There’s a whole world of ecommerce shoppers, but U.S.-based merchants say they are not ready to embrace the cross-border shopper. According to Multichannel Merchant’s MCM Outlook 2016 survey, just 41.9% or respondents said their ecommerce sites are set up for global business.
So why aren’t more merchants looking to become cross-border sellers? Chuck Whiteman, Sr. VP Client Services at MotionPoint, says one reason is because merchants often are just oblivious to cross-border opportunities.
In this Q&A with Multichannel Merchant, Whiteman, who is a keynote speaker at Multichannel Merchant’s Growing Global 2016, discusses some of the common mistakes ecommerce merchants make when they start their cross-border journey, how technology has made it easier for merchants to go cross-border, and where she sees cross-border ecommerce going in five years.
MCM: Why aren’t more merchants looking to become cross-border sellers?
CW: We make a distinction between brands – i.e., companies that make something and also retail it online in markets to augment whatever retail distribution they have – and retailers – i.e., those who resell other people’s brands. Among brands, there is a high level of cross-border commerce happening. This is due to several factors:
The web is both a sales channel and a global marketing channel for these companies. For brands, if they aren’t creating awareness and demand for its products online globally, then nobody is. Once you have a strong marketing presence online, adding e-commerce capabilities is almost a no-brainer – at least in markets where your distribution agreements don’t preclude selling direct-to-consumer.
Retailers, on the other hand, operate on thinner margins and have to compete against local retailers who know the local market, and benefit from faster delivery times as well as lower shipping & logistics costs.
Retailers also often must contend with vendor agreements (with the brands they resell) that forbid “trans-shipping” into other markets.
Finally, and somewhat specific to the U.S., retailers that enjoy a large home market are often oblivious to the opportunity offered by smaller foreign markets. In our experience, this isn’t the case for retailers in the UK and elsewhere. UK-based retailers are much more focused on and experienced with cross-border selling.
MCM: What are some of the common mistakes ecommerce merchants make when they start their cross-border journey?
CW: Believing that perfection is a pre-condition for getting started: You actually want to compromise when you’re starting out – otherwise you’re likely to create a cost structure that is unsustainable given the reality that new markets take time to grow and hit stride. Our most successful clients are committed to their long-term international growth strategy, but are also smart enough not to doom that vision by building the kind of overhead into the effort that their mature markets support. The key is to create an operational/financial plan that moves through the stages from start-up through to maturity. The clothes that fit an adult, don’t fit a toddler. Similarly, the investment level appropriate for a large mature market is likely to be problematic for a small market you’re targeting for growth.
Using market size as the primary determinant of your market roll-out strategy: Our clients often enjoy greater success in smaller markets than in the large, well-served & highly competitive markets.
Targeting too many markets at once … which really isn’t the mistake. The mistake is to not explicitly think about the complete customer journey from the standpoint of every market you choose to target AND to craft user experiences (from brand discovery through repurchase) that resonate & respond to the Use Cases that are unique to consumers in each market.
There are tons of tactical mistakes that can be made along the way, but it’s difficult to say that any of these things is a categorical mistake. Generally, tactical mistakes are only “the right tactic at the wrong time” (e.g., not offering local pay types might be the right tactic at start-up time, but a mistake 2 years into an effort). As long as they avoid the strategic errors, companies can generally weather these inevitable tactical mistakes along the way. In fact, they should embrace these tactical mistakes as they are evidence that they’re moving along the growth curve in each market.
MCM: How has technology made it easier for merchants to go cross-border?
CW: Obviously the web makes it much less expensive to engage customers around the world (versus building a brick-and-mortar presence everywhere). Some of this demand gen is technology-driven via international search engines, local social platforms, etc. As the web helps drive demand, demand drives the need to streamline the logistics of fulfilling that demand. Some of this streamlining is enabled through technology. For instance, automating the estimation of tariffs & duties, the technical support for multi-currency, international pay types, translation, etc.
MCM: Which countries do you feel are low-hanging fruit for ecommerce merchants who are looking for grow their global sales?
CW: Many of the niche markets in the EU are under-served. Some barriers that cause markets to be under-served are difficult to overcome. Others are easy. If a market is under-served because of large customs and tariffs barriers – e.g., Brazil – this will be a tougher market to target cross-border than if the reason is a language barrier – e.g., Slovakia.
MCM: Where do you see cross-border ecommerce going in 5 years?
CW: Cross-border will be a tactic that exceptionally efficient retailers use to drive sales growth … bringing competition to smaller markets and driving prices down and service levels up. Brands will use cross border as a strategy to complement whatever retail distribution they have in each market – using the web as a brand-building – i.e., marketing – tool and selling product at “MSRP” to support margins in their retail channels. As cross-border matures, it will become less and less “defined” since growth in volume will drive a logistics approach characterized by warehouse distribution in markets that have achieved a certain volume, meaning fulfillment will happen in-country and no longer appear to be cross-border.