In this second edition of ‘Retailer’s Guide’ Rob Smith, Managing Director of Blueleaf, discusses the process for selecting which countries to choose when growing your ecommerce offering. Rob takes inspiration from IMRG’s Cross-Border eCommerce conference, which he attended on 24th September 2015.
Over to Rob
Often, the decision as to which countries to enter for your international eCommerce aspirations doesn’t get the full scrutiny it deserves and there’s a lot of factors to consider. A lot of the thinking I share in this guide has been inspired by the IMRG conference, where there was a great variety of speakers and panels, including retailers with direct experience of the highs and the lows. It’s stitched together here in a cohesive manner to give, as far as possible, a simple approach to what is a complex decision!
Before we begin the process of which countries to chose, let’s first have a discussion on the question that should be asked before that; why are you looking to extend your geographic reach at all?
There needs to be a good reason to expand your reach. Just the gut feeling that international trade is a potential ‘goldmine’, especially for a well-known UK brand, isn’t a good enough reason. The reason it’s not good enough is because the hidden complexity of going internationally is substantial and before you know it, you can be consumed with a lot of tactical work and decisions that distract away from bigger opportunities. Here are some questions to ask yourself before deciding “Yes, we want to expand”:
- Have you reached anywhere near the potential of your domestic market?
- Would resources deployed to international activity get better ROI domestically?
- What are the reasons you’re considering expansion? If political, heavily consider the ROI equation.
Once you’ve put some thought into the questions above, then it’s time to actually get into the nitty gritty of making your selection, and to follow a selection process. If the countries you need to enter have been mandated, it’s still worth running through the entire exercise here so you have all the information to feedback.
Country and currency selection
Which countries to expand into is not an easy question to answer. There’s a number of ways to approach this and we’ll look at a few.
Organic traffic clues
One of the easiest way to spot a potential country is to look at where you are ‘accidentally’ delivering a lot to anyway (if you deliver worldwide). Another clue is the weight of organic traffic and whether it’s building up over time, or if you’re getting lots of requests to ship to a particular place. All this can mean people are finding you / hunting you down without much effort on your part. Taking advantage of that can be seen as the low hanging fruit of internationalisation.
Where do people buy?
If you’re considering a country, it’s very important you consider where people buy within that country. Whether you love them or hate them, you can't deny that selling through a Marketplace (eg. ebay, Amazon, etsy) dominates sales in many countries, and some countries that might surprise you. We all know that China is dominated by the marketplace, with 61% of sales in China going through 'T-Mall' (stat from a Hermes presentation). There are others though. See the graph below from Borderfree’s recent report which is full of useful stuff in this regard. Poland, India and Japan are all lesser known places which also have strong marketplaces.
How do people pay?
It’s much easier to enter a country if they pay the same way your current customers do. This is often why Nordic countries seem like they are growing quicker than others - they pay in a very similar way to the UK and this increases their conversion vs. those where the payment process is completely different, maybe via their bank or a digital wallet. 70% of people in Egypt pay cash. iDEAL dominates in the Netherlands and is key to success in this market. Alipay is essential for China. Look at the countries you’re entering and ensure you add the appropriate payment methods if you want smooth conversion.
Why is there demand?
You need to establish why there is demand for a product as it could determine whether this is a short-term tactic or a long-term investment (which also dictates how far you go in terms of internationalisation). At the conference, the following example was shared by Jim Buckle, previously from Wiggle now COO at FeelUnique. Wiggle were selling a lot of Shimano gear sets (an important part for a push bike) to Japan. What’s odd about that is that Shimano is a Japanese company, so you would have thought they would be cheaper domestically than being shipped from Japan to the UK and back to Japan again. What transpired was that due to the exchange rate at the time, Wiggle had a significant advantage. It’s important to note that this was not a strategic advantage and as the exchange rate changed, their business dried up. So consider some questions around if there’s good demand:
- Is it brand-led? Especially for the UK, ‘Made in the UK’ can be useful
- Is there a significant price advantage over domestic? If so, why?
- Are you the only online purchase route for these products? Not as rare as you may think in certain locations
Giving these questions some thought will help you establish the quality of the demand you’re seeing and therefore whether it’s likely to last.
How far do you go?
Not in terms of distance, but in terms of investment in any given country / location. There are 4 distinct parts to entering a market:
- Logistics (delivery and returns)
- Services (payment and customer service)
Each of these have an entry level, through to full service level, for each market.
Most people start by simply shipping from their current warehouse via an international courier to a new location. This makes sense, especially if you’re testing the market. However, as an opportunity grows you may find it harder to compete on delivery speed with domestic competitors. At the time of writing this, some countries are not up to the level of delivery choice and speed that the UK is. This is certain to change! As a result you may look to open your own warehouse there or at least hold stock in someone else’s for fast delivery.
This is also true of returns. Returns internationally feels hard to the customer, regardless of how easy the process may be. So you may look to have localised returns as well, to further increase the relevance to the customer’s location.
Finally on logistics, consider how the market likes to be served. The CEO of Hermes pointed out recently (as you may expect considering they offer the service) that a great majority of customers in France like to pick up their parcels from a Parcel Shop-style arrangement, not home delivery. This is very different to the UK and these differences need to be recognised.
How much do you need to translate? How many people actually speak English anyway? Nearly 60% of people use a language other than their native one to shop online in the EU.
There's numbers to show that people prefer to shop in their native language and this does change from country to country, especially as you get outside of the EU and North America. There are levels you can go to though. Translating the checkout is a good first step. First of all, it’s not difficult to do and secondly it doesn’t change that often (unlike product / category content).
The next step is to translate the product content as well and from then on we get into deeper areas of localisation that we’ll consider in the ‘Marketing’ section below. If you only have a short term advantage in a country and / or there’s not a large market opportunity, then checkout translation could be sufficient, especially in the EU.
The services you offer customers are really important to their experience. Payment is especially important in certain markets and we covered this in the selection section above. Make sure you nail the right payment methods for that market or there might not be much point entering the market in the first place! Secondly though, how do you serve the customer after that? Do you employ native speakers in your current call centre or customer service location? Do you force people to use English to email? These are important questions as 74% of people would buy again if their customer service was in their local language. Of course this can also be phased in and looked at based on market size. Don’t use auto translation though...ever; even when trying to figure out a customer question!
The final milestone of fully entering a territory is to localise your marketing. After all, translation isn’t localisation. All translation does is make it easier for someone to understand your native proposition, range, holidays and so on.
True localisation comes from understanding the market, what promotional periods are important to them, how they like to be communicated with, what delivery methods are best and so on. Lots of your current ‘convincer’ content on site could be misaligned to the market you’re trying to speak with and so localisation of marketing will solve that problem. This also goes for search, social media and so on - all can have localised presence if the opportunity is big enough.
Going international is a complex affair. There’s a perception we believe that it can be an easy untapped goldmine because of many of the market sizes involved. In the end though it requires thought, planning and detailed execution to get it right. You need to test markets appropriately before going all in. You need to see what structures work for you internally to manage them. Some have separate teams, for some it’s centralised. Either method can work depending on the parameters. Overall though, keep in mind the graph below that shows how important certain barriers are to the consumer when purchasing internationally. These should be addressed in order. And you’ll notice that translation isn’t the most important.
I’d like to thank BorderFree and eCommerce Worldwide for producing a great report that provided the graphs for this article. If you’re working in this area, I would recommend that you go and get that report, which is available here, as it goes much more in depth across a number of areas.