E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Going global isn’t as hard as it looks, but e-retailers should take some basic steps to help assure their success.
Consumers outside North America will buy $1 trillion worth of goods this year online, and there are a growing number of services that can help e-retailers reach those shoppers It's a big world for e-retailers, what with 90% of the world's population living outside North America, and those that are not yet making the most of reaching consumers beyond U.S. borders are missing out on a huge opportunity. Global business-to-consumer e-commerce sales are projected to top $1.25 trillion in 2013, according to the Interactive Media in Retail Group, a U.K.-based online retail trade organization. Consumers outside of the United States and Canada will account for roughly 80% of those purchases.
Some of the booming overseas markets include Europe, where e-commerce sales in Southern and Eastern Europe are growing rapidly; Asia, where e-commerce sales in China alone could surpass those of the United States this year; and Latin America, which many e-commerce experts feel is a hidden gem.
So what's holding back many U.S. e-retailers from cashing in big on international markets? Many believe that selling internationally is harder and more complicated than it is. Many retailers look at shipping to countries with no postal codes, of which there are about 70, overcoming the language, cultural and consumer behavior differences, facilitating convenient returns, especially for customers living in rural areas, and same-day delivery—a must in many large Asian cities—as deterrents rather than solvable problems.
"There is a myth among many retailers that international sales are too complicated, but that is far from the case," says Jaime Basagoitia, vice president and general manager for TransExpress, a provider of international transportation and logistics services to Latin America and the Caribbean. "What retailers need are partners that can help them understand that overcoming the hurdles to selling internationally is easier than they think."
Localized web sites
Best practices for retailers selling internationally start with localizing their web sites. While many retailers interpret this to mean designing a site specific to each country, all it really requires is making sure they answer questions international shoppers might have about products before they click the Buy button.
Setting up a customer service center staffed with agents who speak the local language, translating frequently asked questions, offering international size charts for apparel, and using high-resolution images and displaying multiple views of products will answer most international shoppers' questions.
"There are a lot of things a retailer can do to address many of the local nuances of selling to international shoppers without having to create a country-specific site," says Max Niclas Bense, international business development manager for Hermes Europe, a provider of supply chain, sourcing, transport logistics, e-commerce, fulfillment and consumer goods distribution services. "The key is to make sure the customer feels confident they are getting exactly what they want so they are not disappointed when the item arrives."
One aspect of localization retailers tend to overlook is delivery. The formats used to address packages vary by country—addresses for packages sent to Brazil require six lines versus three in the United States, for instance—and getting those formats wrong can prevent packages from reaching customers.
"A lot of retailers shipping to customers in Brazil will compress an address into three lines just as they do in the U.S., which can lead the shipping carrier to deem the address to be incorrect," says Charles Gaddy, business development manager, global solutions, for Melissa Data Corp., a provider of data quality and address management solutions.
Germany is another country where retailers often make mistakes formatting the address, Gaddy says. German addresses require the street name to be in front of the house or building number, and the postal code in front of the town. For example: Herr Karl Schultz, Strassa 123, D-66123 Munich.
Many U.S. retailers will invert the address data to fit the U.S. address format, which can confuse German postal carriers.
"Getting the address right is critical to delivery and if an address is formatted wrong the item may not get delivered or the retailer may have to pay to get the address corrected," Gaddy says. "Retailers not only need to step out of their domestic practices when shipping internationally to make sure they have the right address formats, but include the right shipping information, because the cost of an incorrectly addressed package can be a returned item and the loss of that customer's business."
Minimize shipping costs
As is the case when shipping domestically, retailers want to keep the delivery costs down when shipping internationally. One solution is to partner with an international shipping company that operates a warehouse where international packages can initially be shipped in the United States, resorted, and then shipped to the customer using the destination country's local postal service.
The process can save consumers as much as 70% off the cost of international shipping through a third-party carrier such as DHL or FedEx, according to TransExpress' Basagoitia. "That's a substantial savings," he says.
Retailers utilizing TransExpress ship packages destined for Latin America and the Caribbean to the vendor's Miami warehouse. From there, the documentation needed to clear the package through customs is completed, duty is calculated and the consumer informed of the tax due and the final shipping cost. The package is then shipped to the customer using either TransExpress' own distribution network or the local postal service. TransExpress provides e-commerce support for a number of postal services in the region as well. Consumers are billed by TransExpress for the final shipping leg and pay any duty and tax upon receipt of the package. Retailers using TransExpress' service include the Walt Disney Co. and Universal Studios.
The company also markets its services directly to consumers. The shipping process is the same, only the customer provides the retailer with the address for TransExpress' warehouse at the time of order, resulting in a charge for domestic shipping. Consumers provide TransExpress with the address they want their packages sent to and TransExpress completes the order once the package is received. The company has signed up more than 600,000 consumers for its service.