October 16, 2009, 12:00 AM

Gap lays plans to develop an international e-commerce base

Having built up its U.S. web channel into a $1 billion business, Gap is now looking to expand overseas. In 2010, Gap will open web stores in Canada for Gap, Old Navy and Banana Republic and for Gap and Banana Republic in the United Kingdom.

Having spent a dozen years building up its U.S. e-commerce channel into a $1 billion business, Gap Inc. is now looking to expand overseas.

Specifically Gap, No. 25 in the Internet Retailer Top 500 Guide, will open new web stores next year for its Gap, Old Navy and Banana Republic brands in Canada and e-commerce sites for Gap and Banana Republic in the United Kingdom. The retailer plans to begin filling orders by fall.

Speaking at the company’s annual investor’s conference yesterday in New York, Gap Inc. Direct president Toby Lenk said the expansion into Canada will be self-contained but closely resemble how Gap’s e-commerce sites look and operate in the U.S. “The Canadian e-commerce market is a smaller but under-served market,” says Lenk.

Gap’s new Canadian e-commerce sites will be supported by their own e-commerce platform and fulfillment operation. The Canadian web stores for Gap, Old Navy and Banana Republic will also feature technology already implemented in the U.S. that allows shoppers at Gap.com, OldNavy.com, BananaRepublic.com and PiperLime.com to click between the various web stores, select merchandise and then use one shopping cart to complete a purchase.

Gap, which operates 188 stores in Canada, including 89 Gap locations, 64 for Old Navy and 35 for Banana Republic, will offer Canadian shoppers the option to return items purchased online to a store, the retailer says. “Many of our competitors ship across the border and that process is problematic,” says Lenk. “We will launch in Canada with a dedicated universal platform and in-country fulfillment.”

In the U.K., where Gap has about 140 stores, the e-commerce sites will also debut on their own e-commerce platform and dedicated distribution center. Once its base in the U.K. is established, Gap will also look to create web stores in other European countries. “With the expansion into Canada and the United Kingdom next year, we will go from operating five web sites to 10,” says Lenk.

The web is the fastest-growing channel for Gap. For the second quarter ended Aug.1, Gap’s web sales grew 17.3% to $224 million, up from $191 million in the second quarter of 2008. Total sales declined year over year 7.1% to $3.25 billion from $3.50 billion and comparable-store sales decreased 8%.

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