Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Most online retailers have avoided the global market, citing numerous obstacles. But the topic is getting more interest these days and was addressed by speakers and exhibitors at eTail 2004 East in Fort Lauderdale this week.
The international promise of the Internet has until now been mostly that-promise. In spite of success in selling overseas by such leaders as Amazon and Office Depot, most online retailers have avoided the market, citing numerous obstacles such as delivery, customs, taxes, payment, fraud and customer service. But the topic is getting more interest these days and was addressed by speakers and exhibitors at eTail 2004 East in Fort Lauderdale this week.
Ed Bussey, senior vice president of FigLeaves, a U.K.-based online retailer of underwear that expanded into the U.S. and opened an office in New York last December, walked attendees through the process of conquering overseas sales. His advice: Do research and tread cautiously. He pointed out that FigLeaves took three years from its first test of the U.S. market to the opening of its New York office. “It’s not something you can rush into unless you have a lot of money to throw into it, which we didn’t have,” he said.
In the first year, FigLeaves settled such issues as shipping products to the U.S., working out an international courier deal, establishing a U.S. returns operation and dealing with duties, taxes and fraud.
In year 2, the company dealt with translating the site from British English to American English, trying out different marketing deals, testing different approaches to merchandising and refining the U.S. site to reflect U.S. tastes. “U.S. shoppers liked different forms of navigation and different page layouts,” he said.
In year 3, it undertook low-risk marketing, such as search engine marketing, launched on Amazon and started online customer surveys.
The strategy has been successful, Bussey reported, with U.S. sales growing 15-fold from June 2003 through May this year.
Among Bussey’s tips for overseas success:
--get quality advice on duties, taxes, fraud and returns
--mix home country and foreign country staff in the overseas market, as opposed to staffing completely with one or the other
--provide the overseas operations as much autonomy as possible
--plan for delay. “It takes twice as long as you think it will take,” he said.
Exhibiting at the show was Comerxia, which provides a turnkey service for retailers to sell overseas, including site translation, marketing, fulfillment, payments processing and customer service. The company supports seven languages, with Japanese being its newest, and plans to offer services for retailers to sell into South Korea and China in the next few weeks, Brent Rusick, CEO, tells InternetRetailer.com. Rusick says interest from retailers has been increasing.
In addition, payment provider PayPal is moving into the international market, Todd Pearson, general manager, merchant services, who chaired a series of sessions at eTail, says. PayPal recently started a service in Germany, with other countries to follow, he says.
To meet the new markets, PayPal is growing its engineering staff by 100% a year to tackle such issues as translation into local languages, dealing with customer service and accommodating multiple currencies. Compounding the problems, Pearson notes, is that European payment systems and European consumer payment preferences are very different from American. “Often, the payment system is very opaque,” he says.
“Selling internationally is a very current issue,” he says. “Many retailers are multinational, but typically with their core in the U.S. They want to know how to get into the other markets.”