit strategy to sell abroad, almost all of Barclaycard’s ecommerce merchants are already taking payments from customers outside of the UK. Moreover, our customers are most regularly engaging in cross-border trade with consumers and businesses in China, the USA, Australia, Ireland, France, Germany and Canada.
This experience tells us the top priority for retailers moving into new international markets should be to ensure a solid understanding of the local market dynamics and consumer preferences. This will in turn enable retailers successfully to localise the following four key elements of the business for each market:
- Marketing techniques: successful techniques for driving traffic to retailer websites will vary from country to country. It is important for retailers to seek advice from local marketing agencies on how best to reach customers. For example, the direct translation of keywords for pay-per-click campaigns can result in missed opportunities because the terms consumers search for can differ in each market. Additionally, different advertising and social media strategies will need to be adopted for each market.
- Web presence: in new markets where a retailer’s brand is not well recognised, it is important to present the website in a way that makes customers confident the retailer is legitimate. This can encompass the way in which the shop is presented, the use of language, trust marks and local support numbers. These are all key factors that make consumers feel comfortable enough to complete purchases. This can be something of a balancing act: the key to successful expansion is to understand the market you are entering and to tailor your website to the market, but at the same time to retain the authenticity of your brand.
- Product lines: many retailers will not offer their product range in all markets. A solid understanding of the market plus consumer behaviour and preferences will enable retailers to tailor the offering in the correct manner to attract customers. Choose the product lines that present the best opportunities, find a niche in the market, and then build the brand and product offering from there.
- Checkout experience: this is critical. If a retailer has successfully attracted a shopper to the point of selecting a product to purchase, having them then abandon the sale because of a bad checkout experience is both frustrating and often preventable. The checkout experience is the most important point at which the trust of the consumer should not be placed in doubt. To win this all-important trust during the checkout process, retailers must at the very least offer the shopper the following: (a) displaying the price of the goods in the local currency. Not pricing in the local currency will make the shopper immediately doubt the sophistication of the merchant and their ability to deliver; (b) offering local payment methods because, although credit and debit cards are used internationally in many markets, they are very low down on shoppers’ preference list in some countries. Offering the right payment methods for the market will give the shopper the choice and convenience they already receive from local competitors. Lastly, the checkout pages should look and feel like an extension of the merchant’s web shop, a dramatic switch in look and feel during the checkout experience creates mistrust with the shopper. Retailers should choose payment providers that have the ability to offer all of the above services.
One of Europe’s largest and most experienced payment acceptance providers, Barclaycard has the expertise and experience to offer practical help to retailers that are targeting new markets and increased international sales.
Ed Black, Head of ecommerce, Barclaycard Global Payment Acceptance
www.barclaycard.co.uk/business/accepting-payments/ e-commerce/
What are the priorities for retailers when moving into new international markets?
International markets offer retailers the chance to significantly extend their revenue streams. This can often be done with few or no changes to the products on offer, which makes the proposition even more enticing. However, the process for getting products into the hands of the customer is highly complex, if retailers want to do it at a profit.
There are three main areas of priority:
- Preparing for online
- Managing the whole supply chain
- Optimising the warehouse
MOVING TOWARDS ONLINE
As retailers increase the volumes of international orders, it’s inevitable that the balance of online/retail orders shifts as well. The challenge is that most organisations were set up to prioritise offline orders and their online processes can be inefficient as a result. As online orders increase in line with international expansion, companies need to make sure that their warehouses and whole supply chain are set up to handle the new profile of their customer orders.
INTERNATIONAL SUPPLY CHAIN MANAGEMENT
Most retailers will import finished goods into the UK for sale in their stores. This process can be highly cost effective where the right calculations of production, shipping and handling costs are done. The challenge of moving to an international customer network is that shipping into the UK and then out to the customer may not be the most profitable route for a product. For example, if a customer is in Spain and the goods are manufactured in Morocco, shipping to the UK first would be inefficient. Alternatively, mailing the goods to the customer directly from the factory saves time and cost.
OPTIMISE THE WAREHOUSE
The expansion into new geographically markets puts extra pressure on the supply chain to maintain profitable fulfillment, especially when extending into international ecommerce. As an example, many retailers launch into an international market with a retail fulfillment capability that is not configured for the different challenges of picking ecommerce orders. International warehouses do not often have the flexibility to perform a standard case pick for a retail environment, as well as the piece pick of multiple orders that is required to maintain an efficient and profitable operation.
MAKE THE WORLD YOUR STAGE…
International retailing provides great opportunities for increased sales. It is a daunting proposition, but global growth may be more attainable than you think. The key is to keep focused on fulfilling orders and satisfying your customer while simultaneously reducing costs with a truly efficient supply chain.
What are the priorities for retailers when moving into new international markets?
The UK ecommerce market is one of the largest in the world, but is also maturing, making it difficult for new and existing businesses to stand out from the crowd. The good news is that online sales are set to continue to grow in western continental Europe, making cross- border ecommerce the best strategy for success for UK businesses in 2013. But if you want to build a successful business model overseas, it’s absolutely imperative to understand the consumer habits and payment methods in each country and adapt to them.
In the UK debit and credit cards are popular, and 90 per cent of all purchases made online are carried out via bank cards. When reaching out to UK customers that’s fine, but if you’re applying the same rationale when moving your online business into Europe, you’ll be missing out on a large number of potential consumers.
If you’re thinking about shipping your goods and services into the Netherlands, for instance, it’s absolutely critical to consider iDEAL, an online bank transfer solution that represents more than 70 per cent of all transactions. In Germany, the use of debit and credit cards is similarly low and there’s even a wider range of payment methods, such as bank transfer, Paypal and online banking.
“A good payment solution provider will provide a consultative approach and has the specialist knowledge on the markets you want to target,” says Julian Wallis, Head of Sales at Ogone [VOGO], UK and Ireland. “It will explain to you what the different forms of payments are in each of these markets. You can set up a collecting contract with a PSP that can actually group together some of those key payment methods. With that single contract you’re opening up your business to a much wider audience and you’re able to accept many more payment methods in one hit. Applying the right payment methods can typically increase a merchant’s conversion rates and subsequent turnover by around 25 per cent, so it’s an important choice to make.”
Ultimately, it’s about accelerating the growth of your business by penetrating more markets, reaching more consumers and reducing the risk of people leaving the shopping cart once they get to the checkout page.
What are the priorities for retailers when moving into new international markets?
Online retail is dependent on consumer trust. Every time a customer makes a purchase he is trusting that the goods will be delivered on time, in good condition and if there are issues they will be resolved.
It’s clear these assumptions dictate consumer behaviour and the impact of this is often more significant when we consider international trade. Consumers can find it difficult to judge how trustworthy an unfamiliar international shop is.
With these factors in mind, here are three points a retailer should prioritise when looking to expand into new international markets:
- Ensure the website’s look and feel encourages trust: from recent Infas research we know that two thirds of online shoppers say a trustmark such as Trusted Shops is important or very important for them if they are considering a purchase from a company that is based abroad. It’s important the website reflects a company’s knowledge, expertise and reliability
- Know the relevant legal obligations: all countries, even within the EU, have slightly variations on rules governing online retail. For instance, the minimum return window is seven working days in the UK but in Germany it is 14 days. As a retailer it’s vital to become familiar with these differences if they hope to sell in new regions
- Security and data protection: concerns about personal data are at an all-time high and people are particularly weary of how websites outside of their own country will operate. Because of this a retailer’s website should have a robust secure data practice that is communicated to the customer
When consumers look for a good deal, being able to consider products from other countries can bring huge savings, but the research shows shoppers often worry about what will happen if something goes wrong.
Trustmarks that support all parties in an online transaction, be that legal or monetary concerns, are one of the key initiatives that can support international retail. No matter where the consumer comes from, if he trusts, he will buy.
Jean-Marc Noel, co-founder and managing director
What are the priorities for retailers when moving into new international markets?
Despite the significant opportunities that exist for UK retailers, the UK still represents only three per cent of the global ecommerce market.
Much has been reported about how many retailers are missing significant opportunities by relying on local economies alone and how international expansion represents not only the future, but a must for retailers wishing to continue to expand in the global economic climate. However, international expansion isn’t always easy.
Why? The reality is that global success requires far more than a desire to sell. Whilst there are many consumers out there wanting to purchase goods from ‘faraway places’ they also wish to be treated in a way which is familiar to them. Localised service is vital.
The key to successful global expansion is knowledge. Knowledge is king. It is vital for retailers to be able to enter a market with a clear understanding. A clear understanding of the market, in-country communications, the process and the culture. This is all vital in achieving a successful delivery experience.
Customs clearance can cause delivery delay with the progress being made often an unknown factor. A comprehensive understanding of, or choosing a partner who appreciates the complexities of EU vs non-EU and duty vs intrastat is paramount. This knowledge and understanding can also help avoid unexpected shipping or duty costs, which can degrade the post-purchase experience.
To ensure you can offer a seamless customer experience, consideration should also be given to how you integrate your chosen duty solution into your online shopping experience. Full tracking and visibility throughout the entire delivery lifecycle could reduce the volume of inbound consumer queries or provide real-time information, offering you the control to, within reason, enquire about change requests at any point during the delivery journey.
The wnDirect delivery solution has been built in direct response to this environment and not as a work-around as with many other solutions.
