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Comment: What it takes for successful cross-border eCommerce

The last few years have witnessed the emergence of streamlined worldwide supply chains that have enabled global commerce, resulting in it now being far easier to fulfil international orders.

Payments are possible internationally, while cost-effective language translations allow retailers to communicate with potential global customers. This has empowered retailers to embrace cross-border eCommerce. There is however one caveat. There is no one-size-fits-all strategy. Those tailoring their strategies according to the readiness of the market and sophistication of the online shopper are more likely to realise the full potential of cross-border eCommerce.

The rapid adoption of the internet – and devices to access it such as tablets and smartphones – has enabled consumers all over the world to compare prices, connect with peers via social media, discuss products and services, and select websites independent of its location, while more sophisticated transaction systems enable payment via a device of their choosing any place, anytime, anywhere. A growing middle class in emerging markets is increasingly willing and able to shop online, looking for more choices in apparel, electronics and luxury goods. Sometimes disappointed with what's on offer in their home markets, many opt for more sophisticated online propositions of international retailers.

It is for these international retailers, especially in mature eCommerce markets, that cross-border eCommerce is particularly appealing. However, it is essential to determine shopper readiness – in terms of those using their internet access for shopping, frequency of shop and spend per head and market readiness – in relation to internet access, technology adoption, infrastructure and fulfilment capabilities, to not only prioritise which markets to activate, but how to maximise the potential on offer.

Brazil, Russia and India are just opening up. Although access to the internet and technology can be limited, those using the internet for shopping tend to be wealthier. However, due to fears over fraud and poor delivery capabilities they are often hesitant to shop more online. As such these markets should be considered a medium activation priority.

A market with a high activation priority is China. ECommerce is rapidly growing, and the market is beginning to peak. Still dominated by local players, such as Alibaba, international entrants are increasing fast and competition is intensifying as a result. Though access to the internet is low to moderate in China, those using their access to shop tend to be wealthier. However, poor online propositions and infrastructure challenges often leads to shopper frustration.

One key indication of demand for cross-border eCommerce is the importance consumers place on the ability to shop online in their language and currency. From the results of Planet Retail's eCommerce shopper research it is consumers in countries reliant on international retailers for their online shopping that rate this as far more important. In Russia and Brazil, the ability to change language settings is deemed important by 47% and 37% of online shoppers respectively, compared to the UK at just 12%. When it comes to being able to set prices to local currencies, 44% of online shoppers in Brazil, and 42% in India rate this as influential in their choice of online retailer, compared to just 10% in Germany.

The findings of Planet Retail's research also assist in understanding how the drivers and influencers of online shopping vary by market. In emerging eCommerce countries, flexible pricing, product mix and promotions will help attract online shoppers. For example, in China, 66% of shoppers would be encouraged to choose a retailer offering online only prices and products, compared to 45% in the UK. Overcoming high delivery charges, cited by 53% of respondents, is a key element of success. However, while this is a barrier to online shoppers in Russia at 60%, with only 32% of online shoppers in China discouraged by high delivery charges, it is less of an issue. Alleviating concerns over security when shopping online is a priority in China, with 51% encouraged to shop more online if they felt it was safe to do so, compared to 35% of all shoppers.

Considering alternative payment options, such as cash on delivery, will encourage 46% to choose a retailer, and this is much higher is Brazil at 66%, and India at 62%.

Managing shopper expectations around fulfilment is also essential. Overall 51% of shoppers cited flexible delivery times and options as being influential when deciding on an online retailer, but with the infrastructure constraints in China and Brazil, this is much higher at 65% and 70% respectively. Indeed, in countries where logistical challenges make home delivery either more expensive or inconvenient, the ability to collect online purchase is important, with 65% of online shoppers in Russia and 56% in China stating this as of being influential in choosing an online retailer.

In markets such as Brazil, where there are fewer online retailers, a sensible entry strategy would be through a minority investment in a local player or a joint venture. This would leverage the capabilities of an established player and help understand local business customs, consumer preferences and cultural differences. In markets such as China, entering through a marketplace site, such as Alibaba, or going direct to the consumer are the best options.

Online fashion house Asos, for example, decided that a different approach was needed in order to fully exploit China's potential. The company implemented a standalone technology platform, a local third party distribution centre, local delivery solutions and payment methods and a larger multi-disciplinary in-country team.

There is a perfect storm brewing in cross-border eCommerce of market demand, proximity and rising adoption of online shopping. The time is ripe to profitably grow online sales across the globe. However, fully capitalising on cross-border eCommerce requires adapting retail propositions to the nuances of individual markets.

Planet Retail's Malcolm Pinkerton will be writing a regular eCommerce column for Essential Retail over the coming months.

www1.planetretail.net

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