Retailers shift their ad spending from TV, radio and print ads to digital ads.
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One thing that doesn’t change from U.S. to foreign markets is the appeal of free delivery. Minimum order sizes for free delivery vary by country but they are similar when the currencies are translated. “It’s a selling tool that works the same in most countries,” Nelson says. In the U.K., the minimum order is £30 (US$44), in Australia it’s $50 (US$27). The average order size is about US$125, and that too, says Nelson, does not vary much among countries.
Understanding local culture, customs and law becomes less onerous with local staff. Nelson says staffing a foreign operation with local employees is critical. “The first person we hire is a new country manager, and he has to be from that country,” he says. That manager must speak both the native tongue and English as well as understand and fit the Viking/Office Depot culture.
The country manager, in turn, oversees all domestic hiring. “The second person in is a merchandiser, who also has to come from the country,” Nelson says. “We send people there to teach them, then we let them run their business.” Each country is different in terms of salary, benefits and social aspects, as well as product, prices and currency, he says.
“It takes a tremendous amount of research and work. The hiring process is enormous,” Nelson says. Local staffing means that when customers call in they will always speak to someone in a native voice, not a translated voice, Nelson says. This also is true for the web help staff. “If a customer from Italy has a problem with our web site, they talk to an Italian; if they’re from Germany, its mother-tongue German,” he says. “We think that’s what customers want.”
Some retail analysts downplay the importance of local management. Sid Doolittle, founding partner with Chicago-based retail consultants McMillian/Doolittle, says it is often the executive from the home country who imparts company values. “Expatriate managers are very useful in transferring a culture,” he says. When Wal-Mart went into the U.K., for instance, it was not able to transfer cultural attitudes toward non-promotional marketing, customer service, organized labor and human relations using national management, he says. “Eventually it replaced the U.K. CEO with one from the U.S.”
Like the staff, the merchandise is mostly of local origin. “We buy 95% of what we sell in a country in that country,” Nelson says. “There are a few global suppliers, but we buy from them locally.” Companies such as 3M or Hewlett-Packard have a local presence in the countries where Office Depot is retailing. The local buying practice stems from customer demand-partly for products made in their native country and partly for brands that can only be found in the native country.
Speaking in tongues
Being local also means the web site must present every ballpoint pen, tape dispenser and printer cartridge in native terms. “The biggest issue is content,” Nelson says. “You’ve got to get all the pictures, graphics and product attributes web enabled. That’s a function of human resources, time and money.” It’s an investment that must be made in every country Office Depot enters.
Besides the language and currency differences, the content changes from country to country based largely on local preference. For example, The Netherlands’ site offers 4,000 products, whereas the Japanese site has 8,000. “The product offering on each site mirrors that country’s catalog,” says Tim Toews, Office Depot’s senior vice president of systems development.
A chunk of the human resources costs include translating words. “English doesn’t always translate word for word,” Nelson says. For example, the word for shopping cart in the U.K. is “trolley”, but when trolley is translated into Japanese it means bus.
Office Depot created a template used when translating its site from English into other languages. “We built tools allowing human translators to type into a template that then goes into a database,” Toews says. Office Depot created a browser-based tool that the business team in each target country could access. This was established before the web site was developed so that the local team could begin translating products into the native language. This allowed the teams to work at their own pace and immediately review the translations on the developing web site.
Translating the language has been fairly simple because there are not a lot of ambiguities in the items and their descriptions, Toews says. “You get some amusing literal translations, such as with ‘trolley’, but it’s been pretty straightforward, even with Japanese, the one we were most concerned with.” Japanese-language web sites present the unique problem of being a double-byte character set language-whereas Latin-based is a single-byte character set. Because the Japanese characters are more complex, they require the additional byte of information to be stored and displayed on the site. “Luckily we were in Japan with systems that were DBC compatible.”
Simple or not, translation is an important issue. “The U.S. retailer can get a small percentage of the international market using only English and U.S. dollars,” Zrike says. “But, to take advantage of international sales, they have to deal with a consumer in his own language-verbal, written and financial.”
Office Depot did not experience currency conversion problems because it created each site to function in the native currency, Toews says. Catalog sales were already conducted in native currency. “The servers and the back-end systems are configured for that national currency,” he says.
He cautions, though, that retailers should think about how much local currency it takes to buy a product. “You run into issues of field size,” Toews says. “Italy’s lira and Japan’s yen need more room for numbers.” The European sites do not show euro pricing, but totals are shown in native denominations and euros.
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