Going Global: Realizing the potential of global e-commerce

Retailers have mixed feelings about global e-commerce. While the opportunities are tempting, the challenges are daunting. On one hand, consider the upside: one in every 10 U.S. e-commerce purchases already comes from international consumers, and that will likely increase to one in every five in the next few years.

The international online population is surging and the growth rates of e-commerce in many countries have outpaced that of U.S. Many early adopters of ecommerce in the U.S. have already added 25 percent to 50 percent of incremental revenue by selling internationally.

But there are substantial challenges to going global. Retailers have to sort through complexities involving product preferences, regulations, customs duties and taxes to serve their overseas customers. Understandably, many American retailers have seen international e-commerce as something that would be nice to have, though not essential.

But a number of factors that make this an opportune time for U.S. online retailers to overlook the obstacles and turn their attention to international markets: soft demand at home, the depreciation of dollar, the high adoption rate of broadband in overseas markets, and the general allure of American brands.

Extending your digital reach may provide a catalyst for growth. The question is, how do you make most of the move into international ecommerce?

Understand the challenges and barriers

From an access perspective, the e-commerce world is borderless. Any online store can reach anybody with Internet access anywhere around the world. But the minute you start the odyssey of getting products delivered to your customers, that border reappears.

International ecommerce is complicated. These common barriers tend to reduce your shopping cart conversion with international shoppers:

• High shipping charges.
• Too many hidden or additional charges, especially related to duty and taxes, or custom brokerage fees.
• Compromised customer experience.
• Language, culture and payment issues.

The good news is that international e-commerce technology has evolved significantly and retailers now have more options available to overcome these problems. You’ll find a variety of choices, depending on your resources for integration, product category and risk preferences.

Your International Expansion

Here a few areas to consider when crafting your international expansion plan:

1. Taking a country-by-country approach
   Find out how much traffic comes from international visitors. (A useful tool is www.alexa.com, a leading provider of free, global Web metrics.) Listen to the voices from your social media outposts, customer service team or any other customer touch points. If there is a large market for your products in specific countries, and if it aligns with your strategic roadmap, prioritize your resources to focus on them. In most cases, start with an English-speaking country like Canada, the United Kingdom or Australia. It represents the lowest risk and demands the fewest resources.
2. Provide reasonable shipping rates and multiple shipping options
   Shipping rates are consistently cited as the top factor affecting sales, both domestic and international. In many cases, though, international buyers are willing to trade faster transit time for cheaper rates. Free shipping, a common marketing tactic for domestic e-commerce, is too expensive to be offered to international shoppers. But if you can find a provider with lower international shipping rates, you’ll have more room to pass the savings on to the shoppers. If you can, provide multiple shipping options, from standard to Express or Priority, to cater to different customer needs.
3. Minimize the uncertainty with the transactions
   Provide transparency for the total costs associated with the transactions. For international customers, the biggest uncertainties are the duty and taxes and customs-related charges. Including guaranteed total landed costs to ensure an accurate quote is a critical to a positive customer experience. Duty and taxes can vary widely for different countries and different commodities. A good solution can translate the comprehensive duty and taxes information into the rate quote during your checkout process.
4. Improve customer experience
   U.S. retailers have invested considerable resources to optimize the buying experience for their domestic customers. The same principles should be applied to the international online shopping experience. A positive customer experience can set you apart from the competition and help build a sustainable international business.

   Analyze the process of your international orders and listen to your customer feedback to gain insight from the buyer’s perspective.

   In addition to including the guaranteed total landed costs in the checkout, a streamlined return process, international address verification and insurance should all be part of the standard features offered to international customers.

5. Transact in familiar currencies and payment methods
   While PayPal is viable solution as an international payment platform, explore other payments methods that are familiar to the local markets as well. Credit cards are popular in Spain. But in the Netherlands, online shoppers want to pay via iDEAL — direct online transfers from their bank accounts. In France, meanwhile, payment by check is still popular. These are just a few examples of nuances that need to be considered.

In the end, the formula for building a successful international e-commerce business isn’t that different from one country to another: a wide selection of products, competitive prices, friendly shipping rates and return policies, and most important, a pleasant buying experience. Take away the unknown, and introduce the familiar.

Sherry Shi is a marketing executive in the Global Ecommerce space. She is in charge of Marketing for Pitney Bowes Ecommerce Solutions (www.pb.com). Follow the latest trends in global ecommerce by visiting our Resource Center and blog.