June 2, 2014, 4:02 PM

Crossing the Continent

(Page 2 of 3)

Another big undertaking for Vente-Privee was hiring customer service associates that speak the same languages as its customers. "If a Dutch consumer calls customer service, we want her to be able to speak in Dutch to a representative," Benhaim says. When shoppers call Vente-Privee's customer service line, they are first directed to a call center where staff can answer immediately in several languages about 15 basic questions such as, "What is your return policy?" If the problem is more complicated, the call center representative contacts the retailer's in-house customer service team of about 250 who handle more complex issues. There an agent looks into the matter and calls the customer back later that day with an answer.

Vente-Privee doesn't break down sales by country but says that its top country outside of France in terms of sales is Germany, followed by Spain. In the United Kingdom, the e-retailer's revenue rose 22% in 2013 over the prior year.

Another French retailer moving into new markets is Carrefour Group, which is No. 19 in the Europe 500. Like Marks & Spencer, Carrefour is digging into its deep pockets to enable consumers throughout Europe to order online and pick up in store at the same time as it expands into online sales in Eastern Europe. The retailer, which operates more than 10,100 stores and generated total revenue (excluding value added tax) of 74.9 billion euros ($102.61 billion) in 2013, launched an online store in Romania last year offering 13,000 everyday food products.

Heading east is a smart move for retailers wanting to grow web sales. In 2013 web sales grew 47.4% to 19.3 billion euros ($26.49 billion) in Russia, Bulgaria, Romania and other Eastern European countries, according to the latest figures from Ecommerce Europe.

Carrefour, which Internet Retailer estimates generated 1.05 billion euros ($1.45 billion) in web sales last year, also sells online in southern Europe. In Spain, Carrefour says its food e-commerce site delivers to around 80% of the country and offers more than 14,000 products. The retailer's Spanish non-food web site sells more than 9,000 products—mainly household appliances, photography, cinema, sound and multimedia items. Carrefour also says it is in the midst of enhancing its e-commerce sites and broadening the range of products it sells.

The retailer adapts its product assortments to reflect local needs, it says. In Spain and Turkey, for example, it promotes high-tech products and household appliances, which are particularly popular with online shoppers, the retailer says. Carrefour's online presence in Spain will help it capitalize on the country's projected 18% compound annual online sales growth rate between 2012 and 2017.

Carrefour is also expanding its click-and-collect service, which allows customers to shop online and then pick up their purchases at the nearest store. In its home country of France, the company opened 143 new pick-up locations in 2013, bringing the total to 348, most of them located in stores. Customers can also pick up online orders in less than five minutes at four Belgian hypermarkets and at a Milan supermarket, the retailer says.

Online grocery shopping, already common in the United Kingdom via the likes of Tesco, which is the third-largest European online retailer, and Asda, the 11th-largest, is poised for growth throughout Western Europe, according to Forrester. By 2018, shoppers across Western Europe will spend nearly 35 billion euros ($47.95 billion) online on food and drink, compared with 20 billion euros ($27.40 billion) in 2014, Forrester says. Carrefour has sold online for 15 years. Vente-Privee has sold beyond its home country for eight years. That's the kind of patience online retailers need when expanding into new markets, Forrester's Wigder says.

"One of the biggest mistakes brands make is relying on financial models that require one- or two-year payback on new global initiatives," she says. "Few companies see a rapid return on their investments, especially when expanding into emerging e-commerce markets where average order values and conversion rates tend to be lower than in mature markets." Meanwhile, in mature Western European markets, global brands must now contend with local players that have deep pockets and can dedicate sizable funds to customer acquisition, she says.

Among those established regional retailers is the Sweden-based CDON Group, which is No. 42 in the Europe 500. The retailer operates multiple e-commerce sites and books most of its sales in its home country, as well as Norway, Denmark and Finland. CDON knows Nordic consumers' preferences, for example, many shoppers tend to pay by invoice rather than by entering a credit or debit card number into a retail web site. On some of its sites, more than 50% of orders are paid for via invoice.

That means that if a U.K. retailer wanted to enter the Nordic market, it would need to consider adding an invoice option, lest it miss out on ample sales. In fact, invoicing is so popular that CDON is piloting offering its own invoicing payments service on some of its e-commerce sites, says Paul Fischbein, president and CEO of CDON Group.

Michelle Beeson, a Forrester analyst, says payment methods should be a big consideration for retailers selling outside their home markets. For example, in Russia it is common for shoppers to pay when an online order is delivered to them, Beeson says.

Even in CDON's home Nordic region, there are differences from country to country. For example, Norway isn't a member of the European Union, so CDON must prepare customs documents and factor in duties when selling to Norwegian shoppers, Fischbein says.

It's not bureaucracy or regulation that limits cross-border sales in Europe. Both Fischbein and Benhaim say laws and regulations for selling online are fairly streamlined across the European Union. "Languages and preferred payment options are the biggest examples where things differ," Fischbein says.

One development that's uniform across much of Europe is the rise of consumers shopping on smartphones and tablets. Leaders in European e-commerce are exploiting mobile commerce to reach more shoppers across the continent. Vente-Privee, for example, says 35% of its 2013 revenue came from mobile devices, with mobile shopping especially strong in the United Kingdom where 37% of sales and 41% of visits came from mobile phones and tablets. CDON, meanwhile, says while its conversion rate is lower for mobile, 30% of visitors to its sites are from mobile devices. Yoox says 40% of its total traffic in the fourth quarter stemmed from mobile devices.

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