Retailers shift their ad spending from TV, radio and print ads to digital ads.
The World Wide Web is becoming a worldwide bazaar, as a growing array of border-hopping services make it possible for e-retailers to target shoppers everywhere.
The price of a made-to-order wedding gown on 360Buy, an e-retailer based in Beijing, retails for one-fifth to one-sixth the price of a similar dress purchased in the United States. Manufacturing takes about three weeks and free shipping is available. That sort of price and speed—any North American bride who's ever ordered a custom wedding dress can tell you the lead time is usually six months—could shake up bridal retailing far beyond China. That's because 360Buy, one of China's largest e-retailers, last month launched an English-language version of its site and started selling made-in-China goods to consumers in 35 countries, including the United States.
Other China-based sites aiming to establish themselves as global e-retailers, such as SooBest.com and Milanoo.com, advertise their access to China's factories, and the price advantages that access provides. SooBest.com, which describes itself as a transnational B2B2C e-commerce platform, uses the tagline "Manufacturers to Consumers! Wholesale prices everyday!" on every site page, for example. A consumer can buy a pair of knee-high suede boots from the retailer for about $40 and have them arrive from Hong Kong in about two weeks with free shipping. Opt to pay for shipping and she can get them faster.
Nor is new competition only coming from China. Web retailers the world over are taking steps to expand their target markets, increasingly overcoming the obstacles of geography and borders. A consumer in Russia can place an order with U.K. apparel e-retailer Asos, for example, and expect it to arrive within 11-12 days. A U.S. consumer can anticipate delivery in six. In both cases shipping, and return shipping, are free.
These overseas merchants are following the lead of U.S. e-retailers that over the past decade have penetrated foreign markets. Amazon.com Inc., for example, is not only the top North American e-retailer but also No. 1 in Europe and No. 7 in Latin America, according to Internet Retailer research. That research also shows that 25% of e-retail sales made by the largest e-commerce players in Europe have U.S. roots; in Latin America it's 14%.
New services are making it easier for U.S. retailers, and their overseas counterparts, to use the web to expand international sales even more, making it matter a little less everyday where home base is. Toys 'R' Us last month began working with international e-commerce and delivery services vendor i-parcel to sell to online consumers in 68 countries in Asia, the Caribbean, Europe and the Americas, for example. McKeon Products Inc., a manufacturer based in Warren, Mich., in May began selling its Mack's brand of earplugs to Chinese consumers through Tmall, a marketplace operated by China's Alibaba Group, by leveraging a new service from vendor Export Now. Jennifer True, international sales director for McKeon Products, says the manufacturer already sells hundreds of units through Tmall each month, and that sales are rising.
For web retailers these developments mean two things: their competitors are no longer just domestic companies, and if merchants aren't already viewing their market space in global terms, it may be time to take a closer look at services can help them see, and seize, the opportunity.
Breaking into a market
True says she began exploring how she could sell Mack's earplugs to China after Chinese consumers began asking True via e-mail how they could get them. Export Now, a vendor with dual headquarters in Akron, Ohio, and Shanghai, helped the manufacturer respond to that demand.
To get its goods to China, Mack's sends its products to an Export Now facility in Long Beach, Calif., where they are consolidated with products from other client retailers and shipped via ocean freight to Export Now's warehouse in China. Export Now ships Mack's items to Chinese consumers as they are ordered; delivery typically takes two days for a minimal shipping fee of around 50 cents, says Frank Lavin, CEO of the 2-year-old Export Now.
The vendor also handles customer service inquiries on behalf of McKeon Products, something True says the company could not do on its own, and which Lavin says is particularly important to Chinese consumers. He says Chinese consumers require more service and assurance than their Western counterparts, and that more than half of the orders his company processes via Tmall include a customer inquiry.
Lavin says the sign-up fee for the service is around $3,000, and Export Now takes a 20% cut of each sale. The fee covers logistics, compliance, legal and regulatory hurdles, and translation services, including for product descriptions and ad copy, among other things. Export Now began handling sales on Tmall for Western brands nine months ago and now works with about 21 U.S. brands. Other Export Now clients include brands with Western caché such as the National Football League and California-based winemakers. Brands can choose to list on Export Now's shopping portal on Tmall or can have Export Now help them build their own standalone shops on the marketplace.
Lavin tells his clients to expect their Tmall sales to total 10-25% of their U.S. revenue within two years. "You've got this entire generation of wealthy Chinese consumers," Lavin says. "These consumers increasingly want sophisticated cool stuff. They want the iPods and the Levi's jeans. And brands can command a premium."
Western brands are also getting help selling to online consumers in the Middle East. Swiss Watch International, a unit of the Hollywood, Fla.-based SWI Group, which also owns the e-retail sites WorldofWatches.com and Smartbargains.com, sells watches, sunglasses, jewelry, pens and handbags into the region by working with MarkaVIP. MarkaVIP is a network of eight flash-sale sites serving consumers in such countries as Jordan, Saudi Arabia and Kuwait. For the past year, Swiss Watch International has been running seven or eight sales per week on MarkaVIP, says SWI Group co-CEO Izac Ben-Shmuel. Marka means "brand" in Arabic.