Developing an International Commerce Strategy

It can be tempting for merchants enjoying a measure of e-commerce success to consider charting a course for overseas expansion. After all, the size and growth rates of international markets can put those of maturing domestic markets to shame.

While U.S. online commerce is forecast to average gains of 10 percent through 2019, nascent markets in Asia and India are expected to see online sales jump by more than 20 percent by 2019. But before being lured to distant shores by the siren call of higher sales, merchants need to think with their heads, not their hearts.

Recent history is filled with examples of retailers whose ill-conceived expansion plans floundered on foreign shores.

• Best Buy pulled the plug on a five-year push into Europe in 2013 to focus on fending off competition at home from Amazon.com and Wal-Mart.

• Starbucks got ground up by the competitive Australian market, pulling out of the country in 2014 after its corporate vibe failed to catch on with consumers Down Under.

• Target missed the mark on its ambitious Canadian expansion after its supply chain failed to keep up with the needs of the 133 stores it opened in two years.

The path to international revenues is strewn with significant hurdles, from site experience basics such as translating copy and converting currency to logistical hurdles such as shipping restrictions and import duties, to subtler issues of understanding local markets and cultures. But if done wisely and, at first, modestly, merchants can find ways to serve brand enthusiasts wherever they reside. Here are some strategies to consider:

• Identify overseas audiences. There are plenty of ways to glean whether brands are attracting international interest, from analytics data to customer service inquiries to social media interactions. Use this data to identify which overseas markets to branch out to first, bearing in mind that those with the fewest cultural, linguistic and trade barriers may make sense to tackle first.
• Assess mobile readiness. In many parts of the world, mobile is even more ubiquitous than in the U.S., with some populations using mobile devices as their primary means of accessing the web. That means a “mobile first” strategy must not only be an ideal, but concrete reality for merchants before they consider expanding abroad. They may need to offer full-featured mobile sites on par with local competitors.
• Can you get it there fast enough? In densely-populated areas, two-day shipping can be the norm, with some brands offering same-day delivery as a differentiating service. Merchants must weigh whether they can compete on local terms using their own supply and delivery networks, and at what cost.
• Partner for smooth overseas shipping. Before launching separate country-specific sites, merchants should consider partnering with international logistics vendors such as BorderFree and Global Shopex to help them ease the transition into international operations. Use of such firms is on the rise, and can help merchants iron out other logistics of international trade by shipping directly from the U.S. This option is already popular with merchants of all sizes. For example, when international buyers at MarketLive merchant French Toast want to ship internationally, the shopping cart switches seamlessly to that of partner Global Shopex (see below).

• Start out on local marketplaces. For merchants with a strong foothold in international markets, there’s really no way around investment in country-specific websites. Designer Marc Jacobs, for example, has more than 80 retail locations in Japan and needs a separate site in the local language that points shoppers to those local outlets. Merchants can also take advantage of Amazon.com and eBay’s extensive regional marketplaces to establish a foothold in overseas markets, using their fulfillment services to help negotiate international shipping and tariff hurdles.

Even merchants that go on to invest more significantly in international markets can offer merchants huge potential for revenue growth, but also huge potential headaches. Those who take their time, use sound methods to identify potential overseas markets, and partner with firms to help them overcome logistical and cultural barriers will succeed in building brands with global appeal.

Ken Burke is the founder and CEO of MarketLive, an e-commerce software provider. Ken can be reached at ken@marketlive.com.