Positioning Yourself in the European Market

The race is on to obtain a “first-mover advantage” in the European online world. Many U.S. companies that were born in just the last few years have won more online marketshare in their home markets than have well-financed, older companies simply because they were known online as first in their market segment.

Amazon (nonexistent six to seven years ago) enjoys a substantial lead over the top U.S. bookstore chain, Barnes & Noble. eToys also enjoys much greater sales online than traditional toy companies FAO Schwarz or Toys “R” Us, even though eToys did not exist six to seven years ago either.

eBay is now interested in establishing itself in the top European markets, but British QXL has already won over the online auction market niche in many European countries, and consumers know to go to QXL when they want to buy by auction (in their own language). “U.S. players have already been able to scoop up 20 percent of the European market by coming in with large-scale pan-European businesses,” says Patrick Forth, vice president of the Boston Consulting Group and author of the BCG report “The Race for Online Riches: E-Retailing in Europe.”

“This approach contrasts with that of typical European incumbents who have focused on their national markets only. U.S. online retailers, however, will also find it difficult to deal with the European online market since it is a conglomeration of regional markets, each at a different level of development…

“European retailers need to step up to this challenge and determine what part of their business can be scaled on a pan-European basis and what part needs to be tailored to appeal to local preferences within the European market,” says Forth. “The rewards will be huge for the small number of retailers, either European or American, who find the right balance between the two.”

It seems that whoever captures new e-Business territory first wins its leadership like in the American West in the 19th century. If you snooze, you lose.

When expanding globally, early market leaders have advantage leveraging the brands that have been established in their home country. And competing against local “names” in other countries represents a significant hurdle.

This is also the case when American companies miss out on crossing the Atlantic in the online world, and let lesser-financed companies in Europe dominate a certain market niche first. European companies have the advantage in that they have been doing business internationally for centuries, and are used to localizing their sales and after-sales support into other languages.

Americans do not like to bear the expense of localizing their sites, nor do many of them think it necessary to invest in promoting their web sites in each country’s market. They may just miss the boat in many European online market niches, even though they are many times better-financed than their European online competitors.

I saw this when I visited Munich two weeks ago. I met with two companies there, one a German leader in free email, another a leader in online automobile sales in Germany. Both were quite keen on having their site translated and promoted in important European markets, to establish themselves as the leader, before heavily financed Hotmail (owned by Microsoft) and Autobytel decide to invest in Europeanizing their web sites.

This scenario is one I see played out over and over again, as European companies have started obtaining the necessary funding for extending their web sites beyond their country borders in an effort to become market leaders in their field on a global scale.

Whoever speaks about marketing on a global scale must bring it down to country by country. While this is happening, I see many American companies haggle about whether to localize their site or not (and the idea of budgeting for web promotion in many languages is not attractive at all to them, as it can get expensive).

I am not making this up these observations come from the thousands of emails I have exchanged and phone conversations I have had since 1995 with European and American companies about cross-border online marketing.

Unless a company can finance the launch of its multilingual site, it will not be able to significantly penetrate the international online market. And, in general, the first-mover advantage holds.

Get into your international markets now… before the local competition has already won them over.

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