January 29, 2014
International expansion is among retailers’ top priorities for 2014 and no wonder, with 45% of global shoppers purchasing goods from overseas stores. It’s time to take some of that market share!
Magento Enterprise has brilliant in-built functionality specifically allowing the creation of multiple regional storefronts around a centralised back end. It’s one of the best features of the platform for growing businesses. However, there is a range of considerations that a retailer needs to think about at a technical, cultural and logistical level before they can meaningfully expand into overseas markets.
1. Lost in Translation
Speaking the local language is the first sign to international consumers that a retailer understands them. In order to start building that trust you’ve got to think about how your website theme will cope with multiple languages for both product and non-product content. Good translation is not just a 1:1 relationship between words; retailers must understand the local culture to capture the local audience, especially when it comes to selling products. A hit campaign in one country can turn into an embarrassing flop in another. Take Ben & Jerry’s for example. A new flavor called Black & Tan was tested thoroughly in the US but even before launching it in the UK and Ireland, the company had a history problem. In the 1920’s, Black and Tans were a force of British ex-servicemen renowned for their brutality and responsible for several brutal events including the 1920 massacre of 12 people at a Dublin football match. The flavour is still on sale in the US despite some Irish-American protest.
Retailers need to make sure that website translations also extend to email, social media, marketing and advertising campaigns.
2. Taxes and Duties
Do you need to register for tax in each country that you’re shipping to? What are the thresholds for VAT registration in each territory? These are the types of questions you need to get answers to as you’re considering expansion into new markets. Duties are liable in some situations and you’ve got to establish whether these should be paid at the point of shipment, whether they fall within the tax-free threshold for that territory or if customers expect to pay the duties.
Some retailers think that accepting Visa, MasterCard and PayPal will cover them everywhere, but this isn’t the case. Even in the UK 11% of the population don’t have bank accounts. German shoppers like to use ELV bank transfers, while Japanese buyers want to pay cash on delivery and French customers use Carte Bancaire. In Africa only 15-20% of residents have bank accounts but 60-70% have mobile phones, so transactions are typically made with phone credits. Even in the US and UK, it’s typical for some consumers to want to pay by real time bank transfers, offline credit transfers, direct debits, eWallets, paper-based payments and mobile payments. Making payment easy for consumers will obviously lead to more sales in each market.
In addition to being technically able to accept these alternative payment types, retailers also need to consider how these will flow within the checkout process. For example, if you offer PayPal or an eWallet payment option, make sure you show those logos in the basket to avoid abandonment.
Be prepared to show approximate pricing in any currency even if you can only accept payments in a few. Make sure to be clear about what currency you are transacting in as this may incur bank fees for your customers. For example, the Matches site does this well, allowing the consumer to choose delivery country, billing currency and display currency.
This may seem an obvious point when considering international expansion but as a retailer you will need to consider whether you will be able to offer competitive delivery times in a commercially viable way using your existing logistics infrastructure. Make sure your shipping costs are clear from the outset. According to a study by WorldPay, over 50% of consumers will abandon the checkout process when presented with unexpected costs. Even if your shipping prices can’t compete with local retailers, a consumer will often pay more than you think for shipping a unique item.
Do your research and be aware of local courier reputations. Several reputable retailers in the UK such as John Lewis, Amazon, Argos and Very.co.uk have been burned by using couriers notorious for not showing up and delivering broken goods.
If your logistics infrastructure can cope, take advantage of innovative fulfilment services. Shutl, recently purchased by eBay Inc., is a fulfilment service in the UK that offers 90-minute delivery.
Returned goods not only place additional stress on long-distance delivery infrastructure, they are also subject to an array of legislation in different territories. Retailers need to consider local distance selling regulations in each market before deploying regional returns policies. It’s also important to keep in mind that return rates vary by country. So while British shoppers return 10-15% of online purchases, return levels in Germany are three to four times higher due to the country's long-established mail order industry and free returns.
No matter what, your returns policy should be easy to find on your website and include information about international returns as a majority of buyers will review a retailer’s return policy before making a purchase.
6. Products and Stock
Sizing charts and international conversions are a vital product detail from an international customer’s point of view. Showing sizing in relation to the model in your product photos is always good practice.
If budget and development timeline permit, it’s a great added bonus to have real-time stock levels for international stores. However, as a rule, retailers mustn’t show stock levels unless they’re absolutely sure that they have the infrastructure in place to honour that stock.
7. Customer Service
Being able to respond in a local language is a prerequisite of effective customer service, but is this going to be delivered through native speakers in head office, through local contact centres or through outsourced operations?
It’s highly recommended to have real native speakers who know your brand well available to handle international customer requests. Alternatively, there are several digital customer service desks available that will centralise all customer service queries from social media, email and other channels into one interface and even handle translation.
Going global isn’t simply a matter of flicking a switch. You have to build the commercial and technical infrastructure to enable a valid retail operation in each market that you’re targeting. Whilst an ecommerce platform such as Magento Enterprise allows a retailer to enter new markets simply and quickly, you still need to have internal planning and localised support in order to succeed in international markets. However, if you consider these issues early enough in the process—ideally whilst you’re re-platforming anyway—then you can save yourself a world of pain further down the line.
*Lost in Translation image source: http://shoply.com/product/38912/funny-a-frame-sign-chinglish-translation-tiny-grass-is-dreaming/
Darryl founded Ampersand Commerce in Manchester in 2008 to help major retailers build better online stores using open source technology. Darryl has built the ecommerce agency into a multi-award winning, Magento Gold Solution Partner and puts his success down to a love of people, business and technology. Tweet him at @DarrylAdie.