A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
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J.C. Williams Group Ltd., which is conducting ongoing research with retailers expanding globally, is finding that complying with local regulations is one of the biggest hurdles to selling abroad. Retailers report difficulties with everything from labeling and advertising laws to return policies.
For instance, Swedish law requires an invoice in every box, says Maris Daugherty, senior consultant at J.C. Williams. A packing list does not suffice. Moreover, laws in some countries change if the retailer has a bricks-and-mortar location, she says. For example, in Canada, the French language laws in Quebec require that merchants have the same amount of French as English on web sites and all media. But the law only applies if the retailer has a business on the ground.
More than just sales
Casual Male Retail Group Inc. believes the best way to learn about a country is by dealing directly with the people who live there. That`s why the retailer launched several European e-commerce sites last year to learn about the market before opening stores in Europe. It`s part of a plan to use the web to gather information about European tastes before it opens stores on the continent, says Dennis Hernreich, executive vice president, chief operating officer and chief financial officer.
"We have to know not just the total dollars, but what is the style in Europe, what styles do they show a propensity for that we don`t have in the U.S., what sizes are important in Europe that are not in the U.S.," he says.
It`s one thing to launch an e-commerce site to learn about different tastes and cultures of foreign consumers, but offering quality customer service to shoppers abroad can be a whole other hurdle. Retailers that operate globally must establish a way to get help-for themselves and their customers-at all hours of the day. "If you have a web site in Japanese, and customers are having problems and your vendor is in bed in Boston, you`re going to have problems," Max says.
To support its new global customers, DNA 11 says it had to expand its customer service. It uses an outsourced call center for customer support after hours in English and French.
"When we do get German or Spanish requests we sometimes use software such as Babelfish or internal resources to handle the requests as best we can, but it`s not how I recommend doing things," Salamunovic says. "Being globalized means that you will likely experience some customer support growing pains, but it`s important to get creative on how you deal with things on a case-by-case basis."
While tackling country regulations, language barriers and marketing styles is no easy feat, many retailers say it`s a cakewalk compared to international shipping and fulfillment.
For retailers that don`t want to deal with the complexity of customs, taxes, duties and international shipping, there is help. Services like iShopUSA and Bongo International LLC will take over international shipping, often with no fee to the retailer. These services are designed for U.S.-focused retailers that aren`t prepared to build web sites targeted at other markets, but don`t want to miss out on occasional international sales.
Fred Hord, CEO of online shoe shops MyGlassSlipper.com, BridalShoes.com and PromShoes.com, added Bongo to his retail site because of the headaches he experienced with international shipping. "The amount of papers to fill out was horrible and time-consuming," Hord says. "You have to provide tax numbers and country of origin. Every time I tried to do it for a customer there was a problem."
About 3% to 5% of Hord`s sales come from international customers, which amount to about $50,000 annually. That was money Hord didn`t want to leave on the table, so when he heard about Bongo, he jumped on it.
International shoppers pay a fee to Bongo to register for a domestic address, which they can then provide to a U.S.-based e-retailer when ordering. Bongo takes receipt of goods at the U.S. location and ships them to the consumer. Users can register at Bongous.com or through an e-retailer that offers Bongo on its site.
While such services help with international shipping woes, there`s another shipping conundrum retailers must face: customs and duties. Depending on the country of origin, the product type and other factors, global shoppers may have to pay a significant charge-above and beyond international shipping fees-to get their goods once they arrive in their home countries, says Greg Sack, president of sales for Bongo.
Bongo tells shoppers in its FAQs and in a registration e-mail that they are responsible for duties and taxes, which can vary greatly by country and product type. IShop USA gives shoppers the option to include duty and taxes when checking out online.
While these fees can be steep, Hord and Sack point out that many foreign shoppers are willing to pay significantly more for products from the U.S. because they often simply can`t find them anywhere else. "Sometimes it`s a $50 shoe, sometimes its $500, but if a bride falls in love with it, she is willing to pay," Hord says.
To get around having to charge customs and fees, some retailers partner with manufacturers in other countries that can produce goods locally, thus avoiding duties. For example, DNA 11 has engaged a canvas printing company in the U.K. that has the same equipment as the retailer`s North American facilities. It sends packages to European consumers from that warehouse to get around customs and duties, the retailer says.
"When you are starting out in these European regions, you don`t need to spend a ton of money on overhead and setting up a warehouse," says Nazim Ahmed, co-founder of DNA 11. "Just focus on sales and revenue first. When the volumes really pick up and it then makes sense to set up your own warehouse or manufacturing in those regions, look at it then."