A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
When it comes to selling into global markets, cultural aspects are as important as technology and operations.
With the Internet reducing the virtual distance between countries and rise of technology that greases the wheels on operations like fulfillment and currency conversion, it might seem an easy matter for U.S. online retailers to flip the right switch to sell abroad. But cultural differences in marketing across borders complicate the picture, as shoemaker Nike learned the hard way.
When Nike launched a shoe in the Middle East bearing a decorative element meant to suggest the shape of a flame, Muslim consumers instead saw in the outline of the design a shape that, to them, suggested Arabic script for Allah. Placing the deity’s symbol so close to the sole of the foot-considered unclean in the culture-led to a marketing controversy and even a brief boycott of Nike before the company made amends for its blunder.
Customs and culture
Nike’s story, though extreme, illustrates the point that in selling online in other countries, success requires more than the right technology-it pays to study up on the local customs and culture, too.
And the concern is not just in product and product display-it’s in how consumers shop, too. In the U.K., for example, online electronics retailer Etronics Inc. has found online shoppers aren’t as inclined to use shopping engines, and that Google search isn’t driving the volume of retail traffic that it does here. “In England, a lot of the ad spend is on banner ads,” says marketing manager David Dwek. “Here, direct response sellers don’t use banner ads so much.”
With so much invested in technology in what may be ninth and tenthgeneration web sites here, it’s tempting for U.S. eretailers to approach foreign markets with the thought of just plugging in abroad what’s been painstakingly refined to work well at home. But if they do so without reviewing cultural considerations that bear adjustment on the site or in the online marketing plan-some obvious, some less so-they do so at their own peril.
“When retailers go into a new market, they often focus so heavily on logistical issues that they overlook cultural and linguistic issues,” says John Yunker, president of Byte Level Research, which advises retailers on selling into overseas markets. In the apparelselling realm, for example, certain countries are sensitive to the failure to use local models, Yunker says. Some cultures are offended by the amount of skin that is displayed without a second thought on some U.S. apparel sites; certain poses are also considered offensive.
Other differences that can affect efforts to sell online abroad may be less immediately apparent and buried deeper in the culture, such as, for example, how people like to shop. One mistake made early on by U.S. retailers operating in the German market is that Germans shop the way Americans do-but it’s a debit card, not a credit card, culture.
Here’s another example: In China, though the rate of Internet penetration at about 7% is still low, growth prospects and interest in Western goods have many online retailers eager to gain a foothold. But U.S. retail sites operate on a fixed price basis and it’s the habit of Chinese consumers to negotiate a price on most things. U.S. online retailers haven’t yet had to figure out whether or how to accommodate that capacity on their web sites because the relatively few Chinese shopping U.S. sites accept that they are shopping in a different environment with different rules and customs-but evolution and eventual competition will change that, says Brent Rusick, CEO of cross border fulfillment and logistics provider Comerxia Inc.
And what Rusick says about China also applies to any emerging online marketplace. “Supply and demand are driving that business today as opposed to customer experience, but that will evolve,” he says. “As the world as a marketplace continues to shrink, it will move from supply and demand being the big drivers to customer experience, price, and how well you communicate to consumers in a local way that’s comfortable for them.”
eBay.com, Sweden’s Ikea, and a few others have already moved in that direction, having localized international web site templates for multiple countries. Some of the largest retailers have been slower to create a foreign web presence. Though it has stores all over Canada, WalMart Stores Inc., for example, has yet to go online there. Other large U.S.based retailers are somewhere in the middle; Sears Holdings Corp.’s Lands’ End, for instance, which handles sales from around the world through its catalog and call center, also has dedicated web sites in Germany, the United Kingdom and Japan.
A resource game
As with any other retailer initiative, exporting a web site is a resource game. Traffic and, most importantly, sales must justify what can be a significant investment in dedicating a foreignlanguage site, and most retailers take interim steps before making that commitment. Fulfillment and logistics platforms such as Comerxia’s allow U.S. online retailers to sell in other countries without having dedicated, countyspecific web sites to do so, and that’s one way to grow a customer base into one that will justify the launch of a dedicated site.
“The subject of international orders come up quite a bit,” says Tom Lindmeier, director of ecommerce at web and catalog retailer Junonia, which sells plussized women’s active apparel. “Our metrics tell us that if we want to go overseas, Great Britain would be a great place for us to go. They are already finding us over there. But we are a fairly small organization, so we have to make a decision: there is this much interest, but what is our payback?”
So far, that rationale has ruled out dedicated foreign web sites for Junonia and focused accommodations on the site for exU.S. customers largely on those for Canada. Junonia is currently streamlining the checkout process for Canadian customers and is working on negotiating a better shipping rate to Canada with UPS. The site currently directs online shoppers from anywhere else to its call center to place an order.