Ecommerce has provided the much needed success for many retailers within their own domestic markets in recent years. So when it comes to international expansion for additional growth, the relatively low risk option of the web is attractive for testing or entering overseas markets.
International ecommerce needs some thought. Simply translating a site and localising the currency may produce some incremental sales, but it won’t ultimately take much of a bite out the £1 trillion online pie. If local consumer demographics and expectations aren’t fully understood, it is just as likely to fail as a poorly researched and executed store expansion. Albeit a less costly and visible mistake!
Retailers who have confronted many challenges opening stores in some emerging markets, such as China, are now scaling back plans and opting to extend their reach through international ecommerce. China’s online sales of $23 billion are set to grow to $81 billion with the help of improved infrastructure. Brazil’s three year growth forecast takes online sales from $10 to $18 billion. Completing the top three emerging online markets is Russia, with a current $9 billion worth of online sales, predicted to hit $16 billion by 2016. With this kind of potential, a first launch, right launch will be vital as their consumers are targeted by an increasingly large number of Western retailers. Western brands are simply no longer a novelty or inaccessible. For less well-known brands, their first impression through offer, service and total experience could determine their long term level of success.
Online shopping behaviours and requirements differ wildly from country to country – driven by local social, economic and cultural nuances. Payment preferences alone span from kiosk cash, to bank transfers, debit cards and credit cards. Delivery expectations range from next day, to same day, specific time slots or collection from local collection points. Interestingly the large etailers such as Amazon whose sector leading position in the West is regarded as almost unassailable, is predicted to find Russia challenging to crack. Russia’s $1 billion-plus Ulmart, is growing at pace and profitably by creating their own specific locally targeted proposition. In a recent television interview Ulmart’s chairman Dmitry Kostygin, confirmed that most of their products are available to the customer within an incredible ten minutes, using the comparison of products reaching consumers like a pizza delivery. Urban based fulfillment centres are at the heart of this service strategy, enabling them to quickly reach the European part of Russia, which accounts for 95% of current online consumers. With the country’s relatively poor infrastructure, Ulmart’s own transport fleet gives them an obvious advantage.
China, like other developing markets, still has low broadband penetration, so forget email, because instant messaging such as QQ is the most effective form of communication and mobile shops are a must!
Western retailers may struggle to compete with formidable domestic competitors, however Western brands with great product have enormous potential.
Understanding at a local level how the consumer wants to shop and giving them the means to do so is definitely a pre–requisite, but regardless of location or channel, the old retail adage still rings true, ‘product is king’.
Online sales of desirable, well positioned, marketed brands are fairly assured to the eager, consumerist population of emerging countries. Although Ulmart can deliver commodity product at the speed of your favourite stone baked pizza, providing that your proposition manages a customer experience aligned to local communication styles and you deliver (quite literally), then the seeds for long-term growth will have been sown.
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