Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Strategies honed in the U.S help Wayfair sell online in the U.K. and Germany.
American know-how is helping Top 500 web merchants such as Wayfair LLC build up their online retailing business in Europe.
Europe is a top e-commerce market for many Top 500 retailers. Of all retailers ranked in the 2013 edition of the Top 500 42%—210—process and ship orders to some or all of the 18 biggest European online retail markets, including the United Kingdom, France and Germany. Based on an analysis of data from the 2013 Top 500 and Internet Retailer’s forthcoming Europe 500, the combined sales of 22 of the largest U.S. web merchants selling online in Europe grew year over year 14.1% to $26.98 billion from $23.64 billion.
But Europe also remains a highly competitive and fragmented e-commerce market with the nature of online retailing distinctive in each of the more than two dozen countries that make up the European Union.
Some Top 500 merchants, such as Wayfair (No. 52), are counting on e-commerce business practices developed and refined in the U.S. to help them gain new web customers and sales in Europe.
After three years Europe only accounts for about 6%—$36 million—of Wayfair's annual web sales of around $600 million. But Wayfair is counting on the same niche retailing strategy it developed in the U.S. to help build business in Europe over the long haul, says CEO Niraj Shah.
Wayfair has doubled its European web sales in the last year by growing the number of products it offers on its e-commerce sites in the United Kingdom and Germany to about 100,000 products, Shah says. In October Wayfair also opened a new headquarters in Berlin and began hiring buyers and other specialists that have since helped Wayfair develop a supplier network in Germany with about 600 local manufacturers of housewares and home furnishings.
“The business processes we first built in North America with a local supplier base and unique product selection is the same approach we are taking in Europe,” Shah says.
To generate more European web sales, Wayfair over the coming months will be introducing other new features to shoppers in the U.K. and Germany that are currently available on its U.S. sites, which include Wayfair.com, AllModern.com and JossandMain.com
New features already introduced in April on its German and U.K. e-commerce sites include a new shop-by-color tool that let shoppers see home furnishings and home décor items in specific hues of colors rather than on a limited color palette.
Another new feature Wayfair calls My Clipbar lets shoppers drag and drop items on to a clip bar that appears at the bottom of each page. Previously, the only way shoppers could save products for future viewing was by keeping them in a shopping cart. ““Whether a shopper is looking to match an accent piece to a precise shade of paint or re-decorate an entire room, we understand the importance of being able to visualize a set of items together, compare and contrast options, and search by specific shades of color,” Shah says.
It will take time for Wayfair to build up significant business in Europe, Shah says. But eventually Shah is expecting international sales, especially from Europe, to account for about 50% of Wayfair’s total annual revenue.
To hit a goal of higher European sales, Shah says Wayfair will continue to develop its niche retail base using the same business model that’s working successfully in the U.S. “European home shoppers aren’t that different from American shoppers,” he says. “Europeans and Americans want unique items for the home at a good price and with a great online shopping experience. We are tailoring what we first learned in the U.S. to make that work on a bigger scale in Europe.”
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More on these and other metrics and analysis is contained in The 2013 Top 500 Guide.
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