May 30, 2008, 12:00 AM

Overseas Opportunity

(Page 2 of 3)

It ships orders from its U.S. warehouses. Consumers in foreign countries are responsible for taxes, duties and tariffs. The carrier, for example, may collect taxes, duties and tariffs via cash on delivery or a country’s taxing authority may bill the consumer for these charges.

“We handle international orders the way we do for simplicity’s sake,” Goldspeed.com’s Kugelman says. However, the e-retailer’s next step in international e-commerce is enabling currency conversion during checkout. It is exploring whether to handle this in house or seek a vendor.

As it launches into international e-commerce in the third quarter, fellow web-only retailer Overstock.com also will handle overseas shopping on its existing site. It will begin shipping orders from the U.S. but, unlike Goldspeed.com, will have currency conversion available at launch in a system it calls international checkout.

It is enabling international sales because of demand from shoppers overseas who complain that Overstock.com does not ship internationally. It decided not to set up country-specific sites because it wants to take things slowly. “This is a great way to place our toe in the water. But we don’t want to set the expectation we can converse with everyone in other countries just yet,” explains Patrick Byrne, CEO of Overstock.com.

So the e-retailer has heeded the call and in the months ahead will launch its international checkout system and international shipping through global e-commerce company E4X Inc. The e-retailer first will serve Europe and Canada, enabling checkout in the Pound, Euros and Canadian dollars. It plans to launch checkout with currencies for Asia-Pacific countries down the road.

Check this out

International checkout will work like this: The web site will recognize the country of origin of a customer via Internet protocol address detection technology integrated into the site by E4X staff. The detection technology enables the site to display a checkout page with the flag of the customer’s country and the order cost, automatically calculating appropriate tariff rates, taxes and shipping and showing the total in the currency of the shopper’s country.

Overstock.com believes maintaining the one site while offering international checkout is the best path for exploring new territory. It is confident, based on the number of international shoppers already wanting to shop Overstock.com, that it need not translate the site into foreign languages, which helps keep the cost of going global down as it follows its strategy of placing its toe in the water.

“The way we are constructing global sales is a super low-cost way to do it, much cheaper than building sites and warehouses for foreign countries,” Byrne says. “Sales growth may not be large, but whatever growth there is, given the expense is so small, will be very lucrative.”

And if it sees particularly good growth from a country, it may consider going beyond its checkout strategy. “International checkout is a gateway for us to identify if and where we want to set up separate web sites,” Byrne adds.

Handling international orders via a country-specific site or through an existing American site are two levels of commitment to overseas customers, each with an upside and a downside, says Maris Daugherty, senior consultant at global retail consulting firm J.C. Williams Group Ltd.

“Retailers like Casual Male and Timberland are making strong commitments to customers in the countries they’ll serve. By building local e-commerce sites that feature the appropriate languages and reflect local culture, they will be able to create a unique online shopping experience,” Daugherty says. “But creating separate sites for every country you enter does require a significant investment in resources.”

By contrast, Overstock.com’s international checkout approach could initially bode well for a web-only retailer establishing itself overseas, Daugherty says. “Overstock’s strategy is a great way to test international waters without having to make as big an investment,” she says. “But the question is, Will shoppers prefer to buy from a merchant with a local presence in touch with their culture versus buying from a company that’s overseas?”

The answer probably lies in U.S. e-retailers’ ability to persuade shoppers in foreign lands to shop their sites. But does marketing a retail web site in Europe differ from marketing one in the U.S.? There certainly are cultural differences in every country, and those differences may very well be reflected in how people shop and how they respond to different marketing techniques.

Marketing overseas

While online consumer behavior has been put under the microscope for years in the U.S., there is little research on the subject overseas, retailers and analysts report. As a result, Internet retail marketing abroad requires learning on the job, they say.

Understanding new shoppers is key to energizing sales in a foreign country, and the best way to do so is to first understand how one’s American shoppers behave and then launch an international presence and observe how those shoppers behave, says Jim Okamura, senior partner at J.C. Williams Group. And because overseas online shoppers and e-commerce site experiences are not as sophisticated as their American counterparts, Okamura says, “e-retailers can pull out their playbooks from the past and do what they were doing five years ago here at home.”

To promote its international checkout program, Overstock.com is setting up affiliate marketing relationships overseas. It’s doing so because affiliate marketing has become a successful marketing method for its U.S. operation, the company says.

To get the e-commerce ball rolling in the U.K., Timberland relied heavily on paid search through digital marketing vendor DoubleClick Performics. Brown says the program proved very effective during Q4 2007. “Paid search and e-mail marketing should basically be the same overseas,” he says, “though certain keywords, for instance, may resonate more. We will learn over time.”

Timberland also conducted multi-channel promotional activities, including advertising the new site on signs in U.K. stores and on shirts for U.K. staff.

Fulfilling sales

Just as their approaches to the front end of international e-commerce differ, Timberland’s and Overstock.com’s methods for international order fulfillment contrast.

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