Internet Retailing Research Programme: International
In recent years retailers’ focus has been largely concentrated on business at home – especially since the recession - ensuring their businesses are in the best shape to survive the economic downturn. But increasingly the growth opportunities offered by international expansion and the success that many of their peers have had either by simply selling overseas or expanding physically too means more and more retailers are looking beyond the boundaries of the UK for their future growth.
Expansion abroad offers huge opportunities for retailers whatever their size or scale. For retailers with store as well as internet businesses it offers particular opportunities for growth given that at home many are consolidating store networks. For smaller retailers it offers the same opportunities as their bigger rivals for opening themselves up to a broader customer base. It’s no surprise that we all want to hear more about how retailers are planning to increase their level of trade overseas and how to do it.
“The evolution of ecommerce in recent years and the changing behaviours of today’s online shopper have been a driving force behind the growth of international expansion,” says Julia Priddle, Head of Account Management, EMEA at Channel Advisor – a leading provider of cloud-based ecommerce solutions that enable retailers and manufacturers to integrate, manage and optimise their merchandise sales across of all sizes are hundreds of online channels including Amazon, Google, eBay, Facebook and more. Their embarking on solution allows customers to leverage a single inventory feed to more efficiently list and expansion and advertise products online, and connect with setting their shoppers to increase sales – vital when expanding into new markets.“Cross-border sights on new trade is no longer just reserved for larger ” companies with international hubs, regions warehousing abroad and thousands of staff; today retailers of all sizes are embarking on expansion and setting their sights on new regions,” says Priddle.
Digital River’s own multichannel commerce solution is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running a global commerce operation.The company currently manages 40,000 stores across gaming, software and physical goods, both B2C and B2B, in practically every country in the world, transacting over $22bn in online sales. Its Chief Marketing Officer Scott Heimes says international is a trend everyone needs to be considering.“Almost every company doing business anywhere in the world hears the siren’s song to“go global”through an ecommerce initiative; approaches range from “do nothing” to “do a little” to “do everything,” says Heimes.
Certainly the opportunity is there with cross- border sales in Europe alone set to reach €36bn in 2013 to account for 10.6% of total online sales in the region, according to IMRG.“This rapid adoption of expansion can be attributed to many different factors; marketplaces such as Amazon are enabling retailers to seamlessly offer their products to new countries, online shoppers are looking further afield for the most competitive appealing products and global infrastructures are facilitating the efficient delivery of products,”says Priddle.
But the desire to trade abroad is the easy part. The reality of doing it is the tougher challenge. The first step is choosing the right market and then considering how you manage that local market.“We’re looking forward to gaining insight into the most desirable countries for retailers who are expanding, what operational challenges they are overcoming and the strategies and future plans of retailers operating internationally,” says Priddle.
Even international selling giant Amazon is aware it can always learn more from its “ customers.“Amazon chose to get involved in the International Research project in order to receive valuable feedback from sellers concerning their plans and requirements to company expand internationally,” says Chris Poad , Director doing business of Merchant Services for Amazon UK . “The input will help Amazon continue to improve the tools anywhere in and services it offers to sellers to successfully grow their online business at home and globally,” he says.
Indeed operating internationally is about much more than simply opening up your domestic website to foreign credit cards and delivery addresses. Instead it requires dedication and focus to ensure it is done correctly and the right logistical, technical and local expertise to ensure your business will work in a different market.
Would be international retailers are faced with a number of challenges to overcome – ranging from the issues of language, currency, product licencing and availability, storage and distribution to the overall service level for a market that, unlike the UK, they are unable to control or manage as closely.
That can make the prospect of international expansion a daunting one but Poad points out Amazon, which has online marketplaces around the world from the US to Europe, China, Japan and India, can help retailers overcome that. “Amazon provides the tools and support to help businesses of all sizes expand globally, taking much of the complexity, cost and effort out of selling internationally,” says Poad.
As if establishing a local trading base isn’t tough enough there are other challenges too.
Derek O’Brien, Group Marketing Manager, Meridian Global Services which has been helping companies manage their cross border VAT obligations for more than 23 years, says there are a number of issues to plan for when managing cross border online selling with VAT and Sales Tax obligations just two of the subjects retailers need to address.“To what extent are retailers aware of the fact that they may need to collect VAT or Sales Tax on sales to consumers based overseas?” asks O’Brien.
And international expansion also requires sensible thinking about retailers’ supply and fulfillment operations too. Do retailers plan to move or import increasing volumes of stock to new locations in order to be closer to the end consumer or are they planning to fulfil from the UK instead?
At Amazon, its FBA Export solution allows smaller sellers to opt into the programme and Amazon automatically enables eligible products for export.“When international customers place orders, Amazon picks, packs, and ships the product from the seller’s local inventory pool. FBA Export eliminates many of the traditional barriers to shipping products internationally and is a great way to get started with global selling because Amazon fulfils orders and manages the export process,” explains Poad. The solution also helps bigger retailers to sell abroad too.
Deciding to trade overseas is in essence an obvious move to make. The market opportunity after all is vast. But retailers do need to ensure their businesses are capable of expansion into a new, often unknown market.To make a success of international expansion they have to put international at the heart of their business and need to ensure they are set up to trade internationally rather than to simply view it as an add on business. It needs a re-shaping and re- integration of retailers business in the same way that the divide between store and web has had to be rethought.
“Every retailer has to adapt and evolve their business in order to attract and connect with customers.We hope the findings will help every retailer sharpen their international focus and enable them to become more strategic and successful in their overseas operations” says Priddle. We here at Internet Retailing hope that too and that this report, which follows the publication of our research report into the Customer Journey in May, will look at the opportunities, issues and challenges around international trade in detail and that it will deliver the answers that you, our readers, are looking for.
Keep an eye out for the retailer survey which will hit your inboxes in the next few days and if you have any suggestions for comment, angles or would like to take part in the research for the report please email our research editor on [email protected]