Expansion into the international online retail space offers huge opportunities for businsesses today. It might seem scary to leave your home market behind and go abroad, but the benefits outweigh the risks if the right localization approach is taken. Retailers need to think local as well as global.
In yesterday’s blog we looked at the role emerging markets are playing in the continued growth of the luxury goods sector in Europe. Online, these emerging markets will also start to have an impact as online retail becomes more prevalent and payment methods improve within these regions. Established online markets such as in Europe will also grow as more and more purchases take place online.
Now is the time for retail businesses to look at foreign opportunities.
An interesting article in Internet Retailing, ‘The New Rules of International Retail,’ explains why retailers should take a more serious localization approach to international sales. Take for example Italy. Even though the financial crisis on the European continent is in full swing, B2C ecommerce sales grew 32.1 per cent in 2011. And if that’s not enough, the expected growth in 2012 is another whopping 25.5 per cent.
Why waste any time you might think? Let’s create and Italian online store and sell-sell-sell! However, when it comes to international online retail, always remember “more haste, less speed”. When rushing into a new market without a predetermined plan you could overlook big cultural issues.
Let’s stick with the Italians for example: most of them have a very close relationship with their mobile phones, with 98 per cent of the people over 15 having at least one mobile. As a business, it is thus a great move to specifically create Italian content for smartphone users rather than rushing into an Italian website which may never be accessed by a mobile phone.
The same thinking is true of payment methods. Francesco Tirelli, head of international commerce and development at Barclaycard, believes the example above is characteristic of a wider current trend, which involves a democratized market. ‘Customers decide how they want to pay and which currencies they want to pay… it is the card holder who has the power.’
Consumers have the power and slowly but surely, they are starting to realise this themselves as well. It is up to the retailers to react. Dr Nicola Millard describes these new customers as ‘monster customers’ that are not afraid to go to a shop on the high street to ask for products at the price they saw on the internet. This attitude can be found in their online shopping habits as well: if a customer doesn’t like what he sees, he is very likely to spend his money elsewhere.
This is also apparent when it comes to an online store’s checkout page. Here, cultural differences are manifold. While the British are fine with using their credit cards, for example, Germans prefer bank transfers. Choosing the wrong payment method may thus lose you customers – and money.
Setting up shop online is not simply opening an online presence in one country and then moving on to the next; retailers must try to expand their expertise and transfer their gained insights to their next projects.
New and upcoming markets are often located outside of Europe. This means fraud prevention will become more important over the next few years. However, the dark cloud of fraud does not seem to block the view of enthusiastic retailers. Lefras Coetzee, product manager at Barclaycard: ‘People are now looking at more difficult expansion projects. Even having a small or relatively modest success in the USA could make a difference to a merchant because it’s such a big market.’
As noted before, retailers cannot simply barge into a new market and tell local consumers how it should be done. Businesses should pay attention to local factors, which might mean they have to change their practices. Maybe this even yields interesting knowledge sources: who will be able to tell what African countries will be able to teach us Europeans about mobile commerce? In conclusion: companies should take a nimble attitude to new, foreign markets. This might be difficult at first, but when they succeed, they will be rewarded greatly.
Are you interested in online retail and internationalization? Why don’t you sign up for this upcoming webcast from Lionbridge and John Yunker? He will draw on new research on the retail industry, focusing on companies that have expanded their ecommerce footprint into new markets (and demographics). He’ll focus on languages, web architecture, navigation, and common missteps.
You can register > here.