Five Ways to Build a Successful Global E-commerce Strategy

3/29/2015
In today's global marketplace, advances in technology are continuing to connect the world's economies in new ways, making it possible for apparel retailers to embrace new channels to sell, compete and expand their footprint. Global e-commerce is also making it possible for consumers to purchase goods from apparel retailers across borders that they can't access in their own markets.

Retailers that take a longer-term and more macro view on expanding to overseas markets recognize that there will be ebbs and flows with global economics.  However, one thing that won't change is the booming market opportunity that global e-commerce represents.  For instance, according to eMarketer, global retail e-commerce sales will reach approximately $1.6 trillion in 2015, driven by strong growth in every region. 

Recent global online shopping research that we conducted also revealed that cross-border e-commerce is gaining traction with nearly 40 percent of consumers having purchased goods online from another country. According to the study, the U.S. is the most desirable e-destination for consumers to purchase goods online outside their own country (70 percent), followed by the U.K. (45 percent) and Germany (38 percent).  As a result, retailers based in these countries are in a great position to tap into this trend to expand their reach to global buyers.

Our study showed that apparel was the top product category with consumers who were likely to buy online from a retailer outside of their own country (41 percent).  This was highest with consumers in Russia (59 percent), South Korea (58 percent) and Brazil (48 percent).  Brand names were the highest with consumers in India (52 percent) and China (34 percent), followed by Russia and South Korea (both 27 percent).

Price is the top reason (68 percent) why shoppers have purchased a product from an online retailer outside of their own country or would consider doing so. This was followed by availability (46 percent) and better selection (38 percent).
Barriers to adoption

Although the market opportunity is clear, entering new markets is complex. Countries take their import and 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. 

Our global online shopping research showed that the number one deterrent for completing a purchase online is high shipping costs (68 percent). This was more prevalent with consumers in Canada (83 percent), Australia (80 percent) and the U.K. and France (both 76 percent). 
Additional fees at the time of delivery, including duties and taxes, were another major barrier (58 percent). This was highest with online shoppers in Canada (72 percent), followed by Germany (68 percent) and France (67 percent).

Product delivery taking too long was the third largest barrier to completing an online purchase (42 percent). This was the biggest deterrent to consumers in Brazil (58 percent), followed by the U.K., South Korea and Russia (all 46 percent). 

Online return policies and processes were a deterrent to more consumers in Germany (50 percent), India (48 percent) and the U.S. (45 percent).

Five strategies for success
Five key pillars that you should consider building into your global e-commerce strategy:

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 embed exchange-rate capabilities into your site.

Compliance. Import and export regulations can be very confusing and are constantly changing. You need to understand what you can ship to which countries (import regulations) and what export regulations may apply to your products.  Screening international buyers from seeing these products during the shopping experience is a best practice that you should consider.

Reasonable shipping. 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 that can provide reasonably priced local market shipping options from reliable carriers that consumers know and trust typically fare best. You also need to help ensure that you have full tracking capabilities, including proof of delivery.

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 include returns costs into your ROI and cross-border business case.

Payment processing and fraud management. 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. Real-time fraud detection is another capability to consider. Having the right intelligence, scoring mechanisms and processes can provide for a healthier bottom line.

Selling in-language could certainly be a best practice, but unless you are prepared to provide end-to-end support in a specific language (including customer care, FAQs and emails/packing slips), it might work best to market 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. 

While it may not be feasible for you to build these all of these capabilities or expertise in-house, you can still provide a seamless online shopping through partners who specialize in offering these capabilities.  With minimal set-ups, rapid integration and limited up-front investments, these providers can help you position yourself for success and tap into the significant market opportunity that awaits you globally.



Craig Reed is senior vice president, global e-commerce, Pitney Bowes.




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