International Strategy

China may have the largest online population in the world, but a much smaller country south of the equator could also offer an interesting opportunity to expand online.

The Children's Place announced that it's signed a 10-year franchise agreement with Fawaz A. AlHokair & Co. SJSC, known as "Fashion Retail," to open stores across Saudi Arabia. The first two stores are scheduled to open during the second quarter of 2012. Jane Elfers, president and CEO of The Children's Place, stated, "We are very excited to begin our international expansion beyond North America with a number of stores opening in Saudi Arabia this year."

Large emerging markets with an active online user base and solid infrastructure offer retailers the greatest e-commerce potential in the near term, according to a new study by A.T. Kearney’s Global Consumer Institute. The study ranks the 10 countries with the greatest potential for e-commerce growth, and China tops the list, followed by Brazil, Russia, Chile and Mexico. 

The world’s virtual flea market, eBay, has set up shop in Russia. The Russian subsidiary will be headed by Vladimir Dolgov, a former Google manager in Russia, Vedomosti daily reported. eBay has been considering the Russian market since 2010, when its international shopping system eBay International Market (eIM) was launched. The platform allowed people living in Russia to search for products around the world, compare them with other products and buy them through the eIM Russian interface. 

Costco may expand its operations to Europe soon, and is mulling opening stores in Germany, Italy, France and Spain. Bloomberg reports James Murphy, international executive vice president for the Issaquah,Wash.-based retailing giant, said the company hasn't decided which European country will be first for its expansion there, and the first European store won't open for the "next couple of years."

The Wall Street Journal reported that Swedish fashion giant Hennes & Mauritz is looking into sourcing its clothes in yuan payments to protect its purchasing costs from further strengthening of the U.S. dollar. "A lot of our rivals have already begun paying directly in yuan," H&M's Head of Investor Relations Nils Vinge told the newspaper. Vinge added that doing so will become easier as China loosens its tight grip on the currency. The Swedish retailer sources the majority of its clothes in Asia, and about 80 percent of its total purchasing costs are in dollars.

Amazon.com announced that developers can now submit apps for distribution this summer in the United Kingdom, Germany, France, Italy and Spain, with plans for further global expansion in the near future. Developers can get started by visiting the Amazon Mobile App Distribution Portal. The Amazon Appstore in the U.S. has grown to tens of thousands of apps and games in just one year.

Given that an increasing number of our clients are eyeing Japan’s e-commerce market, I thought it would be interesting to share some observations from my trip there. Local business perception is that the economy is struggling and will persist to struggle, but robust activity on the street and our most recent Asia Pacific Forecast belie that. There's clearly potential for growth in the market, but changes need to be made before that can happen. Based on my observations, the key inhibitors are:

Europeans, don't go looking for new kicks on eBay or Amazon.com — not if you like the brand with the three stripes. Adidas says it wants to limit all European online sales to franchised sites. The ban, set to take effect in 2013, would also affect subsidiary athletic shoe maker Reebok. 

Having spent last week at the Internet Retailer Conference & Exhibition in Chicago, I came away with three key takeaways: One, if you're an online retailer not selling internationally, particularly in Australia, what are you waiting for? You're missing out on a potential growth opportunity for your brand. Two, brick-and mortar retailers must develop a strategy to deal with "showrooming," — i.e., consumers using stores as showrooms to check out products, then buying those products online at a lower price (with free shipping, of course). Three, online marketplaces are proliferating — it's not just Amazon.com and eBay anymore — and becoming another viable channel for retailers to engage consumers and sell their products.