5/02/14

Off to market(places)

New services make it easier for North American retailers to sell via online marketplaces to shoppers around the world. And not just on Amazon and eBay.

Allison Enright , Editor

BHFO Inc. last year sold $25 million worth of designer apparel, with all of those sales coming through the e-retailer's storefront on eBay Inc.'s U.S. marketplace. What's more, 30% of those sales, about $7.5 million, came from international shoppers, says Stacie Sefton, CEO of the Cedar Rapids, Iowa-based e-retailer. That international sales volume outpaces eBay's own average; eBay says based on gross merchandise value, 20% of goods bought through eBay.com are exported.

It's a similar story at Goja LLC, a 5-year-old e-retailer that sells camera lenses and related accessories. Goja sold $8.7 million worth of merchandise last year—all of it through online marketplaces operated by eBay and Amazon.com Inc.—and it shipped about 20% of its orders to international customers. "We have been international from day one," says Goja president Walter Gonzalez.

Both e-retailers say they've figured out how to ship to and serve international consumers shopping on U.S. marketplaces, and they're poised and ready to expand international sales. Sefton says BHFO will be selling on at least one international marketplace before the start of the holiday season. On her short list are localized marketplace sites serving consumers in Latin America, Japan, New Zealand and China.

Gonzalez, meanwhile, says Digital Goja will be up and running on at least one MercadoLibre Inc.-operated marketplace in the next six months. MercadoLibre is Latin America's closest equivalent to eBay—in fact, eBay owns nearly 20% of the company—and operates localized online marketplaces in 13 Latin American countries. It accounted for more than 15% of e-commerce sales in the region in 2012, according to the Internet Retailer 2013 Latin America 400. Digital Goja is also queuing up storefronts on eBay.co.uk and eBay.ca to more directly target consumers in the United Kingdom and Canada; it's also in talks with Amazon to list on Amazon.ca.

These e-retailers, and many other U.S.-based e-retailers, are eyeing international opportunities. In Shop.org and Forrester Research Inc.'s most recent "State of Retailing Online" survey, 14% of U.S. merchants put investing in international sales as one of their top four priorities for 2014. It's easy to see why: E-retail growth is global. Numerous forecasts show that online sales growth in regions like Latin America and China far outpace that of the United States. For example, Forrester projects web sales in Argentina, Brazil and Mexico will grow 135% by 2018. But in the United States, where e-commerce is much larger than in Latin America, growth is expected to taper off, growing 14.6% this year, 14.2% in 2015, 13.6% in 2016 and 12.8% in 2017, according to U.S. market research firm eMarketer Inc.

Seeing the shifting sands, online marketplaces and service providers that already support marketplace sellers stateside are trying to make global selling easier, offering services that aim to make selling internationally as straightforward as selling to someone next door. These services include calculating total order costs at checkout, shipping assistance and marketplace management.

E-retailer TechArmor.com began selling its branded screen protectors and phone accessories on online marketplaces in late 2012, and sales have taken off like a shot. The Redondo Beach, Calif.-based e-retailer shipped 2.5 million units last year, with 70% of its sales coming through the marketplace listings it maintains on Amazon, eBay, BestBuy.com, Newegg.com and Rakuten.com Shopping. Co-founders Eric Tong and Joseph Jaconi say the majority of its sales today come through Amazon.com marketplace listings—Amazon was the first place they listed Tech Armor products, and many of its screen protectors rank at or near the top in Amazon search results for such products.

Tong and Jaconi say they, like Digital Goja, planned to sell internationally from the start, and began selling to Canadian consumers in January 2013. Initially, though, they ran into some problems common to e-retailers trying to ship goods across borders. "Products got stuck in customs and deliveries were delayed," Tong says. "We were not delivering the same experience to customers there as we were in the U.S."

Tech Armor decided to switch from shipping orders placed on Amazon to using Fulfillment by Amazon, and letting Amazon handle the logistics of cross-border delivery through its Export feature. Fulfillment by Amazon (FBA) is a warehousing and shipping service managed by the e-retailing giant's Amazon Services division. FBA Export lets U.S. retailers ship at no additional charge to customers in more than 60 countries, although there are some restrictions on products that can be shipped internationally through the program.

To get started with FBA, Tech Armor shipped stock from its Southern California warehouse to Amazon's distribution center in Hebron, Ky. From there, Amazon spread Tech Armor's stock around its U.S. warehouses to meet shipping demands, and shipped from the U.S. centers into Canada. After consumers in Canada and Europe started buying more from Tech Armor through Amazon's U.S. site, the e-retailer created listings on Amazon's localized sites in Canada, Germany, France, Spain, Italy and Japan, and chose to warehouse goods through FBA facilities in Canada and the United Kingdom. Most of Tech Armor's products are manufactured in Asia, and to save on shipping and import costs, and time, its suppliers now ship stock directly to the international FBA facilities on Tech Armor's behalf.

In 2014, Tech Armor also began to house stock at FBA facilities in Italy and France, and Jaconi says it'll add facilities in Germany and Spain in the coming months. "The reason we started to move directly into those markets and warehouses was the service standpoint," Jaconi says. "We feel it is a much better experience [for consumers] to have the products the next day. We are investing and believe in the future of that." With stock residing closer to customers, FBA often gets Tech Armor orders to them the next day, he says.

All 96 of the distribution centers Amazon says it operated globally last year offered FBA storage and shipping for marketplace sellers, including one in India that is only for FBA at this time, says Tom Taylor, vice president of seller services at Amazon.

Whether Tech Armor can maintain its service level is a deciding factor for where the merchant goes next, and service is more than just fulfillment, the e-retailer says. For example, while the same photos can appear across marketplaces, the text has to be translated. Tech Armor does some of that in-house using translation software, then enlists human translators to refine the wording. And while customer service inquires related to the initial transaction are handled by Amazon as part of FBA, post-purchase inquiries come directly to Tech Armor—Tong says most customer service requests from international consumers come via e-mail—which means it needs to be able to read and respond in the customer's language. That's a lot for Tech Armor's 20-person staff to handle.

Still, the e-retailer isn't slowing its global march, and Tong credits outsourcing most of its shipping to FBA as a reason why Tech Armor has been able to scale quickly around the world. "We let them do the shipping and it allows us to focus on other areas," he says. The retailer is currently in talks with Amazon India to see how it can sell and fulfill products there; it expects to be live there at some point this summer. Tong says Tech Armor is also looking at its options for selling on MercadoLibre in Latin America and in China on Tmall, one of two huge online shopping portals operated by Alibaba Group Holding Ltd., which has announced plans for an initial public offering in the United States this year.

Selling on Amazon.com and eBay.com domestically has proven fruitful for DealYard, a web-only e-retailer that sells kitchen hardware and small appliances. CEO Rob Heller says 85% of DealYard's 2013 sales came through the two U.S. sites last year and 2% of those sales were from international shoppers. He says the majority of its marketplace sales come through Amazon, but that when it comes to drawing international shoppers' pounds and euros, DealYard gets 2.5 times as many international sales on eBay than Amazon. That's a big reason why DealYard started using eBay's Global Shipping Program (GSP), a service eBay began offering in August 2012 in conjunction with mailing service provider Pitney Bowes Inc.

When an international shopper clicks to buy a DealYard product listed on eBay—DealYard's products are cross-listed across eBay's local sites globally if the item is eligible to ship to that market—he sees the fully landed cost, including customs and duties fees, at checkout. Upon completion of the order, eBay notifies DealYard to ship the item to Pitney Bowes' 53,000-square-foot warehouse in Kentucky—DealYard pays the domestic shipping cost to get it there, about the same cost as if it were shipping to an individual U.S. customer—and Pitney Bowes does the work to transform that domestic shipment into an international one. It ships eligible products to 53 countries, including nine in the Middle East it added in the first quarter of this year. Pitney Bowes and eBay don't charge fees to sellers to use GSP, says Craig Reed, vice president of global e-commerce at Pitney Bowes. Pitney Bowes makes its profit from a fee eBay collects from international shoppers at checkout.

"The GSP allows us to ship to a domestic distribution center, making it very easy and cost-effective for us to offer our products to a much larger audience," Heller says, noting that eBay and Pitney Bowes handle any customer service inquiries related to the delivery of the product. DealYard also uses Amazon FBA Export for some of the products it sells internationally on Amazon.

Using programs like eBay's GSP and Amazon's FBA Export are ways for U.S. merchants to test the waters of international markets and gauge the demand for the products they sell, says Scot Wingo, CEO of ChannelAdvisor Corp., which provides marketplace management services for e-retailers. "A lot of brands and retailers approach cross-border trade and global destinations with a very heavy-loaded approach," he says. "The marketplaces allow you to put a toe in in a lightweight way and ease into it and get earnings and revenue earlier."

ChannelAdvisor announced in March that later this year it will start supporting merchants to sell directly to Latin American consumers on MercadoLibre and to Chinese consumers on Tmall. (Alibaba has set up a shipping service for U.S. merchants called Cainiao that is similar to eBay's GSP. It's available to U.S. merchants selling on Alibaba marketplaces and to merchants that sell direct to Chinese consumers on their own e-retail sites.) Wingo says ChannelAdvisor merchants trying these marketplaces are still in test mode, but interest is high.

Digital Goja, which uses ChannelAdvisor's services to manage its marketplace feeds, intends to continue bootstrapping its international fulfillment processes. The e-retailer's e-commerce engineer Rodrigo Martinez says merchants should go after international opportunities, not fear them. "Fear," he says, "is a bigger issue than the issue itself."

allison@verticalwebmedia.com

@AenrightIR

Topics:

Alibaba Group Holding Ltd., Amazon Services, BHFO, ChannelAdvisor, DealYard.com, eBay, Goja, international selling, international shipping, May 2014 Magazine, online marketplaces, Pitney Bowes, TechArmor

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