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Do’s and Don’ts for Retailers Expanding in European Markets

BY Kelly Stickel

For many retailers, expanding to European markets holds a big draw. But it’s more complicated than putting something in Google translate and getting international shipping packaging. Is your company up to the daunting task of expanding to a whole new market?

Here are few things to take into consideration as you craft your next move:

● You can’t rely on Amazon: Even if a business falls prey to the lure of Amazon monopoly (also known as the world’s biggest product search engine), you need to remember that Amazon isn’t even available in most European countries.

● Social media creates a global marketplace: Social media is a no-brainer for retailers around the world. Not only does it give you an exclusive opportunity to have an authentic conversation with your market, it makes it easier to build a brand and reach shoppers around the world. There could be demand for your market in Europe and you’re “missing the boat.”

● Know the market: If you do decide to go into a new European market, be aware that critical mistakes happen when you don’t know what will work – and what won’t. Don’t spend too much money experimenting, make sure you know what will sell from country to country.

● Partner wisely: Big platforms that sell internationally can be likened to a huge body of water. If you don’t have a remarkable or popular product to start, your product will get “lost at sea.”

• Don’t mistake today for yesterday: It’s crucial to have a real strategy for Europe – more so than was needed five years ago. Even if you’ve been in the European market before, things have changed and your company will need to adapt.

Understanding the Challenges
After you’re done considering the market conditions that can impact your current retail strategies, you’ll also want to understand what challenges you’ll be facing as you turn from domestic to European markets. Consider the following:

• The New Retail: Technology matters. Being proactive and innovative in your partner choices will impact your performance.

Companies that have been using traditional online commerce systems for the past ten years are not going to perform at the same level as a company that adapts and makes the change to something newer and more flexible. Keep up with current market technologies to ensure your product gets seen.

• Avoid the anonymization of your brand: Avoid being a faceless, nameless product in a sea of products. Product aggregation sites might ensure that you’re selling a product, but it doesn’t mean that you’re building a brand. Not to mention the simple monetary aspect: Platforms take a cut of the revenue sales – anywhere from 6%-18% – plus whatever other partners you may use that charge more. You could be losing almost 40% of your sales revenue. If you’re like most retailers, that cut means little to no profit.

• It probably won’t work there: What works in the U.S. may not work in Europe. Shoppers in Europe will turn to the U.S. for items they can’t get. Where U.S. shoppers have come to appreciate free shipping as a given, you won’t be able to use that as a differentiator with European customers.

Free shipping doesn’t exist between Europe and the U.S. Customs in Europe want their import duties and taxes. This makes shipping a long, expensive and painful process with a surprise behind every door. It only takes one item to make or break the first impression for your new European customer.
How to Beat the Challenges.

After you’re done considering the market conditions that can impact your current retail strategies, you’ll also want to understand what challenges you’ll be facing as you turn from domestic to European markets.

Here’s a checklist of ways to beat the heat when it comes to transitioning to European markets:

● Carefully consider technology and partner platforms based on your products, market, and competitors in the market you’re tackling.

● Find the right partner and market your product in Europe for affordable and fast shipping.

● Use social media to sell as much directly to consumers from your “.com” to avoid partner revenue drain.

● Focus on products that are unique to your brand to stand out in crowded markets and create demand.

● Pay attention to small details such as changing from a “.com” to a “.co.uk” or “.de” make the European market more comfortable with your product’s website.

• Partner with a localization expert help you ensure that your message is tightly aligned with a target customer’s need from country to country.

The Future of Global Retail expansion
There are a host of shifts in the market that will directly impact those retailers looking to expand their markets. First, millennials are bringing change to the global market faster than ever. They don’t have the perception that China or Morocco are that far away. They give new meaning to “it’s a small world,” and it’s impacting the way they buy. This makes ordering online from an international company feel more “lock and key” and less “Nigerian prince.”

One more thing to consider is the fact that there will be new customs and shipping laws going into effect for Europe, starting by the end of 2020. As the world shrinks and governments recognize international tax potential of online retail sales, everything will come with duties and taxes.

All cross-border commercial items shipped into Europe will be taxable from the first cent. GO EU is helping businesses breaking into European markets with all the aforementioned challenges and helping provide solutions.

Kelly Stickel is the founder and CEO of Remodista, a social think tank examining global retail and fintech disruption.

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Online shopping fraud up—particularly in two categories

BY Marianne Wilson

E-commerce fraud is on the rise, but some categories — and states — are taking a particularly bad hit.

Total online shopping fraud increased 30% in 2017, according to a report from Experian Information Systems. The rise was most dramatic in shipping, where it rose to 37% in 2017 over the previous year, and billing, where the rate increased 34%. (Shipping fraud occurs when a criminal uses their address for the delivery of stolen goods purchased online. Billing fraud occurs when the victim’s address is tied to the payment account used to purchase the stolen goods.)

From a regional perspective, the Western U.S. saw a nearly 60% increase in attack rates for shipping fraud. The North Central region saw a 50% increase in billing fraud.

Overall the data showed that 50% of total online fraud attacks were from Delaware, Oregon, Florida, New York and California. Delaware and Oregon are the riskiest states for both billing and shipping fraud for the second year in a row and continue to see a significant increase in shipping attack rates, with Delaware increasing over 300%, and Oregon just under 300%.

In more findings:

• The top five riskiest states for shipping fraud were Delaware, Oregon, Florida, New York and California. Nearly half of all shipping fraud attacks happened in these states as they made up 27.6% of all e-commerce transactions from a shipping perspective.

• The top five riskiest states for billing fraud were Delaware, Oregon, Washington, D.C., Florida and Georgia. The top 5 states for billing fraud made up about 18% of overall fraud attacks.

• The top riskiest ZIP codes in America for online fraud were all near international airports and seaports because these are ideal locations for reshipping stolen merchandise quicker before victims or card issuers can take action. Beaverton, Oregon, is home to the ZIP code that has the highest shipping attack rates among all eligible zip codes in the U.S., with billing fraud rates at 21.8% and shipping fraud rates at 27.4%.

• In 2017 among fraudulent transactions, 53% of those took place through an internet browser while 29% happened on a mobile device.

• $855 was the average amount lost per ZIP code for online shopping fraud in 2017.

• Credit card fraud was the most common form of identity theft in 2017, according to the FTC. In 2017 among the fraudulent transactions, 92% of those used a credit card, while 7% happened through direct billing, third-party transfers or prepaid gift cards.

For the full report, click here.

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Survey: The products—and brands—most likely to be stolen from stores are…

BY Marianne Wilson

Shrink costs U.S. retailers a staggering $42.49 billion during 2017-2018.

That’s according to the 2018 “Sensormatic Global Shrink Index” from Tyco Retail Solutions, which found that the most likely to be stolen from U.S. stores included clothing, cosmetics, jewelry and confectionery, as well as consumer electronics. The brands targeted the most included Guess, Gap, Revlon, Apple (and Beats), Samsung and Sony.

U.S. fashion and accessories stores had the highest rate of shrink by retail vertical, the survey found. Office equipment stores had the lowest.

Tyco commissioned global retail market intelligence provider PlanetRetail RNG to conduct the report, which included over 1,100 retailers across 14 countries representing the world’s leading economies and 13 vertical markets. They operate over 229,000 stores. On a global scale, shrink cost retailers nearly $100 billion globally last year.

Shrinkage was highest in the U.S. at 1.85%, of sales during 2017-2018, while Europe (1.83%) ranked second.

Key U.S. findings include:

• External theft/shoplifting (including organized retail crime) make up the most significant percentage of losses, at 35.55% of lost sales, slightly above the global average. Internal shrinkage (24.54%), including employee theft, was the second largest source of losses, followed by vendor and supplier losses (21.47%).

• The average value of each ORC incident in the USA during 2017-2018 was $1,401.68 (or $131.72 more than the global average). Other external incidents, including shoplifting, amounted to $89.80 (or $16.86 more that the global average) compared to all other countries surveyed. Internal sources, including employee theft, were worth $12.75 more in the USA, at $71.75, compared to the rest of the world.

• After electronic article surveillance (EAS), alarm monitoring is the next most popular loss prevention investment, followed by access control systems, exception-based reporting and closed-circuit television (CCTV).

• The country ranked fifth for overall shrink, but has the highest shrink dollars based on being the world’s largest economy.

• Fashion and accessories have the highest rate of shrink by retail vertical, with shrinkage as a percentage of revenue coming in at 2.43%. Convenience stores and home, garden and auto stores had a rate of 2.05%, followed by drug stores, at 2.03%.

• The sector with the lowest amount of shrink (as a percentage of revenue) was office equipment, at 1.26%.

“Best in class retailers are optimizing their physical stores by ensuring that operational controls are in place for growing problems such as retail shrink,” said Catherine Walsh, VP and general manager, Tyco Retail Solutions. “The Sensormatic Global Shrink Index benchmarks retailer performance globally and sheds light on other factors affecting loss prevention.

To view the full report’s findings click here.

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