A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
Some retailers are setting sail for international sales but taking two very different routes.
American e-retailers have met with great success as e-commerce has rapidly grown during the last 15 years to become part of the mainstream of shopping. In other countries, however, e-retailing has yet to achieve that status. Internet retailers overseas are providing a web shopping experience akin to what their American counterparts were doing five or so years ago, and consumers in other countries are just becoming comfortable with shopping and sharing financial information online, researchers and analysts say.
But online shopping and sales are growing significantly in Europe, Asia and South America, and the U.S. dollar continues to weaken, giving foreign shoppers extra buying power. There’s opportunity overseas, and some retailers are expanding their operations to serve the international marketplace.
Casual Male Retail Group Inc., Goldspeed.com Inc., Overstock.com Inc. and The Timberland Co., for example, are serving shoppers overseas via their existing sites or country-specific sites. They’re seeking to increase sales to boost the bottom line, create larger footprints for their brands, and acquire new customers as the pool of American Internet users who have never shopped online decreases. “European e-commerce growth rates are phenomenal, and international sales will very much be a growth engine for us,” says Troy Brown, senior director and general manager of e-commerce at Timberland.
Some retailers see the global market being where the U.S. was several years ago, but catching up. “That gap is closing. And Europeans particularly are increasing their shopping on the web,” says Dennis R. Hernreich, executive vice president, chief operating officer and chief financial officer at Casual Male. The multi-channel retailer in August will open its online doors in the U.K., France, Germany, Italy, Spain and the Netherlands. “The international scene in e-commerce is very promising.”
The weak dollar
Promising is not the word for the U.S. dollar. As it has weakened in recent years, it has made American goods more enticing to foreign buyers.
“Our overseas sales are up 25% in the first quarter of 2008 compared with the first quarter of 2007, and the weak U.S. dollar has a lot to do with it,” says Neil Kugelman, CEO of Goldspeed.com, which handles international orders through its existing site. “Today a shopper in the U.K. looking to buy a watch can purchase it online at Goldspeed.com and pay less than they would at home, even including shipping, duties and taxes.”
Retailers heading overseas see the most promise in Europe, where online sales are growing fast. In the 10 largest markets in Europe between 2006 and 2012, online retail sales will grow 137% from €56.9 billion to €134.8 billion, Jupiter Research projects. (For breakout of countries, see chart, page 148.)
Casual Male, a multi-channel apparel retailer for big and tall men, chose Europe first for six country-specific sites because e-commerce is growing quickly there and because its e-commerce platform vendor, GSI Commerce Inc., has experience operating online stores in those countries.
GSI Commerce will be responsible for web site design, order processing, fulfillment and call center services for each web store. Each store will include the same features and functions as the U.S. site. GSI will localize country-specific components, such as online payment processing, content translation and customer service.
“It is our goal to do business across all of the European Union, and this is a logical way to start,” Hernreich says. Casual Male chose not to create more than the six international e-commerce sites because it wants first to better understand the European market. “There will be differences in what Americans wear versus Europeans,” Hernreich says. “We will learn, and our assortments will vary from what we do in America as we learn more. This is a good reason not to launch across the entire world all at once.”
Like Casual Male, Timberland is building separate web sites to enter online sales overseas. The merchant launched its first international site, in the U.K., in October. It will launch online stores in France, Germany, Italy and Spain later this year. The stores will operate on an e-commerce platform from Demandware Inc.
Timberland, which operates stores in Europe, will create foreign sites patterned to an extent on its American site, though it will use them as a testing ground for new concepts and technologies it is keeping under wraps. It will localize the sites with languages and currencies while ensuring, through the expertise of its country managers and store staff, that product descriptions and other content reflect the cultures of the countries.
The multi-channel retailer believes having a distinct web site for each country is important because it already has bricks-and-mortar stores in these countries; the online channel should complement the stores. Offering an e-commerce site in shoppers’ native tongues increases the number of potential customers and provides a web experience that foreign shoppers will come to expect, Brown says.
Timberland has a leg up when it comes to establishing an international online presence: 45% of its $1.5 billion in sales come from outside the U.S. via retail stores and wholesale operations. And Europe is one of the retailer’s strongest markets. “We chose these countries for e-commerce because we have the brand presence,” Brown says. “It makes sense for us to leverage what we have on the ground for online and continue to go where we have strength.”
While Timberland has a U.K. online store up and running, Goldspeed.com is testing one. But it has been handling orders from numerous foreign countries in a much different way, taking them on its existing site.
It went into international e-commerce after receiving a significant number of inquiries from foreign consumers. It advertises international ordering prominently on its home page and does not see the need to set up multiple country-specific sites yet because of the growth it already has been receiving in international sales. Consumers from numerous countries shop the site; it is especially strong with consumers from Europe, particularly the U.K., Ireland and Belgium.
The same experience
The shopping experience is the same for overseas shoppers as for U.S. shoppers. When it’s time to place an order, an overseas customer selects international shipping, for which the e-retailer charges a flat rate. It established a flat rate that takes into account the varying prices of shipping to different countries so that for the most part fluctuations in shipping charges come out in the wash.