International Retail Opportunities? ¡Si! Oui! Ja! Da! はい! 是!
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International Retail Opportunities? ¡Si! Oui! Ja! Da! はい! 是! WE LOOK AT THE TOP NINE COUNTRIES FOR LUCRATIVE ONLINE RETAIL OPPORTUNITIES. If your customers are not shy about crossing A Wide-Open Market borders to get goods they desire, why should you remain focused on your own backyard? Global ecommerce continues to accelerate and is expected to reach $4.5 trillion by 2021. Worldwide spending online increased 18 percent in 2018, Even though international ecommerce expansion is a key growth opportunity for according to Internet Retailer. The vibrant growth retailers based in the United States and Europe, it can be a daunting enterprise provides a significant opportunity for retailers who are to embark upon. You likely have to deal with new currencies, different languages, ready to move beyond their home country’s borders different buying habits, and logistical and distribution challenges like taxes, trade and sell internationally. In fact, a recent Nielsen agreements, and customs paperwork. report found that 57 percent of shoppers bought something from an overseas retailer within the past Fraud and risk are also concerns, as fraud trends and the availability of data to six months. protect retailers from fraud and chargebacks differ from country to country. In fact, in a survey of retailers, Pitney Bowes found that in 2018, fraud became the Overall, the global outlook is promising. According top-most concern for merchants looking to expand into new countries. to a 2018 briefing by the United Nations, the global economy is finally growing again after a sustained Plus, according to Deloitte, retailers throughout the world are coming to terms stagnant period. Regardless of doubts incurred by with the fact that consumers no longer think of shopping in terms of channels. some political instability — notably Brexit and trade They want to effortlessly move from bricks and mortar, to bricks and clicks, wars dominated by the United States and China — to online only. You could say that they are “channel-agnostic,” says Deloitte. the worldwide economy is experiencing increased Pre-shopping research, the purchase itself, and taking physical possession investment and trade, improved spending attitudes of purchased products are all done in a “fluid” way, with consumers moving by both businesses and consumers and better labor seamlessly between online and offline channels. market conditions. Moreover, cross-border commerce is increasing, as consumers look beyond their country’s boundaries to get the goods they want. 3 Things To Ponder When Going International One of the most important things to consider if you do decide to expand globally is whether you want to grow or buy your infrastructure. Today, even the smallest niche ecommerce businesses can leverage third-party vendors to get access to multilingual platforms that translate their existing U.S.-focused content to serve consumers in new markets such as China, Germany and Russia. They can hire third- party logistics firms to handle fulfillment, payment and delivery. Just as digitally native retailers have outpaced the success of legacy retailers by partnering with firms that specialize in specific aspects of ecommerce operations, merchants going international have made progress by enlisting third-party firms. The same Pitney Bowes report that found that fraud was a top fear, also found that high-growth retailers were significantly more likely to have outsourced their fraud management responsibilities. On the other hand, a larger retailer may choose to invest in building its own fully integrated physical stores, ecommerce storefront, supply chain and integrated processes to serve new international markets. It depends on what investments will reward you with the best competitive advantage. Pricing: Tariffs and taxes can significantly raise the final price of Here are some of the issues you’ll face when venturing across country borders: products. It is critical to understand how these charges will affect sales and pricing. Some online markets are extremely price sensitive, others Payment methods: Customers in different countries prefer paying in not. International shipping is another aspect of pricing that can prove a different ways. Whereas United States buyers prefer credit, debit, deal-breaker for buyers in some markets (see below). PayPal, PayPal Credit and Google Checkout, debit is a popular payment form in the United Kingdom. In Russia, cash is still king. You need to set Shipping: Shipping costs can also significantly affect the price of up a payment infrastructure that best meets local preferences. the transaction — especially for international shipments. The cost to the retailer to fulfill orders will vary significantly based on where the Product and content localization: You have to customize your product inventory is located and what partners they’ve signed up. and content for each market. That means you have to understand local product preferences, descriptions and images and safety regulations. Risk: Expanding into new markets means serving customers with whom you have no transaction history. You might also be facing Language: Although English is widely spoken in other markets, retailers different restrictions on using data that can help identify whether an need to evaluate whether to translate the content on their websites. order is legitimate or fraudulent. Some retailers elect to translate only portions of their website whereas others translate entire sites. Wherever content is translated, it needs to In this e-book, we’ll explore the top nine international markets for ecommerce be localized and then tested for accuracy. (other than the United States). We examine each one in terms of market size and growth, purchasing trends, payment methods, challenges and special considerations for each particular market. 5 ONLINE PURCHASING TRENDS China: Land of Burgeoning Alibaba has been named the company “most likely to disrupt business” Opportunity—and Competition by global tech industry leaders, who were asked to name the business they were most worried about. That’s because Alibaba—along with rivals China is still the supersized version of ecommerce when Tencent and JD—has perfected the art of the seamless consumer online compared to the rest of the world. It is also the birthplace of the supply chain. Everything from social media, to virtual window-shopping, to only ecommerce giants that could eventually meet and battle buying, to payment and delivery is covered under the online behemoths’ Amazon as equals. business portfolios. SIZE AND GROWTH OF ECOMMERCE MARKET What’s more, the blurred lines between all their customers’ digital Chinese ecommerce revenue in 2018 was almost as much as activities provide online giants Alibaba, JD.com and Tencent with a vast the United States and the United Kingdom rang up together. amount of information about its customers’ lives. For example, Alibaba Retail web sales totaled 7.18 trillion yuan ($1.149 trillion), passing gives customers a “unified ID” that collects data on them across Alibaba’s $1 trillion for the first time, according to Internet Retailer. The many businesses and allows Alibaba to do extremely targeted selling. sum marked an increase of 32 percent from the previous year. China’s online retail market is expected to hit $1.8 trillion in “We know you as well as you know yourself.” 2022, according to a report by Forrester. -Zhang Chen, chief technology officer, JD.com, said to the Economist. SALES IN 2018 SALES IN 2022 $1.8 TRILLION Perhaps as a result of this, six out of 10 (59 percent) of Chinese shoppers $1 TRILLION are comfortable shopping online, versus the international average of 47 percent, according to Delivery Matters. Eighty percent prefer using China also has one of the highest percentages of online to their phones to shop, nearly twice as much as in the United Kingdom, for bricks-and-mortar retail sales, according to The Economist. example. Euromonitor predicts that the ecommerce proportion of total retail will reach 24 percent by 2020, and other experts say it Clothes are the most popular goods to purchase online, Delivery Matters will overtake that to achieve 31 percent of all retail sales. says, followed by food and drink, footwear and toiletries. Much of this activity is powered by Alibaba—now the What China’s shoppers love buying world’s biggest ecommerce platform—and supported by the Chinese ecommerce behemoth’s sister payment, shipping What’s on the list for shoppers in China? and auctioning sites. JD.com is another up-and-coming etail Key platform titan in China that has an entire portfolio of delivery China International average and payment services. The most recent increases in online shopping dollars come from consumers living outside of China’s big cities. They increased online purchases by 39 percent in 2017 to 1.25 billion yuan ($199 billion). This was a huge jump, largely attributed 61% 46% 51% 23% 44% 26% 36% 24% to broader and more sophisticated delivery networks. Sales outside of China’s largest cities now represent more than 17 Clothes Food and Footwear Toiletries percent of total online purchases in China. drink How many times will you telerate a negative experience and stay loyal to an online retailer? Source: https://www.royalmail.com/business/system/files/Delivery-Matters-China-2017.pdf 7 PAYMENT Chinese consumers don’t trust credit cards. Most use cash on delivery or Alipay, a digital payments system spun off from Alibaba, that is currently used by 520 million Chinese people. MARKET CHALLENGES In a phrase, entrenched competition. Alibaba’s online marketplaces are expanding. Free delivery is expected For example, the firm has moved from physical goods into healthcare, with Ali Health selling medicines online. A partnership with the world’s biggest hotel chain, Marriott, was just announced. Alibaba also owns Youku, a video-streaming site, and Didi, a ride-sharing service. Say they expect no minimum spend to Alibaba first coined the concept of “new retail” in 2016.