Strategies for Expanding Your E-Commerce Business Into Europe
Tapping into a global marketplace is at the top of many retailers to-do lists for the end of 2011 and beyond. This has been made possible in large part by e-commerce. Discussing what retailers can expect along with strategies to optimize success was Ulric Jerome, general manager of European cross-channel retailer Pixmania.com, during a session yesterday at the National Retail Federation's Shop.org Annual Summit in Boston.
The European e-commerce market is huge — it's larger than the United States’, in fact — but it's fragmented, Jerome said. The key is retailers need to adapt to the customs and traditions of each marketplace. For example, if you don't speak the local language, it's unlikely you'll ever be the leader in that market, Jerome noted.
To help it address this challenge, Paris-based Pixmania has hired more than 50 percent of its corporate employees from outside of France (most of them hail from other countries in Europe). This has helped the retailer acquire local expertise and insight in to the mind-set of the consumers in the other 25 European nations where it operates e-commerce sites.
Jerome documented several differences between consumers across the European continent. These varied from search behavior (e.g., price-comparison websites in Ireland are virtually nonexistent while in Germany they're very popular) to buying habits (e.g., Italian consumers are more likely to have a higher average order value than other European consumers) to preferred payment methods (e.g., French shoppers prefer to make purchases via credit card while consumers in Eastern European countries traditionally opt for bank transfers). Pixmania has identified these behaviors and trends, subsequently adopting its websites to the preferences of the local shopper.
Pixmania has structured its organization to have a managing director for each of the 26 countries in Europe where it has an e-commerce site. Those managing directors are in charge of their own P/L statement. Jerome advised the audience to develop their international business units — e.g., marketing, IT, customer service — by local market expertise.
Taxes and pricing are two areas where retailers need to do their research before entering an international market. Pixmania reports paying 90 country-specific taxes for its network of e-commerce sites, ranging from environmental to product copyright taxes. Factor in local taxes into your product margins when setting prices, Jerome advised.
Pricing for Pixmania is dependent on a number of factors (e.g., competitors’ prices in that market, taxes, buying behavior of the local shopper) and varies by market. For example, a digital camera on its Italian site is going to be more expensive than the same digital camera on Pixmania's Bulgarian site. Reiterating a common theme throughout his presentation, Jerome said adapting your site to the local market and shopper, including language, pricing, creative, content, etc., will be the key to your international success.
Social media has played a big role in helping Pixmania endear itself to the shoppers in the various countries where it has an e-commerce site. The retailer has 26 Facebook pages (one for each European country it sells in), 11 Twitter accounts and a branded YouTube channel. These platforms are primarily used for brand building, customer acquisition and sharing company information, Jerome said. Fifteen Pixmania.com staffers’ sole job is to manage the company's social media program.
Social shopping via Facebook is an area where Pixmania is experimenting. The retailer has launched a campaign on its Facebook page where consumers can purchase a group gift — chosen from Pixmania's product catalog — and then invite their Facebook friends to participate. Updates are provided via Facebook whenever a friend contributes to the group gift.
