Four Tips for International Retail Success
Merchants are increasingly looking beyond U.S. borders to attract new customers. While the potential upside is great, sellers should prepare extensively and ramp up gradually to ensure they’re equipped for global success.
Technology researcher Forrester estimates that some 15% of all e-commerce sales will be transacted across borders by 2021, and leading online brands such as eBay report that more than a third of their revenues are already generated internationally. But with new opportunity comes new risk; given cultural differences and regulatory hurdles, there’s a real danger of flubbing entry into international markets. We’ve seen this happen already with well-established retailers. For example, Home Depot had to close up shop in China because the retailer underestimated cultural tendencies in home improvement. Best Buy miscalculated its efforts in China, as well, by selling complex consumer electronic products when most Chinese consumers preferred more basic items like TVs and DVD players.
To avoid these kinds of pitfalls, merchants considering international expansion should research their options extensively. For instance, Export.gov is one good resource to explore. Developed by international trade specialists and economists from 19 different U.S. government agencies, Export.gov is a good source for trusted market intelligence, practical advice and business tools to help retailers understand how to export, connect with foreign buyers, and expand operations in new markets.
Additionally, here are other key factors to consider when looking to expand internationally.
• Know the local calendar. This is extremely important as shoppers in different geographical regions have their own traditions and customs when it comes to when and where they prefer to shop. For example, Single’s Day is a key fourth-quarter retail event in Asia, while U.K. customers hunt for post-holiday bargains on Boxing Day. Merchants should familiarize themselves with local customs by tracking competitors’ promotions and connecting with potential audiences on social media to learn their expectations.
• Mind the (GDPR) gap. The General Data Protection Regulation (GDPR) has been in effect for nearly six months now, and it applies to any company doing business in the European Union, even those without a physical footprint there. The law requires companies to protect consumers’ online privacy and grant control over how personal data is collected and used. Merchants should check with their software providers to ensure compliance, rewrite privacy and security policies in plain language, and make access to data collection controls prominent throughout the path to purchase.
• Consider online marketplaces as an entry point. For the retailers that have embraced them, online marketplaces create an endless aisle online without the traditional costs. Forrester Research estimated that 56% of global B2C online retail spend came from marketplaces in 2017. Merchants can take advantage of Amazon and eBay’s extensive international marketplaces to establish a foothold, while region-specific hubs from Taobao in Asia to Mercado Libre in Latin America offer still further localized options.
• Boost OMS functionality to support international fulfillment. Before launching a localized website or opening foreign fulfillment centers, merchants can iron out international logistics by shipping internationally from their U.S. e-commerce sites. The potential revenue can motivate merchants to upgrade their order management systems for global operations. Or, for a shorter-term solution, global cross-border tools can offer turnkey services for retailers.
If a brand has an international following, it is essential to remember the subtle, and not so subtle, differences between U.S. and international shoppers. Keep in mind that the American lifestyle is metaphorically big, but that the rest of the world often operates on a different and (again, metaphorically) smaller axis.
Danielle Roberts is Senior Product Manager at Kibo.
Technology researcher Forrester estimates that some 15% of all e-commerce sales will be transacted across borders by 2021, and leading online brands such as eBay report that more than a third of their revenues are already generated internationally. But with new opportunity comes new risk; given cultural differences and regulatory hurdles, there’s a real danger of flubbing entry into international markets. We’ve seen this happen already with well-established retailers. For example, Home Depot had to close up shop in China because the retailer underestimated cultural tendencies in home improvement. Best Buy miscalculated its efforts in China, as well, by selling complex consumer electronic products when most Chinese consumers preferred more basic items like TVs and DVD players.
To avoid these kinds of pitfalls, merchants considering international expansion should research their options extensively. For instance, Export.gov is one good resource to explore. Developed by international trade specialists and economists from 19 different U.S. government agencies, Export.gov is a good source for trusted market intelligence, practical advice and business tools to help retailers understand how to export, connect with foreign buyers, and expand operations in new markets.
Additionally, here are other key factors to consider when looking to expand internationally.
• Know the local calendar. This is extremely important as shoppers in different geographical regions have their own traditions and customs when it comes to when and where they prefer to shop. For example, Single’s Day is a key fourth-quarter retail event in Asia, while U.K. customers hunt for post-holiday bargains on Boxing Day. Merchants should familiarize themselves with local customs by tracking competitors’ promotions and connecting with potential audiences on social media to learn their expectations.
• Mind the (GDPR) gap. The General Data Protection Regulation (GDPR) has been in effect for nearly six months now, and it applies to any company doing business in the European Union, even those without a physical footprint there. The law requires companies to protect consumers’ online privacy and grant control over how personal data is collected and used. Merchants should check with their software providers to ensure compliance, rewrite privacy and security policies in plain language, and make access to data collection controls prominent throughout the path to purchase.
• Consider online marketplaces as an entry point. For the retailers that have embraced them, online marketplaces create an endless aisle online without the traditional costs. Forrester Research estimated that 56% of global B2C online retail spend came from marketplaces in 2017. Merchants can take advantage of Amazon and eBay’s extensive international marketplaces to establish a foothold, while region-specific hubs from Taobao in Asia to Mercado Libre in Latin America offer still further localized options.
• Boost OMS functionality to support international fulfillment. Before launching a localized website or opening foreign fulfillment centers, merchants can iron out international logistics by shipping internationally from their U.S. e-commerce sites. The potential revenue can motivate merchants to upgrade their order management systems for global operations. Or, for a shorter-term solution, global cross-border tools can offer turnkey services for retailers.
If a brand has an international following, it is essential to remember the subtle, and not so subtle, differences between U.S. and international shoppers. Keep in mind that the American lifestyle is metaphorically big, but that the rest of the world often operates on a different and (again, metaphorically) smaller axis.
Danielle Roberts is Senior Product Manager at Kibo.