When U.S. retailers launch global e-commerce efforts, they often start with countries that have a long-standing trade history with America. Shipments to Canada are soon followed by expansion into the United Kingdom, Australia or other English-speaking areas.
Some organizations stick with this strategy — where few barriers to entry, cultural similarities and overall market understanding provide for a “safe” selling environment.
Increasingly, however, U.S. retailers have discovered that more significant growth opportunities exist in the more up-and-coming markets, where e-commerce is taking off at record pace. For example, in countries such as Brazil, Russia and Germany, the combination of higher disposable incomes and a growing appetite for brand-named goods is creating high demand. The numbers speak for themselves:
- Brazil now represents the world’s sixth largest economy, with a $2.25 trillion GDP, according to the World Bank.
- In Russia, e-commerce will grow to $36 billion by 2015 as consumers gain access to broadband and credit cards, according to Morgan Stanley.
- China is on pace to overtake the U.S. as the leading e-commerce market, according to projections from Bain and Company.
- In Germany, the average spend per e-shopper exceeds nearly $1,800 per year.
Beyond these countries, e-commerce sales in smaller markets, including Mexico, New Zealand, Israel and the Philippines are adding up fast. To give you a sense of the opportunity overall: while some U.S. retailers were excited with the 18% year-over-year increase produced by Cyber Monday 2013, other retailers who are selling on a global basis are reporting annual growth rates of 40% or more.
However, adding new markets one by one can be a slow, resource-intensive process when relying solely on in-house capabilities. Countries take their import/export laws seriously, and if you don’t ship the right goods to the right people in the right ways, you could be subject to penalties or even denied entry to markets.
Consider Brazil. You’ll need to know what imports are prohibited — pre-owned merchandise, antiques and precious stones, to name a few. You’ll also need to know when to apply import duties, the Industrialized Product Tax, the Merchandise and Service Circulation Tax and other tariffs, as well as how to comply with country-specific forms, country-specific product coding and local shipping rules. Now, multiply that knowledge across every hot market in Latin America, Europe and Asia-Pacific. Do you need to collect passport information from your buyers? Are their monetary limits on what can be shipped to each household? What other country-specific rules are in play?
Clearly, those 40% growth rates don’t come without assistance. That’s why U.S. retailers who are ready to expand beyond the “safe markets” turn to third-party experts to provide the capabilities and the country-by-country know-how to satisfy both international buyers and local-market regulators.
So, what does it take to succeed on a global scale?
Selling in-language is certainly a best practice, but unless you are prepared to provide end-to-end support in a specific language (including customer care, FAQs and forms) you may be better off marketing your products in English. When it comes to language, it’s better to set realistic expectations upfront rather than to confuse online buyers with a change later in the process.
There are five other areas where you cannot afford to cut corners.
- Cost certainty. Consumers do not like surprises, so you need to provide visibility into the fully landed cost at checkout, including all taxes, duties, tariffs and fees. You may also want to consider expressing the prices in local currencies, which would require you to bake exchange-rate capabilities into your site.
- Reasonable shipping. Overnight service is rarely required, but if you can’t provide cost-effective ways to get merchandise to online shoppers within 10 days, they will likely shop somewhere else. Naturally, expectations are relative to proximity — Canadian buyers will expect a much faster service than those in Russia, for example. U.S. retailers who can provide local market shipping options from reliable carriers that consumers know and trust typically fare best. Also, tracking should be a key part of any international shipping service.
- Clear policy on returns. Offering an easy-to-understand process for returns and after-sale service is important. Depending on what you sell, you may or may not want to ship goods back to the U.S. Some retailers choose instead to liquidate returns in country and reimburse buyers. You’ll need to think through your policies, establish a process and bake returns costs into your ROI.
- Payment processing. Don’t assume everyone owns a major credit card. Payment preferences will vary by market, so you’ll need a way to accept a variety of credit, debit and electronic payment vehicles to which buyers are accustomed.
- Fraud management. Real-time fraud detection is another capability to consider. Having the right intelligence, scoring mechanisms and processes can provide for a healthier bottom line.
A few years ago, U.S. retailers were satisfied with a limited country-by-country approach. Today, the tidal wave of e-commerce opportunity requires a more global view. With minimal setups, rapid integration and limited up-front investments, global e-commerce solutions providers can offer U.S. retailers the support they need for rapid and successful entry into one or many new markets.
Craig Reed is VP of global e-commerce at Pitney Bowes, overseeing strategy, sales and business development for the company’s global e-commerce business. Pitney Bowes international e-commerce solutions and cross-border parcel services help retailers create a seamless online purchasing and shipping experience for consumers and reduce the challenges associated with international e-commerce.