A special report from the editors of International Ecommerce 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.