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Special Report: A wide world of web opportunity
Online shopping is catching on around the world, and that offers opportunities for North American web retailers that learn the ropes, country by country.
While U.S. e-retail sales grew last year at a solid 16.1% rate, according to the U.S. Department of Commerce, the growth rates were higher in other areas of the world where e-commerce is less mature. In Europe, e-retail sales increased 18.2% in 2011, according to the U.K.'s Centre for Retail Research; in Latin America, the growth rate was 34%, says web research firm eMarketer; and China's online retail sales grew nearly 54%, the country's Ministry of Commerce says.
What that means is that consumers around the world are growing accustomed to shopping online. And, given the popularity of North American brands, there are plenty of opportunities for web retailers based in the United States and Canada to increase their revenue by selling to consumers in other countries.
Cashing in on this potential bonanza, however, requires building brand awareness in the countries being targeted, flawless logistics, gauging the competition in each market, crafting localized web sites that speak to international shoppers in their native languages, offering competitive pricing and catering to consumer product preferences in each market. Not many retailers can do all this on their own.
"There are a lot of countries in Europe and Asia where online sales are very robust, but many retailers need a partner that can help them with global infrastructure and reducing the barriers to entry through local knowledge of international markets when it comes to online shopping trends and building brand awareness," says Max Niclas Bense, international business development manager for Hermes Europe, a provider of supply chain, sourcing, transport logistics, e-commerce, fulfillment and consumer goods distribution solutions.
And while North American e-retailers may be tempted to dip their toes in international waters by selling first in a handful of countries, some experts argue that a retailer can better spread its global expansion costs by targeting many countries.
"A site looking to expand internationally is faced with many of the same operational and financial challenges, whether they are opening their doors to one country or globally," says Craig Turnbull, CEO of Bongo International LLC, which provides online payment, fraud screening and logistics software for online merchants expanding globally. "Our view is that companies should expand internationally to all countries, taking advantage of all the traffic driven to their sites, given that the operational challenges are largely ubiquitous. Retailers that open up to the top 10 countries only get access to 60% of global e-commerce sales. Why would a retailer want to limit their sales opportunities to a few countries when they have just developed their global sales infrastructure?"
Speak their language
The starting point for a retailer to sell globally is to identify the country where a shopper resides so it can translate content into her native language. Adding geolocation software to its web servers enables a retailer to detect the Internet Protocol address of the device accessing the web site to trace its country of origin. Once the shopper's country is known, the web server can automatically display a version of the retailer's web site with content in her native language.
Yet, as effective as geolocation is in identifying the country where a shopper resides, retailers need to remember it is not foolproof. "Geolocation software is not always 100% accurate, so retailers should also give visitors the option of self-selecting their country of origin in case content is initially served up in the wrong language," says Bobby Frank, CEO of BorderJump, which provides duty calculation, shipping, logistics, returns and payments software for retailers selling internationally.
Proper language translation plays a critical role in global e-commerce by removing the communication barriers that exist from country to country and making consumers feel more comfortable shopping at a site that's in their native language. When it comes to site translation, however, there are many ways retailers can manage the process.
"A good place to start is by translating top-level navigation and customer service pages, then attacking content and product descriptions," Frank says. "Sites that rely heavily on product images also tend to be very effective since the visual impact helps buyers overcome the language barrier."
Retailers typically have two options when it comes to translating content on their sites. They can either use an automated translation program or they can hire a language specialist to perform the translation. While automated translation is far less expensive than hiring a translator—it costs between 5 and 10 cents per word for automated translation compared to 22 to 28 cents per word for human translators, according to Turnbull—the approach comes with risks. Translation software provides generic translations that can show a lack of understanding for the local dialect and culture.
Alternatively, retailers can opt to use automated translation programs for product pages, which are accompanied by an image that can clarify the translation if it is slightly off. A translator can then be used for more critical data, such as navigation tabs, frequently asked questions, contact information, checkout, and return and shipping policies, Turnbull says.
Some retailers, to save on translation costs, may take the chance of leaving product pages in English in the hope that many shoppers will be able to understand the description. But that option is not always available, as some countries require web sites be translated.
"By law, France and Poland require that all business-related information and documentation on web sites be translated to the local language," says Hermes Europe's Bense. "Translating a web shop according to the needs of respective target groups is especially a big issue in the European market, where there are 27 independent member states that differ by their languages, business habits and marketing cultures."
Once a retailer has translated its web site, it needs to localize it, which means taking into account cultural nuances within the target market that can influence a consumer's purchasing decision. That includes creating promotions specific to a country that rival those offered by competitors and tailoring product selection to local consumer preferences.