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Expanding horizons: where next for British brands?
By Michael Kliger, Vice President International at eBay Enterprise
International e-commerce represents an enormous untapped opportunity for many brands and retailers. While success will depend on having a carefully-executed long- term strategy, expanding overseas needn’t be intimidating if you adopt a phased approach that balances opportunity and manages complexity strategically, says Michael Kliger
Untapped opportunity
When Napoleon referred to Britain as a “nation of shopkeepers”, he highlighted the fact that Britain’s power and status on the international stage was built, unlike its continental rivals’, not on the extent of its lands or its population, but on commerce. Tis proud heritage endures, with Britain remaining a leading
exporter of goods and services on a global scale. Cross-border trade is big business for the UK, worth almost four times as much as in France and Germany. In fact, the UK’s trade surplus from online sales is worth as much as all such Dutch exports put together.
Amid doom-and-gloom forecasts and scaremongering about
the future of the High Street, cross-border sales are becoming even more important as e-commerce makes it easier for brands to market and deliver internationally. OC&C research puts the potential size of the global cross-border e-commerce market at £80 billion by 2020, with cross-border online sales growing at twice the rate of domestic online sales. Tis will also open up less developed markets where
competition is lower but wealth is being created at record levels, allowing retailers unprecedented opportunities to build brand strength and drive profits. Despite this clear opportunity, Emota research shows that only a small proportion of retailers sold across borders in 2013. Retailers need to put specific strategies in place to target this growth, or they risk being left behind by the competition.
Competition
One of the reasons for the international strength of the British retail sector is the high level of competition among established domestic retailers. Tis competition led to something of an “arms race” between British retailers to develop the most compelling online offerings. Tis is turn has seen British retailers move ahead of many of their international counterparts, their early-adopter status meaning that their e-commerce platforms are now often more mature in terms of functionality and reliability, and more sophisticated when it comes to customer experience.
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Phased approach and managing complexity
We are currently at an inflection point in international e-commerce, where even the most conservative commentators expect the market to multiply in size over the next five years. For the majority of retailers that remain restricted to a single market, there is still an opportunity to capitalise on the upcoming surge, but to do so they have to clearly prioritise long-term outlook ahead of short-term gains. It is not reasonable to expect payback in the first two years, and it is preferable to be well established ahead of the anticipated uptake in e-commerce rather than chase early profits at the expense of building sustainable market share. Retailers seeking to enter new markets should adopt a phased
approach that focuses on managing the complexity of market entry. Te first step should be to establish the strength of the brand in the new target market. Te rise of social media, and the burgeoning field of social media analytics, has added a new dimension to traditional market research by enabling retailers to collect more immediate and nuanced insights into customer behaviour and preferences. Te initial products offered should be those deemed most relevant to the new market, as this simplifies logistics in the early stages and helps build brand awareness through a smaller number of more recognisable products. Ensuring you pick the right market to expand into can be
difficult, and some crucial factors are often overlooked. Retailers should aim to be efficient: trading in just three languages (English, French, and German) and two currencies (GBP and Euro) provides access to nearly three quarters of the European e-commerce market. Do not underestimate the cost of shipping to a new market – early orders will be exclusively shipped from the country of origin. It is also important to bear in mind how consumer behaviour differs between markets. For example, German shoppers have a low adoption rate for credit cards, while Scandinavians have a preference for cash on delivery. Working with a third party that has experience of the markets
to outsource some or all of your international e-commerce operations can help retailers develop this kind of understanding, as well as reducing the number of plates that the retailers
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