International Expansion in E-Commerce – Part 3

September 5, 2013

Marketplaces ChannelAdvisor By ChannelAdvisor

Welcome to the final instalment of our three-part
international blog series! In our previous blogs we looked at why
retailers are considering cross-border trade
and what
tools these retailers are using
to enable expansion. Today we will round
off this series by looking at where you
should consider expanding.

If you plan to incorporate cross-border trade into your
business model, it is vital to spend time researching where the demand for your
product exists. There is no “one size fits all” strategy for expanding
internationally – spend time tailoring your cross-border plans to fit your own
business targets and make sure these are well examined before you begin acting
on these proposals.

As we discussed in our previous blog,
many retailers embark on international expansion through marketplaces such as
eBay and Amazon as both of these channels have a vast global presence; eBay has
fourteen global sites while Amazon has ten. With all of these options, how do
retailers decide where to start?


PayPal CBT Globe

Source: Nielson/Paypal Study
from 2013

We think retailers have two options when starting out with
expansion. By grouping countries by either language
or proximity, you can decide the approach
that best suits your business model.

Language

Starting out selling across borders can be overwhelming – looking
to countries that share a common language is often a great way of trying out
expansion for the first time while remaining in your comfort zone.

Countries such as the US, Canada or Australia are a great
starting place for retailers looking to sell to English-speaking countries. These
countries already have an established audience of online shoppers searching for
similar search terms and these consumers are more than willing to purchase from
international retailers. In the US, 34.1 million people shop cross-border
online, with 49% of those purchasing from the UK. Similarly Australia boasts
6.3 million online cross-border shoppers, with 47% purchasing from the UK.[i]

The main benefit of expanding to an English-speaking country
is that translation is not an issue. All of your product data and listings are
already created in English, keywords are optimised and you can offer customer
service in the same language. This means that not only are your products
optimised and ready to be found on international channels, there are also
customers searching for these keywords.

Selling to a country like Australia also allows retailers to
overcome issues of seasonality. For example, our apparel and sportswear
retailers have begun selling their summer stock to the Australian market now
that the season is ending in Europe and the US. This lengthens the season and
avoids the issue of excess inventory or selling remaining products at a
dramatically reduced price.

Things to consider…

  • Localisation:
    While translation isn’t necessary when selling to countries that share the same
    language, it can be easy to overlook that some localisation is still needed.
    For example, changing “jumper” to a “sweater” for the US market or “trainers”
    to “tennis shoes” ensures that you are more likely to appear in customer
    searches for those products.
  • Fulfilment:
    Make sure you have a solid fulfilment process in place for these countries;
    their distance makes delivering an order in a timely fashion more of a
    challenge. Clearly display your expected delivery times for international
    customers and be upfront about delivery costs in order to manage customer
    expectations. Don’t forget that eBay and Amazon have robust delivery programs
    that you can leverage to make delivery as seamless as possible.
  • Tax:
    Research whether you are required to charge tax on any sales and make sure you
    understand the varying thresholds or legal requirements you may need to adhere
    to when selling to a new country.
  • Listings:
    eBay and Amazon’s international versions of their sites are predominantly consistent
    but certain listing requirements vary between countries and values such as size
    are different across the globe. Keep up-to-date with these marketplaces’ requirements
    and make sure you are pushing the right information to these channels.

Proximity

Looking to Europe when expanding can be a logical step for
retailers. The growth potential for the region is attracting many retailers — the
IMRG forecasts that cross-border sales in Europe are set to reach €36bn in
2013, accounting for 10.6% of total online sales[1].
Furthermore, eBay has identified eBay.it, eBay.fr and eBay.es as high potential
sites for international sales, as more buyers in these markets are purchasing
online and domestic sellers are often unable to meet demand. [2]

Exporting to countries closer to home can be a great way of
attracting new customers, while its proximity means that products can be stored
locally and delivered across Europe quickly. Additionally, the close time zones
mean that customer service hours don’t need to be extended to cater to queries
from European customers.

Things to consider…

  • Translation:
    Although English is widely understood across Europe, it is advisable to
    translate your listings to the country’s native language to ensure you are searchable
    and found on marketplaces. Work with a translator who understands your product
    and who can optimise your data based on keywords and search terms relative to
    that country’s search habits.  
  • Fulfilment:
    Again, it is important to work with trusted fulfilment partners to ensure
    your product gets to the consumer in the quickest manner and the best
    condition.  However, keep in mind that
    returns are a fact of life in retail and the European Union is updating its
    returns directive so that return timeframes are clear and fair for customers
    across Europe.  
  • Tax: Don’t
    fall into the trap of assuming every country in the EU is the same when it
    comes to taxation. Each Member State has an individual distance selling
    threshold, which is essentially a turnover threshold ranging between €35,000
    and €100,000. If a seller exceeds the turnover threshold in an EU Member State,
    they will have a liability to VAT register there and charge the relative local
    VAT rate on their sales. For that reason it is essential to educate yourself of
    the tax requirements you may be subject to before expanding.

Summing it up

Research is key when expanding. Take your time to identify
the approach most suited to your business and remember that there is no clear
formula to expansion. Whether it’s selling to customers in Europe or further
afield, the key to expansion is to think like a global company, but act as a
local when expanding.

We hope you found this blog series a useful tool in your
expansion plans! If you want to learn more about cross-border trade, why not join
our three-part webinar series, led by ChannelAdvisor CEO and e-commerce guru
Scot Wingo, exploring the concept of Agile CBT: http://bit.ly/ScotsGuideToCrossBorderTrade


[1] IMRG and Trusted Stores Data

[2] eBay Seller Central: Where to sell internationally

[i] PayPal Modern Spice Routes Report 2013