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Conquering the Next Frontier: Ecommerce Expansion (Part 2)

by Sherry Shi | September 25, 2013 | Comments Off on Conquering the Next Frontier: Ecommerce Expansion (Part 2)

This blog post is a continuation of Conquering the Next Frontier: Ecommerce Expansion (Part 1). For a summary of the different stages outlined below, feel free to take a look at Part 1 of this blog post.

 

A Simplified Roadmap for International Ecommerce Expansion

Stage 1: Leverage What You Have

This is the “get the ball rolling” approach some retailers are taking. Speed to market and low investments are what make this route attractive. Beyond enabling the international features on the platform and finding a logistics provider to ship to international markets, not much extra effort is needed.

Retailers can leverage their existing platform, logistics network and payment solution to serve international customers. E-stores are borderless by nature and retailers can capture the immediate opportunities with their current competencies. However, they may turn away customers not having the solution tailored to their needs.

  • Target countries: English speaking, low fraud risk countries such as Australia, Canada, UK
  • Target customers: Overseas customers who can shop and transact in English; familiar with the U.S. culture and brands; have access to popular payment methods; desire U.S.-made products; comfortable with buying overseas
  • Marketing: Rely on organic marketing tactics such as Social media or SEO. No proactive marketing is needed,  leverage current display ad network for international, for instance, turn on “international” in your search display in Google Adwords.
  • Localization: Minimal. No need for translation.
  • Fulfillment: Ship directly from your warehouses in the U.S; customers take care of the duty and taxes issues.
  • Payment: Popular credit cards and PayPal;

This route is especially appealing to retailers who are new to international business, unsure of the overall international demand, and choose to be reactive rather than proactive for fear of overcommitting to an unproven market. It doesn’t require much extra work, but it also won’t get the coveted growth retailers expect from their international initiatives. The markets are limited to a few English-speaking ones. The international customer experience will be compromised. The limited payment options may shut out consumers who don’t have these payment methods. Expect customer issues to go up as customers have to take care of their own duty taxes and receive unexpected bills from customs.

 

Stage 2: Make Them Feel At Home

At this stage, retailers should have some experience with their international ecommerce, and become acutely aware of the issues faced by their international customers through their Customer Service team or social listening tools. To “get it right”, retailers should focus on improving international customer experience for customer retention. The ideal shopping experience for international shoppers should resemble a domestic one. The need for localization has thus increased for currency, language, culture-based merchandising and pricing strategy. Accepting more local payment methods becomes critical to open the door wider to more buyers. Introducing transparency to the total landed costs will minimize the customer complaints on the unexpected duty charges.

Expand beyond the basic features to utilize the multi-currency and multi-language capabilities offered on your ecommerce platform. Include local payment methods and a total landed cost solution.

  • Target Countries: Retailers can add the non-English speaking countries and emerging markets to the list
  • Target Customers: International customers who want to buy U.S. brands, but were constrained by language or payment options before
  • Marketing: Check the analytical tools to see where the top selling destinations are. It may be worthwhile to do a few country specific marketing/PR efforts. Be aware of the differences in the top search engines and social networks in different markets
  • Localization: Platforms such as Demandware provide the technology to enable retailers to implement their in-country pricing strategy for different markets. Demandware LINK Technology partners such as MotionPoint and Translations.com can help you deliver the content translation
  • Fulfillment: Introduce a DDP (Delivery Duties Paid) solution to eliminate the uncertainty of duty and taxes, and reduce your customer service issues. Display duty & taxes, and guarantee the total landed cost quoted in the checkout
  • Payment: Add more local payment methods and fraud protection tools from companies such as Global Collect; CyberSource  and WorldPay – all LINK technology partners within the Demandware community.

This route applies to retailers who want to build a sustainable international business, and consider international markets an important growth engine instead of “nice-to-have” markets, but don’t have enough scale to justify the deeper investment in stage 3. More dedicated resources will be needed for taking this route. If the resource commitment sounds intimidating, select a few countries to prioritize. The decision can be made with the traffic and transactional data from the analytical tools, combined with the strategic importance of certain markets.

 

Stage 3: Set Up A Local Presence

At a certain point, fulfilling orders from the warehouses in the U.S. becomes inefficient and expensive. For retailers who have deep convictions of the international opportunity, proven demand and investment resources, the next logical step is to build a streamlined supply chain to serve the international market more directly, whether through fulfilling by third-party providers or building distribution centers in the primary markets APAC, EU where shipping costs are high, but the presence of the third party providers may vary in different markets. Make sure their geographic capabilities align with your market expansion roadmap.

  • Target customers:  local customer base in the chosen markets
  • Marketing: Localized search marketing, email, and social media efforts. Engage local marketing expertise, especially in certain high cultural context markets. In some markets, retailers may need to collaborate with leading marketplaces to access their immediate customer base
  • Localization: The website should feel like a domestic one for those in-country customers. Full localization is needed for language, currency, merchandising and customer service
  • Fulfillment:   Collaborate with a third party logistics provider or set up distribution centers to directly serve the international markets.
  • Payment: Local payment methods and fraud protection become mandatory

While it will bring a faster transit time and lower fulfillment costs, this route only makes sense for retailers who have obtained significant brand recognition in markets with proven demand, and achieved scale to justify the large investment. Retailers who have reached the decision point need to analyze the impact of the full engagement route on their brand, operation, and organization to understand the risk factors and the ROI picture.

This may be a simplified take of the complex scenarios of a retailer’s capability, risk tolerance level and internal priorities, but hopefully this can provide a roadmap to kick off an international expansion initiative, remove the fear factors, and encourage you to take the next step to seize the opportunities that exist globally. Many ecommerce platforms including Demandware and Magento provide  excellent infrastructure with the flexibility that retailers need to expand internationally.

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Pitney Bowes enables operational excellence in global ecommerce by eliminating “border friction”, and connecting you to the a global consumer base. If you’re a US retailer looking for more information on cross-border parcel shipping, subscribe to this blog for weekly updates, and contact us for more information. You can also watch a video of how one retailer is now selling globally.

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