International Trends in E-Commerce – Part 1

July 12, 2013





Picture1Cross-border trade is at the core
of many retailers’ e-commerce strategies. In fact, research conducted at
Catalyst Europe
, a
leading European e-commerce event, found that 17% of European retailers are
anticipating expansion into Asia within the next two years (in addition to 17% that are already selling
into Asia), 21% have their sights set on North America (in addition to 34% that already sell into
North America and a further 13% will expand to South America, increasing from the 23% who currently operate
in this region today. However,
retailers are not overlooking the UK and European e-commerce markets. The
retailers surveyed are very active in these ‘home’ regions with 91% active in
the UK and 71% active in other European countries.

This cross-border trade theme is not limited to Europe.
According to Forrester, cross-border trade in the US is growing at a rate of
15%, increasing from $192 billion in 2011 to an expected $379 billion in 2017.
APAC has an even steeper trajectory, with Forrester predicting a 20% growth of
cross-border trade in this region, growing from $169 billion in 2011 to $457
billion in 2017*!

In the spirit of helping you understand the cross-border
opportunity and assess its appeal for your business, we’re compiling this
three-part blog series revealing all you need to know. Today we focus on the
WHY of CBT; specifically why cross-border trade is attractive to more and more
retailers. After that we’ll be looking at the HOW, discussing the tools you can
use to help your expansion. Finally, in the last post we’ll focus on the
WHERE, exploring the demographics of some popular e-commerce regions.   

WHY ARE RETAILERS
EXPANDING?

Retailers are collectively turning their focus to the
perfect storm of market demand, proximity and rising adoption to profitably
grow sales across the globe. Here are some key tips to drive your international expansion:



Postit 1Appeal to new
customers:
Entering a new market offers retailers a potentially vast number
of new customers. This is particularly appealing for retailers in more mature
markets where the domestic competition is strong and new customers hard to
retain; internationalisation offers a potential solution for growth. Further,
just as fashions come and go and the seasons change, some retailers may
encounter a more interested and engaged customer base for their specific
products than in the domestic market. This is especially true for retailers
selling product ranges that have not traditionally been available outside the
domestic market.

Picture2Choose an under-served
market:
When a retailer enters an immature market from a comparatively
advanced one, they may have considerable advantages over local competition in
terms of site sophistication, user experience and customer service. This
experience can help a retailer secure a strong foothold for the brand to build upon
in the new market. Take a look at your offering compared to potential local
competition and identify whether your products will appeal to foreign markets
and if you have the systems in place to jump ahead of the competition  to serve this audience.


Picture3Overcome seasonality:
For sectors selling seasonal stock, moving into markets in a different
hemisphere can be an excellent solution for shifting excess stock once the
domestic season ends. Fashion retailers — consider that as the summer ends in
the Northern Hemisphere, it is only just beginning in the Southern Hemisphere,
so you have the chance to elongate your season. This can free up storage space faster
and improve margins by removing the need to sell that stock at heavily reduced
prices.


Pic4Find similarities
across markets:
While consumer behaviour can vary widely between cultures,
there are some cross-border markets that are more appropriate for ease of
access than others. UK retailers, for example, can find Australia a good fit
due to the shared language, and Spain due to the large number of British
ex-pats there. Many retailers find that expanding their offering to other
English-speaking countries can be a great way of testing the waters of
international expansion with customers of a similar nature.


Picture5Leverage improved infrastructure:
E-Commerce has really opened the boundaries for retailers hoping to expand.
Marketplaces such as eBay, Amazon, Sears, Newegg or Trade Me can be great
vehicles for initiating your expansion plans. Worldwide, we have seen the
emergence of a streamlined supply chain that is enabling global commerce. Fulfilling
a product to an international buyer is now as easy as fulfilling to a local
customer. Payments are possible internationally and cost-effective language
translations allow retailers to communicate effectively with new audiences. All
of these factors have empowered retailers to embrace international expansion.

We’ll be back soon with part two of this blog, the HOW
aspect of international expansion, where we’ll explore the tools you can use to
power your global plans. In the meantime, why not download our IMRG
International E-Commerce Report
?


*Source: Forrester Research Inc data, presented by Scot Wingo at Catalyst Americas 2013