In its second-largest acquisition, Amazon buys the company for $970 million.
(Page 2 of 3)
The retailer sets aside the products it will sell via MarkaVIP and once the sale concludes, MarkaVIP pays the retailer a pre-negotiated price for the goods sold. MarkaVIP takes possession of the goods from Swiss Watch International's warehouse in South Florida and ships the products to its distribution centers in the Middle East.
The marketplace, the 2-year-old brain child of ex-Zazzle.com I.T. director Ahmed Alkhatib—has laid the groundwork with customs agencies in each country so that its shipments get cleared in transit rather than once they arrive. This shaves about 2-3 days off the delivery time, a MarkaVIP spokesman says. "We are on the lists of trusted companies in government customs agencies and therefore our items get cleared very fast." It took roughly one-to-two years to get these approvals, the spokesman says.
85% of MarkaVIP's shoppers pay with cash when an item is delivered. MarkaVIP drivers deliver orders and accept payments. If the shopper chooses to pay with a payment card, the driver swipes it on a credit card terminal he carries with him. The retailer works with local banks for payment gateway services so that it can accept regional payment cards.
These kinds of systems would be tough for a retailer to set up on their own, Alkhatib says. "Each country has its own laws and policies," he says. "In a way it's like we are running eight separate private-sales sites—one for each country."
"They are a really great way to enter a market our brands didn't have exposure to," Ben-Shmuel says. "Marka has done a unique job in being able to penetrate an e-commerce market which is under-tapped."
Web sales in the Middle East are projected to grow 81.8% from $1.1 billion in 2011 to $2.0 billion in 2016, according to Aramax International, a fulfillment vendor that serves businesses selling in the Middle East. Swiss Watch International also sells its goods to consumers online in Europe, China, Korea, Mexico and Canada through other private-sale sites, but Ben-Shmuel says he never had access to the Middle East until MarkaVIP came along.
For now, MarkaVIP doesn't charge brands and retailers to list on its site, instead making its money off the margin it adds to the sale price. Alkhatib declines to reveal the margin. In the future, MarkaVIP plans to generate additional income by charging brands and merchants for access to customer purchasing behavior and other analytics data. MarkaVIP has 2 million members, 360 employees and has raised more than $10 million in funding. About half of the goods the marketplace sells are products and brands that are hard to get in the region, Alkhatib says.
At your service
Catering to international shoppers' needs—as Export Now does for Chinese consumers with a little extra hand-holding—can help increase a retailer's bottom line, as Skooba Design discovered. The manufacturer of bags for laptops and other electronic devices retooled its site in 2010 to recognize where shoppers are coming from by their IP addresses, and it automatically offers international shoppers a discount code to defray shipping costs. The code appears in a live chat message. Then at checkout, instead of showing delivery rates for UPS, the retailer's domestic carrier, it shows U.S. Postal Service rates, which are 30-50% lower than those of UPS for foreign deliveries, says CEO Michael Hess. Prices appear in the shopper's local currency.
International customers now account for 15% of online sales, compared with less than 1% before the redesign, Hess says. Canada, the U.K. and Australia are Skooba Design's top foreign markets.
Figuring out intricacies of payments and delivery also helped Australia-based e-retailer VurgeJewellery.com expand its sales from its home market to more than 40 countries. Originally launched as an eBay.com storefront, it now runs VurgeJewellery.com and eight more niche accessories sites, says co-owner Nathan Hartnett.
Hartnett says the e-retailer accepts international payments through PayPal because it is widely used in many countries, and elects to ship internationally via FedEx because most packages arrive in 2-3 business days, and the consumer can track the package's progress. While costlier than shipping by Australia Post, FedEx is faster and tracking is important to consumers, he says.
Hartnett had to make adjustments to his sales strategy to account for the higher shipping costs. That's why the minimum purchase amount to qualify for free shipping outside Australia is $150, in Australian dollars, compared with $60 for orders going to customers in Australia, he says.
For Boston-based audio equipment e-retailer Tivoli Audio, which sells in about 30 countries mainly in Europe, language was a primary barrier to entry. It turned to Interpro Translation Solutions for help. Retailers using the service first translate key terms related to product descriptions to words and phrases native speakers would use. Tivoli, for example, translated complex audio terms such as "analog tooling dial," and then sent a glossary of the translated phrases to a native speaker to check that they made sense. "This made sure we had key terms for things like product descriptions and instructions correct," says Kyle Allain, e-commerce manager. After developing an initial glossary of key terms, Interpro translated the remaining web content, referencing this initial glossary for terminology consistency.
Rodanthe, N.C..-based kiteboard and sports gear e-retailer Best Kiteboarding takes another tack. Terms for the sport often don't make sense when run through automated translation systems, says Troy Lawson, chief technology officer for Pure Action Sports Worldwide Inc., the e-retailer's parent company. For instance, kiteboarders in Spain still use the word "kite" when referring to the sport, instead of the formally correct Spanish word, paplote. Now it hires kiteboarders who speak the local language for help with translation, and takes cues from its sales reps on the ground. Besides English, the site is available in French, German and Spanish.