International Ecommerce

A special report from the editors of

The challenges and opportunities in global e-retail

PRESENTED BY: The growth opportunity of international ecommerce International shipping is complex. It can be costly to send products to customers in other countries, and it may also require retailers to clear hurdles they don’t normally face with domestic shipments. Because of these complexities, many retailers--especially small and midsized businesses--don’t bother to ship abroad, which limits their opportunities for growth.

Some leading North American brands and retailers have seen those opportunities and expanded their international and cross-border operations in the past year. And many see global expansion as an important source of growth, according to a recent survey of 111 retailers and brands by Internet Retailer and the Global E-Commerce Leaders Forum, an organization dedicated to helping retailers and brands sell internationally via ecommerce. Nearly 48% of survey respondents reported 2017 growth in overseas web sales of at least 15% and 80% of respondents called international ecommerce “a critical source of our ecommerce growth in the future.”

This e-book, brought to you by GlobalPost, presents articles and data previously published by Internet Retailer and helps to define these issues and uncover the opportunities.

Reaching global online shoppers ...... 3 How retailers can overcome international shipping challenges and open up new markets ...... 8 The top hurdles to international ecommerce ...... 10 Building a marketing strategy for global ecommerce ...... 11 Case Study: Victoria’s Secret enters China ecommerce with a flourish ...... 19 Emerging legal trends in international ecommerce ...... 21

Copyright 2018-2019 Internet Retailer and DigitalCommerce360.com. No part of this report may be reproduced in any form by microfilm, xerography, or otherwise, or incorporated into any information retrieval system, without the written permission of the copyright owner. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering financial, legal, accounting, tax or other professional service. Internet Retailer is a registered trademark used herein under license. 2 ReachingHEADER TKTKTKTK Global

ONLINE SHOPPERS International ecommerce is already big, and many retailers and brands see it as an important source of growth

any consumers around the world are shopping on retail websites outside their home countries, looking for goods they can’t find at home, better prices or Mproducts they trust. Meanwhile, retailers Amazon 48.8% GLOBAL IMPACT and brands increasingly are seeking to Share of U.S. Top 1000 Rest of Top 1000 8.8% serve these global shoppers, and the retailers’ web sales Source: Internet Retailer. prospects for growing sales and profits outside of North America Excludes sales in U.S. and Canada from international ecommerce have never been greater.

While it is still early days for international ecommerce for many North American retailers, merchants and brands report that selling globally via the internet is

3 PRESENTED BY: REACHING GLOBAL ONLINE SHOPPERS From the Editors of easier than ever. Among the factors opening the door to international web sales are the growth of online marketplaces that provide an avenue to reach millions of shoppers, improved services from vendors for handling everything from customs clearance to fulfillment and the growing comfort among shoppers the world over in shopping online.

Retailers are affirming the promise of international ecommerce both by what they do and what they say. Several 80% leading North American brands and retailers have expanded their international and cross-border operations in the past year. And many see global expansion as an important source of growth, according to 2018 survey of 111 retailers and brands by Internet Retailer and the Global E-Commerce of respondents Leaders Forum, an organization dedicated to helping retailers called international and brands sell internationally via ecommerce. ecommerce “a Nearly 48% of survey respondents reported 2017 growth in critical source of overseas web sales of at least 15%. And 80% of respondents our ecommerce called international ecommerce “a critical source of our growth in the ecommerce growth in the future.” future.” Source: Internet Retailer/Global The survey sample was not scientific and likely skewed E-Commerce Leaders Forum survey, toward companies investing in international online sales, April-June 2018 given that 80% of survey respondents sell online outside of their own market while only about half of Top 1000 retailers do so.

What’s more, answers to one survey question suggest bigger brands may have an edge: 78% of respondents called HOW COMPANIES VIEW INTERNATIONAL ECOMMERCE Percentage of respondents who agree or strongly agree with each of the following statements: International ecommerce is... A critical source of our ecommerce growth in the future 80.0% Suitable for us because we have many international customers and 78.2% followers of our brand and products Too long of a financial payback or path to profitability 12.7% Too risky due to fraud, counterfeit products, political risks and other 9.1% aspects largely beyond our control Too complex and not worth the effort and resources 3.6% Source: Internet Retailer/Global E-Commerce Leaders Forum survey, April-June 2018

4 SPONSORED BY: REACHING GLOBAL ONLINE SHOPPERS From the Editors of international online sales “suitable for us company’s net revenue, up from 11.0% a because we have many international customers year earlier. and followers of our brand and products.” That underscores that the retailers and brands likely l Benefit Cosmetics LLC, the San Francisco- to have the most success selling globally are based unit of French luxury conglomerate those that many online shoppers already know LVMH, has expanded to 42 global or are finding through search engines or social ecommerce sites that let consumers shop media. in their own languages and pay with local currencies. The cosmetics brand says it has New customs fees nearly doubled the number of consumers it interacts with online in the two years since Whatever their size, companies face obstacles expanding internationally. when they sell internationally. Survey respondents pointed to such hurdles as l Walmart Inc. in 2018 paid $16 billion to regulations that vary by country on product acquire a 77% stake in Flipkart Group, safety, marketing practices, customs and taxes. operator of India’s leading online retailer Language, customer service and fulfillment and marketplace. That puts Walmart into all present challenges, they say. And there is a competition with Flipkart’s biggest rival, relatively new factor: More governments are Amazon, which has pledged to invest tightening customs regulations or introducing $5 billion in India. While Amazon hasn’t new fees as they see more parcels arriving for disclosed sales for its India site, Internet their citizens from international websites. Retailer estimates consumers purchased $10.3 billion worth of goods on Amazon.in But some North American retailers are tackling in 2017. those hurdles with major investments. Here are four recent examples: These moves underscore the allure of international ecommerce, which already l Amazon.com Inc. launched a web store in represents big business for Top 1000 retailers. Australia in 2017, its 13th ecommerce site 72 retailers in the Top 1000 operate a total of outside the U.S. Amazon.com.au is one 295 country-specific ecommerce sites outside of 10 Amazon non-U.S. sites that operate of the U.S. and Canada that together booked marketplaces where other retailers and $109.9 billion in sales in 2017. brands can sell. In 2018, the retailer also updated its mobile app with an international Those sales numbers, however, are skewed mode that lets consumers shop in five by Amazon, which operates 13 ecommerce languages and pay with 25 currencies. sites outside of the U.S. and Canada, nine of them with online marketplaces where other l Wayfair Inc., the fast-growing home merchants and brands can sell. goods online retailer, has launched websites in recent years in Canada, the Most of those sales took place on Amazon’s United Kingdom and Germany. Those international sites, which, counting Amazon’s sites generated $446.6 million in sales Canada site, accounted for $76.2 billion in in the first half of 2018, or 14.6% of the revenue by Internet Retailer’s estimate. That’s

5 SPONSORED BY: REACHING GLOBAL ONLINE SHOPPERS From the Editors of just over half of Amazon’s retail-related 2017 number of retailer respondents, as 41.2% of revenue (sales of goods by Amazon itself plus respondents said those countries represent commission from marketplace sellers). Not at least 1% of their international ecommerce counting Canada, Amazon’s international sales sales. The fact Australia and New Zealand are totaled $73.2 billion, Internet Retailer estimates, English-speaking countries could reduce some or 48.8% of its retail-related revenue. (Amazon barriers to entry, but the survey did not address does not break out sales by country.) specific reasons. Next were China at 36.5% and Japan at 28.4%. South Korea and Southeast Asia But, even without Amazon, other U.S. Top 1000 followed, both at 18.9%. e-retailers generated $28.5 billion in 2017 web sales from outside of North America, nearly 9% of But there are other ways to reach international their web sales, based on Internet Retailer data. online shoppers besides operating dedicated websites abroad. Top 1000 retailers also are For all U.S. Top 1000 e-retailers, including increasingly reaching global shoppers via Amazon, Europe led the way with 118 country- web marketplaces, not only those operated by specific sites that produced $47.4 billion in Amazon and eBay Inc., but also such shopping revenue, followed by Asia-Pacific with 63 sites sites as JD.com and Alibaba’s Tmall in China, as and $49.9 billion in sales. Outside of the U.S., Top well as Mercado Libre in Latin America. 1000 retailers operated the largest number of sites in Canada (33), followed by the U.K. (32) and Amazon’s sites easily topped the list of global Germany (17). However, Japan led in 2017 sales, marketplaces in the Internet Retailer/GELF followed by Germany, the U.K. and China. survey, with three-quarters of respondents who sell on multi-merchant portals saying they work Key global targets with Amazon, with eBay and China’s Tmall the next most popular. This Internet Retailer survey confirmed that Canada, Western Europe and Asia-Pacific Many marketplace sellers rely heavily represent the key international priorities for on services Amazon offers to expand retailers and brands. Within the Asia-Pacific internationally. Especially popular is Fulfillment region, Australia and New Zealand were the by Amazon, which will store and ship items most important countries to the greatest for sellers on Amazon sites, and even handle

BRAND RECOGNITION OFFERS AN EDGE Totally agree 36.7% On a scale of 1 to 5 where 1 is “totally disagree” and 5 is Agree 41.8% “totally agree” respondents rated their opinion of the Neutral 14.6% following statement: International ecommerce is Disagree 3.6% suitable for us because we have many international customers and followers of our brand and products. Totally disagree 3.6%

Source: Internet Retailer/Global E-Commerce Leaders Forum survey, April-June 2018. Percentages exceed 100% because of rounding.

6 SPONSORED BY: REACHING GLOBAL ONLINE SHOPPERS From the Editors of TOP INTERNATIONAL fulfillment of orders from retailers’ own sites. ONLINE MARKETPLACES Tech Armor is one e-retailer that relies on FBA Percentage of survey respondents selling on sites to handle delivery of orders it gets from Amazon operated by each company. Respondents could select multiple answers. marketplaces in Europe, Canada, Mexico and Japan, as well as the U.S. FBA makes it easier for Marketplace Home country % Selling Tech Armor to expand into new markets, says Amazon USA 75.6% Joseph Jaconi, co-founder and general manager eBay USA 29.3% of the retailer of smartphone accessories like Tmall China 26.8% screen protectors, cables and earbuds. JD.com China 17.1% “We don’t have to go out and look for and Coupang South Korea 9.8% interview third-party fulfillment services,” Lazada Indonesia 9.8% Jaconi says. “We can rely on Amazon to do that, Mercado Libre Argentina 9.8% and we can focus on growing our brand. Newegg USA 9.8% Rakuten Japan 9.8% The most common way that North America’s Souk.com UAE 9.8% top online retailers serve global consumers Zalando Germany 9.8% is by taking orders on their primary websites and shipping merchandise abroad. Nearly half Flipkart India 4.9% of the Top 1000 fulfill orders to consumers Lotte South Korea 2.4% in such major European markets as the U.K. Zalora Singapore 2.4% and Germany, and more than a third to such Source: Internet Retailer/Global E-Commerce Leaders Forum survey, April-June 2018 countries as China, Russia and Mexico.

Even small e-retailers can sell internationally Webinterpret warehouse in the U.S., which these days, in large part because of the growing consolidates client shipments for bulk shipping number of vendors that specialize in cross- to overseas markets. Butler Luxury CEO Mike border ecommerce. Cregan says the savings from bulk shipping enable his international customers to pay less For example, Butler Luxury, a web-only retailer than half the shipping fee they would pay if he of high-end clothing hangers, uses Webinterpret sent each parcel individually. Parcels typically to translate its full product catalog into four arrive in under 10 days to international languages besides English (German, Spanish, destinations, he says. French and Italian), and more limited translation in other languages. Webinterpret, through an Cregan says international sales make up one- alliance with PayPal, also enables Butler Luxury third of his annual online revenue of just over to accept payment in 25 currencies. $1 million.

By Don Davis, editor at large, Internet Retailer Consolidated shipments Reprinted from DigitalCommerce360, When the e-retailer receives an order September 2018 from abroad it sends the merchandise to a

7 SPONSORED BY: SPONSORED ARTICLE From the Editors of How retailers can overcome international shipping challenges and open up new markets nternational shipping is complex. It can be costly to abroad, Felix says. “Retailers have the option to prepay send products to customers in other countries, and it duties and taxes for their customer, but they often don’t. Imay also require retailers to clear hurdles they don’t Then the customer is surprised to learn he owes extra normally face with domestic shipments. Because of these fees upon delivery,” he says. “It makes for a bad customer complexities, many retailers—especially small and midsized experience. And if the customer rejects the package, which businesses—don’t bother to ship abroad, which limits their he often does, the retailer has to wait and hope it get its opportunities for growth. product back.” By prepaying duties and taxes, a retailer has a much better chance of getting its orders through Even some retailers that ship internationally customs easily, Felix says. struggle to understand some of those complexities, says Shea Felix, general manager Despite those challenges, international shipping of GlobalPost, a Stamps.com company that helps is becoming much easier, Felix says. “There are businesses ship products outside of the United really exciting changes happening in cross- States. “A retailer might start off domestically border shipping,” he says. “Every day, new and and get really strong in that domestic market, better solutions are coming to more shipper then simply try to transfer that model over to segments.” For example, there’s “Direct Entry,” international markets,” he says. “But there are which enables retailers to segment international SHEA FELIX many differences between shipping domestically shipments to help them reliably clear customs and internationally. Chances are, the products general manager, and ship at a relatively low cost. they’re trying to send aren’t ‘classified’ or GlobalPost, ‘prescreened’ for those markets.” a Stamps.com Retailers should work with shipping service company providers that can help them ensure their By “classified,” Felix means that products that are international shipments are classified and will shipped into a country are eligible to enter that country easily clear customs, he says. Companies such as GlobalPost and include the proper classification. “Some products offer retailers quick cross-border shipments so that their simply aren’t allowed in some countries, and if a retailer international customers receive their orders in a timely fashion tries to ship a product into a country in which it’s not without incident, while keeping costs in check so those allowed, it will cause a host of complications. That creates shipments aren’t unreasonably expensive for the retailer. a bad experience for their customer and delays getting that product back, if that’s even possible.” Traditionally, these international shipping services were only accessible to large retailers that had the time and A product also needs to be properly classified with codes resources to do the type of investigating required to that identify its essential properties and its relationship to obtain lower price points and higher value services on other products. “If they get those wrong, the product will international shipping, Felix says. “GlobalPost makes get held up in customs,” Felix says. it easy for small and midsized retailers to access these international shipping services and get their products into Retailers often don’t understand their responsibilities with more markets than ever before,” he says. “Now is a great regard to the duties and taxes on products they’re shipping time to give cross-border shipping another look.” n

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To learn more, call 1-888-899-1255 or visit GoGlobalPost.com/ir today! Survey Results From the Editors of The top hurdles to international ecommerce

International ecommerce isn’t easy, as The Question: demonstrated by the results of a 2018 survey Which of the following have of 111 retailers and brands by ecommerce created significant obstacles to publication Internet Retailer and the Global E-Commerce Leaders Forum, an organization your international ecommerce dedicated to helping retailers and brands sell expansion? internationally via ecommerce. (Respondents could select three)

Shipping & fulfillment 42.9%

Local regulations & laws 40.3%

Customs duties 29.9%

Marketing & generating demand 28.6%

Language & cultural nuances 27.3%

Path to profitability or the risk related to achieving profitability 20.8%

Customer service 16.9%

Merchandising for a local market 14.3%

Currency & payment processing 13.0%

Selling the international ecommerce business case internally 13.0%

Data, analytics and insights (strategic & operational) 11.7%

Incumbent regional partners view ecommerce as a threat 10.4%

Inventory investment 9.1%

Insights on local competition 7.8%

Managing third-party partners 7.8%

Recruiting local personnel 3.9%

Source: Internet Retailer/Global E-Commerce Leaders Forum survey, April-June 2018 10 SPONSORED BY: From the Editors of

Building a MARKETING STRATEGY for global ecommerce

Effective online marketing requires careful attention to nuances of language and consumer expectations that vary widely from one market to the next.

o online shoppers in other countries want to buy from foreign e-retailers, accounting for your products? Which products? And less than half of them buying from websites Dconsumers in which countries? outside the U.S. Questions like that are the starting point for any There is also a tendency of online shoppers to retailer or brand evaluating whether to embark gravitate to websites in nearby countries, either on international ecommerce. because the language or merchandise is familiar. A big part of “cross-border” shopping is really It’s important to recognize significant “near-border” ecommerce. differences in shopper behavior by country. For example, while 71% of European consumers say That shows up in a SimilarWeb analysis of they have purchased from an online retail site in traffic to Amazon’s international websites. another country, that’s true for only 55% in Asia After Germany, the two countries that send and 47% in the U.S., according to the 2018 UPS the most traffic to Amazon.de are Austria and Pulse of the Online Shopper Study. Switzerland, both countries where German is widely spoken. For Amazon’s Japan site, three In general, consumers in major economies who of the four leading sources of traffic other than have the option of shopping from many online Japan are neighboring nations—China, Taiwan retailers in their own country are less likely to and Hong Kong. (The United States is the purchase from foreign websites than those with fourth.) fewer domestic options. For example, 83% of consumers in Canada and 78% in Mexico have Foreign shopping for local reasons shopped online internationally, no doubt many at U.S. websites, according to the UPS report. There are also significant differences in why But U.S. shoppers are less likely to feel the need consumers buy from foreign websites. For

11 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of example, while getting goods at lower prices is can also examine the nationality of the credit the main motivation for consumers in Brazil, cards consumers use to buy their goods, both a country with high tariffs, Asian consumers online and in stores, if they operate bricks-and- mainly go to foreign websites to buy products mortar locations. they can’t find at home, according to the UPS global consumer study. Studying Google search activity and social media posts by country can reveal how Local developments much interest there is can also cause spikes in a company’s brand in consumer interest in or type of product, he foreign products, says adds. Schulmeyer also Andreas Schulmeyer, suggests examining the a former international online “grey market” executive for Walmart in a company’s goods. and L Brands. In 2008, Chinese entrepreneurs, for for example, a scandal example, often buy goods involving tainted milk abroad, then ship them led to increased demand back to China to sell on for foreign milk and marketplaces like Taobao milk powder in China. and Tmall, a sales channel “Recently, there has been known as “daigou.” “That a wave around Korean cosmetics,” Schulmeyer gives you an idea if there is an underlying, says. “People are interested in non-global brands unmet demand,” Schulmeyer says. that are specifically tied to the Asian consumer.” A retailer or brand can also grow its followers How to gauge global demand among international consumers by taking advantage of the surge in global tourism and Retailers and brands evaluating whether there is shopping, says Jim Okamura, co-founder of international interest in their products can look Global E-Commerce Leaders Forum, a global at how much traffic to their primary website ecommerce sales consultancy. As one retailer comes from abroad, and from which countries. told Okamura, “The best ecommerce marketing They can also examine how engaged foreign to Chinese consumers is opening a physical consumers are with their content. For example, store in New York City.” When the tourists Lion Brand Yarn, which offers 7,500 free sewing return home, they seek out U.S. brands via patterns for download, analyzes how many of ecommerce, and some retailers are encouraging those downloads come from foreign consumers this “international showrooming” behavior and from which countries. to capture foreign transactions long after the consumers have gone home, Okamura adds. Schulmeyer says online retailers can also track how much of their U.S. orders are going to Ascertaining whether consumers already sites that consolidate shipments for foreign know about and want your product is critical consumers seeking American goods, such as when deciding whether to embark on selling MyUSAddress.ca for Canadian consumers. They online in a given country, Schulmeyer says.

12 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of

When consumers already recognize a brand The complexity of reaching consumers in many that can minimize marketing costs. “Customer countries leads many retailers and brands to acquisition is the most expensive part of the focus on the global platforms they know, such as P&L,” he says. “If you’re paying to acquire every Amazon, Google, Facebook and YouTube. customer, it won’t work.” Amazon especially appears to be a central Primary marketing channels marketing focus, with sellers taking advantage of the growing number of services the big While operational issues such as fulfillment e-retailer offers across its marketplaces. When and regulation were listed as the top challenges big smartphone brands like Apple and Samsung to international ecommerce in the Internet introduce new mobile phones, accessory retailer Retailer/GELF survey, attracting shoppers is Tech Armor promotes them through ads on also an important issue. 28.8% listed “marketing Amazon along with localized social media, says and generating demand” as a general manager Joseph Jaconi. top-three obstacle to global THE ROLE OF LOCAL PARTNERS online selling and 12.3% Do you agree or disagree with the Lion Brand Yarn Co., which “merchandising for a local following statement: In terms of customer sells many of its product market.” acquisition, international ecommerce is wholesale to Amazon, promotes highly dependent on adding in-country that merchandise on Amazon Many companies turn to local marketing partners. sites through such vehicles as marketing agencies for help. “lightning deals” and “best 40% of survey respondents deals.” “There’s a slew of agreed or strongly agreed with marketing-related things on Disagree the statement that they are Neutral Amazon,” says chief sales officer 16.4% “highly dependent on adding 36.4% Evan Blumenthal. He notes new, in-country marketing that it’s up to a supplier like partners” to aid with customer Totally Disagree Lion Brand Yarn to create and acquisition. 7.3% translate the content for those Totally Agree marketing offers, even though For many U.S. retailers, finding 10.9% Agree Amazon is the seller of record. the right local marketing 29.1% partners is a high priority—yet Amazon’s growth has created a navigating through an agency cottage industry of companies selection process can be more Source: Internet Retailer/Global E-Commerce that specialize in technology Leaders Forum survey, April-June 2018 daunting than finding domestic to maximize sales on Amazon marketing partners. Thus, many marketplaces. U.S. retailers tend to follow their U.S. marketing services providers into global markets. That For example, U.S. e-retailer etailz has developed leaves opportunity on the table for bolder risk algorithms that spot unmet demand on Amazon takers, says Kent Allen of GELF. “Leaders that go by measuring the velocity of searches for it alone and establish their own relationships with various types of products, and whether search local agencies have the opportunity to gain an momentum is rising or falling, says CEO Josh edge—if they execute,” he says. Neblett. When etailz identifies an opportunity,

13 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of it turns to a network of 2,500 manufacturers to relies primarily on search engine marketing provide a product that would satisfy Amazon to promote the 5 million SKUs it offers via 63 shoppers looking for a particular product. country-specific websites in 17 languages, says Neblett says, for example, his technology was Hayne Shumate, senior vice president, internet able to predict accurately that a plant fertilizer business. called TopBoxUs Health Mix would be a strong seller on Amazon’s UK site. Shumate says the company markets through all the major search engines—including Google, Etailz sells on Amazon’s marketplaces in Bing, Yahoo and Russia’s Yandex—but focuses Canada, the United Kingdom and Germany, on optimizing for Google. “Most of the search with Amazon India in the works, Neblett says. engines seem to follow Google’s lead,” he says. “If you make Google happy, you make them Search and social media happy, too.” Beyond marketplaces, companies expanding in The reliance on search engines to find 63 ecommerce globally often turn to Google separate websites requires a platform that and major online social networks to is ultra-fast: Shumate says Mouser drive sales. That’s not surprising, sometimes serves 600 pages per given that those platforms second to search engines alone. dominate online marketing. That unusual requirement is Display advertising—including one reason the company relies video and social media— on homegrown software, apart was expected to account for from using the Endeca site 48.7% of the $224.7 billion in search software engine now worldwide online advertising owned by Oracle Corp. in 2018, with search engine marketing representing 42.9%, Mouser also encountered the or $96.3 billion, and classified problem that, with 63 ecommerce advertising the rest, according to sites, a search for a specific electronic Zenith, an international marketing agency component using its product code, which that is part of Publicis Media. might be two dozen characters long, could produce a search results page pointing the Three platforms account for a big part of that searcher to a dozen or more Mouser sites, all of spending because so many consumers use which offer that item. That confused customers, them: Google, which accounts for roughly 90% Shumate says. of searches worldwide; Facebook, with some 2.1 billion active users; and Google-owned To help the search engines provide better results, video platform YouTube, with some 1.5 billion Mouser added 100 lines of text to the code of users. each site—visible to search engines but not to website visitors—explaining that this is, for Mouser Electronics, a U.S. distributor of example, a French product page for the country electronics components primarily to businesses of France, and here is where to find the product but also to hobbyists and do-it-yourselfers, page for Germany and the rest of the countries

14 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of the distributor serves. For Mouser—which That way, a French in 2017 surpassed engineer searching $1 billion in sales and for a component is gets nearly a third more likely to see just of its business from the results from the Asia—Brand Zone French site and not has been worth it, from other Mouser and the distributor sites. That’s a tip to has used the service keep in mind for for three years, other companies Shumate says. with multiple sites and specific long- Influential brand tail keywords that customers use on advocates search engines. Social media and Chinese social media influencer Candy Lian, left, who focuses on cosmetics, posted videos after a visit to Tokyo’s Matsuya video are the fastest- In China, however, Ginza department store. They attracted more than 4 million growing online where the viewers and generated twentyfold more-than-typical sign-ups marketing channels, government blocks in one weekend. Source: thejapantimes each projected to Google, Mouser increase by 17% a has modified its year from 2017 to marketing strategy for the leading search 2020, according to Zenith. Encouraging positive engine, Baidu. The distributor for the past three buzz on social media can pay off big-time in years has invested in the Brand Zone option international ecommerce, especially when the Baidu offers that allows a company to control people doing the buzzing have a big following. the results for its own brand. Users searching for Mouser, for example, will see a page dedicated That kind of “influencer marketing” is especially to the brand’s ads, including video and images, important in China, where some celebrities and not results from competitors. have massive social followings. The Chinese blog WhatsonWeibo lists 10 celebrities with at Brand Zone is expensive, Shumate says, least 66 million followers on Weibo, the Chinese though he would not say how much Mouser is social network similar to Twitter. spending. But Azoya International co-founder Don Zhao says one of his retailer clients paid At the 2018 Cannes film festival, French $30,000 for a month of Brand Zone promotion. cosmetics brand L’Oreal SA hired Chinese He says a retailer would need to generate annual actress and singer Li Yichun to promote online sales of at least $10 million in China its products, taking videos that it posted to for Brand Zone to be cost-effective, although social sites from Instagram to Weibo. A live a consumer brand manufacturer with a large talk show the brand hosted on the beach at marketing budget might invest in the Baidu Cannes, featuring such international stars as option to raise its profile in China. Jane Fonda and Isabelle Adjani, also included segments produced in Mandarin and hosted by

15 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of

American-Chinese TV star Hung Huang. Those The power of video segments were posted to Tmall where L’Oreal sells its products. Online video is the other very fast-growing online advertising channel globally, according to Azoya International, which facilitates retailers’ Zenith, and one that T-shirt retailer Spreadshirt entry into China ecommerce, has taken Chinese leverages. Spreadshirt, which operates social media influences to the stores of its ecommerce sites in 18 countries, relies primarily clients in Japan, the United Kingdom, Germany, on advertising on Google and Facebook, and on videos posted by designers on YouTube, says The Australian business unit of Canon runs contests and CEO Phil Rooke. He says Spreadshirt allows designers features consumers’ photos on its social media posts . to set up their own shops on Spreadshirt’s site, relying on Australia and New Zealand from which the the e-retailer to fulfill orders globally while the social media stars post video accounts of their designers market their creations to their fans. shopping sprees for their social media followers. YouTube is also an important marketing In 2018, Azoya brought Candy Lian, a Chinese channel for Wizard Industries, which uses commentator on cosmetics with nearly 2 million videos to explain its highly specialized products, followers on Weibo and WeChat, to the famous such as metal detectors that help woodworkers Matsuya Ginza department store in Tokyo from find screws or restaurants to spot misplaced where she posted live videos of her visit on forks and knives, says owner Billy Carmen. The Weibo and took questions from followers. Those company’s 900 videos on YouTube are a major posts attracted 4 million viewers and the event source of sales, along with natural search results generated more than 20 times the usual number on Google—Carmen says he rarely pays to of sign-ups on Matsuya’s China ecommerce site advertise because his unique products tend to compared to a normal weekend, Azoya says. show up highly in natural search results.

Nor are famous people the only ones whose But, he says, 75% of his direct-to-consumer social media posts can boost a brand. The orders come from Amazon sites, demonstrating Australian business unit of Canon, the Japanese again the power of Amazon marketplaces. manufacturer of cameras, printers and other equipment, regularly runs contests and features Getting the tone right consumers’ photos on its social media posts. Canon Australia has over 300,000 followers While platforms like Google and Facebook offer on Instagram and its posts routinely receive a global reach, that doesn’t mean a company can thousands of comments and dozens of likes, simply translate its ad copy from one country says Tim Wilford, editorial and consumer to the language of the next one. Localization engagement specialist at Canon Australia. includes taking into account consumer He says consumers tag Canon in more than expectations in each country, says Rooke of 1,000 photos they post each day to their social Spreadshirt. network accounts.

16 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of

In the United States, for example, T-shirt implementation in the European Union of the retailers routinely offer big discounts, setting list General Data Protection Regulation—which prices high and promoting 30-50% off, Rooke requires consumers to give consent to receive says. But that approach would turn off many solicitations and limits what advertisers can European shoppers. do with consumer data—Germany had strict personal privacy rules. Among other things, that U.S. attitudes and language are so different, makes it hard for marketers to use lists obtained Rooke says, that a few years back Spreadshirt from third parties because it’s hard to prove moved its head U.S. copywriter from Boston to consumers gave consent to those companies to the e-retailer’s headquarters in Leipzig to help receive marketing messages. the marketing team better understand how to market in the U.S., the company’s second-largest GDPR requires online retailers to inform market. visitors what they are signing up for and to make it easy for them to unsubscribe. That Getting the nuances right is also important forced Mouser Electronics to make changes in email marketing, says Aaron Zagha, senior in how it signs people up for subscriptions, director of ecommerce, international, for which it offers mainly to engineers interested in Teleflora, a company that funnels online orders keeping up with the latest technology. to 7,000 florists in the U.S. and another 2,000 in the U.K., Australia and New Zealand. “We had to change the privacy policies on the website and allow people to be forgotten,” “At one point we were running email marketing Shumate, the internet business executive, says. for the U.K. from the U.S. and the tone was “We have to have people responsible for GDPR often completely wrong for the local market,” in our German office in Munich. We had to hire Zagha says. Text and images that might strike developers to make changes to our systems so consumers in one country as cute or funny that they were compliant with the law.” may prompt very different reactions in another market, he says. “We’re localizing anything that South Korea and Japan also have stringent touches the consumer,” he says. “You have to privacy laws, while China imposes fewer have local people or an agency to get that right.” limitations for marketers.

Marketers must also be aware of national Mobile marketing regulations that govern the messages they can send consumers and what they can do Adding to the complexity of accurately targeting with personal data. Even before the May 2018 marketing messages, consumers increasingly

‘(Because of GDPR) we had to change the privacy policies on the website and allow people to be forgotten ’. Hayne Shumate, senior vice president, internet business, Mouser Electronics

17 SPONSORED BY: BUILDING A MARKETING STRATEGY FOR GLOBAL ECOMMERCE From the Editors of

shop on their mobile phones as well as other touchpoints contributed to the decision,” the devices, such as computers and tablets. The report says. trend to mobile shopping varies significantly by region: 77% of Asian smartphone owners have Sephora addressed that issue with a loyalty purchased on their mobile phones, versus only program that, by requiring the shopper to 59% in Brazil and 57% in Mexico, according to provide her member number, allows the brand the 2018 UPS Pulse of Online Shopper report. to associate shopping behavior in-store and During its big annual Singles’ Day sale in online. By making the program sufficiently November 2017, Alibaba says mobile devices appealing that it signed up 85-90% of its accounted for 90% of purchases on its big China customers in the region, Sephora was able to marketplaces. better map its customers’ path to purchase, Wang wrote in the report. Touchpoints, decisions Retailers may invest more in loyalty programs as U.S. cosmetics brand Sephora encountered a hedge against regulations like the EU’s GDPR, the challenge of identifying consumers across as they give consumers a reason to provide channels in Southeast Asia, according to information to a retailer, as well as a reason to an April 2018 Forrester Research report by want the retailer to retain that data. After all, a analyst Xiaofeng Wang. “Sephora found that consumer can only redeem rewards or loyalty its customers search for beauty products on points if the shopper allows the retailer to track smartphones, watch product reviews or how- her purchases. to videos on YouTube, and even go to a store to sample a product in person before making By Don Davis, editor at large, Internet Retailer a purchase decision. This makes it difficult Reprinted from the for Sephora to tell how much each of these 2018 E-Retailer Global Expansion Report

18 SPONSORED BY: From the Editors of CASE STUDY Victoria’s Secret enters China ecommerce with a flourish

Brands’ Victoria’s Secret lingerie and Alibaba’s own pre-Singles’ Day TV show that sleepwear line made a grand entrance airs the night before the big sales day on Taobao into online selling in China by moving and Tmall that takes place every Nov. 11. Three its highly publicized annual fashion show top Victoria’s Secret models—which the brand to Shanghai, the show’s first time outside calls “angels”—appeared on the Alibaba show, LNorth America or Europe, and tying it closely showing some of the items the brand would with the brand’s new store on Alibaba’s Tmall offer the following day on Tmall, which was its marketplace. only online outlet in China at the time.

The invitation-only event in 2017 featured 55 Schulmeyer says that appearance sparked supermodels walking a glitzy runway in the a wave of social media commentary about latest Victoria’s Secret underwear, including Victoria’s Secret. That was followed by more a $2 million “fantasy bra” adorned with 6,000 commentary when the Victoria’s Secret fashion precious stones. Asia’s glitterati joined fashion show was taped Nov. 20, with bloggers posting bloggers, many flown in from around the world images, video and comments from the event, by L Brands, for the event that also featured such entertainers as British singer and actor Harry Styles and Chinese musical star Jane Zhang.

The aim was to give Chinese consumers a better idea of what Victoria’s Secret offers and spark interest in the brand, says Andreas Schulmeyer who was head of international ecommerce for L Brands at the time, and now principal in consulting firm Faultline Solutions LLC. “The Victoria’s Secret name was known,” he says, “but Chinese people didn’t necessarily know what the product was.”

Victoria’s Secret began promoting Victoria’s Secret models promote the brand on Alibaba’s the event, and its Tmall store, on pre-Singles’ Day TV show.

19 SPONSORED BY: CASE STUDY From the Editors of

and still more when the fashion show was aired brand’s Tmall store quickly attracted more than on TV. “We got a huge traffic spike and then 1.5 million followers. “For a store that’s less than another spike the following week during the a year old, that’s pretty good,” he says. official airing of the event,” Schulmeyer says. “The frequency of repeatedly seeing the brand While Victoria’s Secret initially sold through multiple times was very effective.” the Tmall Global cross-border site that allows sellers to ship goods into China after online ‘See Now, Buy Now’ shoppers buy them, it subsequently launched on the main Tmall marketplace. That followed Alibaba, meanwhile, deployed its “See Now, Buy L Brands’ acquisition of more than two Now” system for fashion shows that allowed dozen stores in China that had been run by Chinese viewers of the Victoria’s Secret event franchisees, giving it the legal presence in China in Shanghai to go to Tmall to immediately buy required for a local Tmall storefront. L Brands some of the items they saw. They could also subsequently announced plans for a dedicated purchase products through the Taobao and China ecommerce site that will draw consumers Tmall mobile apps and through the Youku directly from its accounts on Chinese social video-streaming service Alibaba owns that media sites. reaches some 500 million Chinese consumers. Reprinted from the 2018 E-Retailer Global Expansion Report While Schulmeyer would not disclose sales related to the November show, he noted that the

20 SPONSORED BY: From the Editors of

EMERGING LEGAL TRENDS IN INTERNATIONAL ECOMMERCE GDPR, Brexit, data security concerns and growing trade conflicts add to the hurdles to international ecommerce. Retailers and brands seeking to sell online around the world must be prepared to adapt quickly to changing laws and regulations.

By Olivier Schott Founder and chief marketing officer, Scalefast

commerce is becoming exponentially brands, in both emerging markets and regulated as a consequence of recent established foreign markets. But they also decisions and changes of consumer and present some challenges. “Eprivacy laws,” writes Giulio Coraggio at DLA Piper. These consumer laws may be a “Traditional boundaries are clearly blurring, major factor in emerging legal challenges, but with online retailers expanding to new so are brewing trade wars, Brexit and the trade geographies,” writes Pavan Chandra at The agreements that have been making the headlines Economic Times. “This leaves companies to recently. In fact, TextMaster COO François deal with government regulations, geopolitical Déchelette highlights such legal regulations as status, ‘stateless income,’ and extensive local and one of the major challenges for cross-border international competition.” ecommerce. These challenges are driven by the issues The quick rise of international ecommerce identified above. It’s the combination of those creates a wealth of opportunities for ecommerce issues that we wish to address here.

21 SPONSORED BY: LEGAL TRENDS IN INTERNATIONAL ECOMMERCE From the Editors of ‘GDPR has unique consequences for ecommerce companies precisely because you receive so much data via email marketing and sales orders ’.

The new trade and tariff wars third-largest ecommerce economy in the world after the U.S. and China. This means it is almost Tariffs have made headlines in recent years sure to slow down sales in Western and Eastern as a political tool, and this is sure to hold Europe. At the same time, some U.K.-based consequences for many ecommerce companies. ecommerce brands are setting up sites in mainland Europe in anticipation of the transition. Most of the impact does not come from the tariffs themselves, which are largely focused on The other major Brexit impact would be changes industrial goods like aluminum and steel, as in tariffs and regulations, which have yet to be Marcia Kaplan at Practical E-commerce notes. determined. “U.K. merchants currently have access to European customers and are able to leverage Instead, most of the effect felt by ecommerce the Eurozone for standardized costs,” writes brands will be from the retaliatory tariffs ecommerce consultant Hendrik Laubscher. instituted by other countries against the U.S. Examples include the European Union, which “Brexit will mean that tariffs on goods and has placed 25% tariffs on a number of food services will be increased, and as such, shipping and fashion items, and Canada, which has and merchandise costs will be increased.” This is introduced new tariffs for foodstuffs. As a also likely to impact third-country ecommerce result, this new trade war may affect ecommerce vendors, since they are used to dealing with the brands dealing mostly with food items and standardized common market. those dependent on raw materials coming from other countries. There are also marketing elements to think about with Brexit. “There’s no denying that The true impact of these new trade and tariff the vote has markedly altered the social and wars remains to be seen, but it is sure to be a political atmosphere of the country,” writes challenge. Rebecca Sentance at EConsultancy. These alterations are sure to affect how ecommerce The impact of Brexit on marketers approach their consumer base. The true impact remains to be seen, pending international ecommerce government regulation-but it is certainly worth In 2016, the U.K. voted to leave the European keeping your eye on. Union, signaling a major shift in international commerce and coining a catchy hashtag in Shifting trade agreements elsewhere the process. With Brexit officially scheduled for early 2019, ecommerce companies are Another wrinkle to this story involves trade determining how it will impact their business. agreements such as NAFTA and the Trans- Pacific Partnership (or TPP). The now-defunct As Bija Knowles at CTMfile notes, the U.K. is the TPP would have been a boon for ecommerce

22 SPONSORED BY: LEGAL TRENDS IN INTERNATIONAL ECOMMERCE From the Editors of brands, as it aimed at decreasing trade barriers “The challenge for brands will be to maintain among member countries (which included a personal and exclusive relationship with the U.S., Singapore, Japan, Mexico and New their customers while making sure marketing Zealand, to name a few). campaigns are still targeting the right people under the new laws, which will place a premium While the original TPP may be dead, in 2018 on customer consent.” a new version became public and is in the works. One of the goals, as Ron Cheng at Forbes The challenge here is already clear. It’s more reports, is to “preserve the single, global, digital than just an IT issue Robert Pennings at marketplace to ensure the free flow of global TechRadar notes. Consumer privacy awareness information and data that drive the digital challenges how ecommerce brands think economy.” about the way they handle their customers’ information. If the new version of TPP gains steam, ecommerce companies should take note. Alexander Clark at SmartInsights goes into greater detail with the challenges GDPR and Further, with the North American countries other changing consumer protections present. re-negotiating their relationships as trading Clark says ecommerce companies should be partners, brands should at least brace for some taking a close look at how they are collecting, fallout there. using, sharing, storing and deleting the data they collect on customers and visitors. Changing consumer protection But this challenge can give way to an regulations opportunity. Rather than seeing these One other emerging legal challenge that has regulations as a barrier, ecommerce vendors been in the news lately is the shift of consumer have the opportunity to see them as deep protection regulations around the world. consumer insights--a reflection of what consumers want. GDPR, the EU’s General Data Protection Regulation, is one such edict that has come from The Nielsen Norman Group has been studying this shift. GDPR places limits on how companies the usability of ecommerce sites for nearly can collect and use the information of EU two decades. For its fourth E-commerce User consumers. “GDPR has unique consequences Experience report, which came out in 2018, for ecommerce companies precisely because NNG asked participants to perform dozens of you receive so much data via email marketing tasks across nearly 50 digital shops. Then, the and sales orders,” writes Melanie Fitzgerald at researchers asked the participants for qualitative ChannelSight. feedback. Data security came up multiple times in those conversations. Staying accountable for this information can prove to be the real challenge. “The new rules “Shoppers in our studies wanted to feel safe create logistical challenges and compliance and needed to know that sites had the proper costs for companies,” write Financial Times security measures and protections in place,” reporters Ralph Atkins and Mehreen Khan. write NNG’s Kim Flaherty and Anna Kaley.

23 SPONSORED BY: LEGAL TRENDS IN INTERNATIONAL ECOMMERCE From the Editors of

In other words, GDPR and other consumer protection regulations are the culmination of Some of these legal changes could even bring consumer trends. Brands should act now to get more competition to your market--though tech ahead of that. advancement is just as likely to be a culprit. There’s more competition in ecommerce than The bottom line: Keep it agile ever, which comes with greater motivation to meet these challenges. If these emerging legal challenges highlight anything, it’s that ecommerce companies need to Regardless of the source, ecommerce vendors learn to be light on their feet, so to speak. This is can get ahead of the emerging legal challenges just one area where smaller ecommerce brands outlined here by taking a strategic approach to may have an advantage. everything from platform development to cross- border fulfillment. “A smaller size used to be a hindrance for companies going up against large global Reprinted from the DigitalCommerce360.com, players with companies that have scale and October 18, 2018 operational efficiency,” writes Mike O’Brien at ClickZ. “Technology empowers everyone to stay competitive and fix what’s missing, whether they’re David or Goliath.”

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