International ecommerce: key issues for retailers
Following the launch of websites across Australia and New Zealand, Marks & Spencer is renewing its focus on overseas expansion.
John Lewis’ decision late last year to open physical shops within branches of the leading Dutch department store de Bijenkorf, followed the launch of stores across Singapore and the Philippines in 2014.
This on-the-ground presence no doubt aids brand recognition and immediate association with the quality and service John Lewis is known for in Britian. In addition, native language speakers selling John Lewis’ product adds to the authenticity of the brand in any market.
For M&S, overseas expansion has been tougher than initially expected. The British retailer already has websites in nine markets including France, Germany, Spain and the Netherlands.
However, international profits have recently been suffering due to unfavourable exchange rates in Europe as well as political issues in Russia and Ukraine.
Due to language similarities and the high number of British expatriates living in the region, launching into Australian and New Zealand may be a sensible move by M&S.
It could be argued that taking an online-first approach, compared to establishing in capital-intense bricks and mortar presences, is a safer way for retailers to test international markets.
Both American Eagle and J Crew took this approach to break into the British market by selling first through Net-A-Porter and its own website respectively.
However, ecommerce is not without its pitfalls. In October of last year, M&S took its domestic website offline temporarily after a technical glitch revealed details of shoppers’ data publically following their launch of the ‘Sparks’ loyalty card.
More recently, delivery issues around the Christmas period and its inability to cope with the surge of orders around “Black Friday” promotions, contributed to M&S’ poor Christmas sales performance and arguably influenced chief executive, Marc Bolland’s decision to step down.
An online-first strategy for entering new markets is tricky business and requires an in-depth knowledge of the specific country’s social and cultural economy as well as local infrastructure.
Launching a website abroad is not a simple case of flicking a switch and charging long-haul delivery costs. There are numerous logistical and cultural factors that need to be considered, and failing to build the commercial and technical infrastructure that enables a valid retail operation in each market being targeted, could lead the website to fall flat on its face.
We’ve outlined some key issues below for retailers, such as M&S, looking to crack international markets with a website-first approach.
Although translation isn’t necessary for M&S’s Australasian expansion, the language used on the website and the supporting marketing materials need to be nuanced to fit with local culture.
Nailing tone and local vernacular is the first sign to international consumers that a retailer understands them. Better yet, consumers won’t even notice… if it’s right.
From a wider standpoint, websites also need to be able to cope with multiple languages for both product and non-product content. Good translation is not just swapping words; retailers must understand the local culture to capture the local audience, especially when it comes to selling products.
Besides language, sizing charts and international conversions are a vital product detail from an international customer’s point of view.
Showing sizing in relation to the model in your product photos is always good practice.
Retailers need to ensure that localisation also extends to email, social media, marketing and advertising campaigns.
Currency issues aside, the world doesn’t run on Visa and Mastercard, and retailers need to be aware of this and adapt accordingly.
German shoppers like to use ELV bank transfers, while Japanese buyers want to pay cash on delivery and French customers use Carte Bancaire.
In Africa only 15-20 percent of residents have bank accounts but 60-70 percent have mobile phones, so transactions are typically made with phone credits.
Retailers need to be aware of and react to local needs, making payment easy for consumers will obviously lead to more sales in each market.
Perhaps an obvious point when considering international expansion, however, retailers have to be able to offer competitive delivery times without breaking the bank.
For many retailers this will involve rethinking their logistics infrastructure. Customers also need to be able to clearly understand what they’re getting. Shipping costs need to be clear from the outset.
If using local couriers, the relevant due diligence also has to be carried out. For example, several reputable retailers in the U.K. such as John Lewis, Amazon, Argos and Very.co.uk have been burned in the past for using couriers notorious for not showing up and delivering broken goods.
On the flipside, retailers need to be careful with how flexible they are with their returns offering.
Returned goods not only place additional stress on long-distance delivery infrastructure, they are also subject to an array of legislation in different territories.
Retailers need to consider local distance selling regulations in each market before deploying regional returns policies. It’s also important to keep in mind that return rates vary by country.
So while British shoppers return 10-15 percent of online purchases, return levels in Germany are three to four times higher due to the country’s long-established mail order industry and free returns.
Retailers also need a good understanding of taxes and duties. For example, issues to address include: whether you need to register for tax in each country that you’re shipping to and what the thresholds are for VAT registration in each territory. No-one, retailers included, wants to be hit with an unexpected tax bill.
Time will tell if M&S’s trip down under proves a success. The British retailer already has customers in Australia and New Zealand, who previously shopped through the U.K. website, so the foundations are firmly in place.
The retailer now needs to capitalise and build on this. Marks and Spencer’s will have to provide Antipodean shoppers with a hassle-free and localised shopping experience, while staying true to a brand people know and love.
If it nails the basics now and grows its revenues, we might soon see physical stores popping up in the towns of Sydney and Auckland.
This is a guest post written by Darryl Adie, managing director of Ampersand