Spinning a Global Web

Let’s say you’re searching the Website of Getty Images, a distributor of photographs, illustrations, and graphic software. You want to download a photo for the cover of your annual report. Since you sell track-and-field equipment, you type “jumper” into the site’s search engine in order to call up photos of high jumpers in motion. And that’s what comes up — if you’re on Getty Images’ U.S. site, that is. Visitors to the U.K. site who input “jumper” are then asked whether they’re referring to the physical activity of jumping, an article of clothing (sweaters are called jumpers in Britain), or a “smoke jumper” — a firefighting plane.

That’s just one example of the myriad details you need to consider if you want to use the Internet to sell your wares internationally.

Like Seattle-based Getty Images, which in October 2001 launched French, German, and U.K. versions of its Website, more U.S. companies are interested in taking advantage of the Web to do business internationally. It’s not hard to figure out why. According to Framingham, MA-based research firm IDC, the worldwide market for Internet commerce will zoom from $354 billion in 2000 to $5 trillion by 2005.

And certainly, using the Web to test the international waters is less expensive and arduous than mailing print catalogs overseas. For one, you don’t have to create and print international versions of your catalog that reflect local languages and currencies. You don’t have to deal with other countries’ postal systems, the efficiency of which vary hugely. Nor do you have to acquire prospect names, which is perhaps the greatest challenge; outside of the U.S. very few countries have well-developed list rental industries, and privacy laws can be stringent.

Apparel and home goods cataloger Lands’ End, for one, is a keen advocate of using the Internet to enter overseas markets. The company launched U.K., German, and Japanese Websites in 1999 and French, Italian, and Irish Websites the following year. “As we expand into new countries, we will do so with the Internet first because of the more favorable economics,” says Sam Taylor, vice president, international for the $1.36 billion cataloger. “Then we will potentially follow up down the road with the launch of paper catalogs to complement the Internet business once we have achieved enough scale in that market to justify a paper catalog launch.”

Still, the hurdles facing U.S. merchants planning to transact cross-border business via the Web are daunting. They have to learn which taxes, duties, and tariffs come into play in different countries; figure out how they’ll ship their goods to points around the world; set up mechanisms for handling returns in faraway places; and decide which languages they’ll offer and which currencies they’ll accept on their Websites. “Going international is not a ‘eureka,’” says Rory Cowan, CEO of Lionbridge Technologies, a Waltham, MA-based provider of multilingual content-management products. “It requires discipline and the diligent application of business skills.”

Getting going

An essential first step is developing a coherent globalization plan that, like your overall e-commerce strategy, flows from your business’s overall objectives, says Steve Adams, president/CEO of Uniscape, a Sunnyvale, CA-based developer of e-commerce globalization solutions.

Before Dodgeville, WI-based Lands’ End enters a new market, “we will do a five-year profit-and-loss statement to determine how quickly we can break even,” Taylor says. “We also look at cash flow and calculate the net present value and internal rate of return of that launch. We also look at the competitive landscape and how comparable products are priced to determine how we feel our products will do in that market.” Indeed, the demand for some goods — say, American artwork — may primarily be domestic.

You also need to determine how cost-effectively you can sell and ship goods around the world. That’s especially true for business-to-consumer merchants, which usually ship in small quantities. Cowan says that most marketers start with an export model, shipping orders from the U.S. as they build up sales volume. Needlework products marketer Ehrman Tapestries, for instance, uses the U.S. Postal Service’s Priority Mail to ship orders to Canada.

It’s obvious that shipping something like furniture overseas is an expensive proposition. But even for smaller goods, the costs can mount. Just ask Marjorie Adams, Ehrman Tapestry’s CEO. The London-based marketer, which has a U.S. branch headquartered in Chestertown, MD, mails about 20,000 catalogs a year in the U.S. In September, it began taking orders from Canadian consumers via its Website.

Adams says that needlework kits coming into the States from Britain, like other textile items, are charged a 12% duty. Goods heading on to Canada incur an additional 20% duty. On top of that, Canadian consumers are charged a 15% sales tax. Given that the company’s kits cost an average of $90 in the U.S., the duties quickly add up.

Sorting through the volume of laws, duties, and the like that come into play in different countries isn’t easy. “There are thousands of regulations by country,” says Greg Stock, vice president of marketing with Vastera, a provider of global trade management solutions based in Dulles, VA. Failing to follow the rules can mean that a firm pays more than it needs to in duties and taxes. If a company underpays, its trading privileges with a country could be revoked.

To get up to speed, Stock recommends working with an expert in trade regulations. Ehrman works with both an international trade broker and a law firm that specializes in cross-border trade. “We definitely need them,” Adams says.

Vastera offers TradePrism, a Web-based service for small and midsize companies, on a subscription basis. Among other things, TradePrism can calculate the landed cost for a shipment — that is, the cost of all the duties and tariffs a shipment will incur — and file shipping documents with the appropriate authorities. The cost can range from several dollars to thousands of dollars a transaction, depending on such factors as the size of the shipment and the number of recipients.

Global systems

Once a cataloger decides to use the Web to sell into other countries, it makes sense to develop an e-commerce platform with globalization in mind. Taking a piecemeal approach is apt to leave a firm with software functions that don’t work across borders. For instance, the online shopping cart may not allow foreign customers to enter their complete addresses, which often are longer than U.S. ones. What’s more, reworking an existing e-commerce system to make it international costs 50% more than launching a global solution from the start, according to a Uniscape white paper.

Mary Maxim, a needlework and crafts distributor based in Port Huron, MI, has seen the benefits of using a platform that allows for globalization. Each year, the company mails 14 million catalogs in the U.S. and another 6 million in Canada. The company also takes orders from Canadian and U.S. customers via its Website. Until four years ago, every item was input into the company’s e-commerce system twice — once for the Canadian portion of the site and once for the U.S. side. Although the online catalog offered only several dozen items at the time, it was clear that the duplicate processes quickly would grow unwieldy.

Lynette Baxter, Mary Maxim’s director of catalog production, reworked the Web catalogs so that both sites now use the same Sequel server database. Employees need to enter each product into the system only once. For the vast majority of products, both the U.S. and Canadian sides use the same item name, number, and description; it’s just the price that needs to be input on both the U.S. and Canadian sides. The streamlined administration is particularly helpful now that Mary Maxim’s Website boasts more than 1,000 items.

While you want customers to make their purchases in their local currency, you need to be able to convert those payments to U.S. dollars. Using credit cards to accept foreign orders is one way to start, since the card companies handle the conversions. That’s the route Ehrman Tapestries has taken, says CEO Adams. Canadian customers place their orders using a charge card; the card company converts the money from Canadian to U.S. dollars and then pays Ehrman. Adams says the cost to the cataloger is the same as for transactions completed within the U.S.

Beyond issues of local currency, there’s the matter of local languages. Never mind that a majority of citizens in countries such as The Netherlands and Denmark speak fluent English. “You need to identify with the local customer,” insists Browning Rockwell, president/CEO of Trade Compass, a Washington-based provider of global trade solutions.

To translate its Website, Getty Images used outside translation firms with which its marketing people already had worked. In addition, Getty’s marketing and sales employees around the world reviewed the final copy, making sure that the words conveyed a consistent, appropriate image of the firm, says the cataloger’s director of marketing, Kristl Date-Dopps.

Investment required

How much will going global cost you? As with so much else related to e-commerce, that depends.

Steve Adams says that installing a Uniscape software platform typically costs about $200,000. Uniscape’s software translates and “localizes” Web content for different countries. For instance, German regulations prohibit comparative advertising, so the software would check for comparative ads and single them out. Smaller companies (typically, those with less than $500 million in annual sales) can have Uniscape host the software for $50,000-$75,000 annually for the first 3 million words on the site.

There’s also the cost of setting up a global communications network. For its U.K. Website, New Pig, a cataloger of industrial cleanup supplies, is subscribing to a high-speed communications line between England and the U.S. This costs the cataloger about $2,500 a month, says project lead Selesia Byrd.

In addition, to allow British customers to download Website pictures more quickly, Akamai Technologies, a Cambridge, MA-based provider of e-business services, is storing New Pig’s images in its server in the U.K. That service costs the cataloger about $2,000 a month, Byrd says.

In all, Byrd estimates that the cost of setting up its new U.K. site will cost Tipton, PA-based New Pig about 75% of what the company’s original, U.S. site cost. Byrd notes, though, that New Pig’s U.K. Website will include more content about cleanup regulations and product features than the U.S. site, because the British market is not as established.

Clearly, the investments required of and the challenges confronting catalogers who want to expand internationally via the Web are significant. Fortunately, the rewards can be compelling. In the month since Getty Images launched its French and German sites, traffic to the company’s sites have jumped 20%, says Date-Dopps. “We’ve opened the door to many other countries,” she says. “Now we plan to keep going.”


Karen M. Kroll is a freelance writer based in Minnetonka, MN.
Additional reporting by Anthony Coia
.

Keep in Mind…

When going global, you’ll want to check these tasks off your to-do list:

  1. Register your URLs globally. Even if you’re not sure if you’ll establish sites for different countries, you don’t want other companies taking away your ability to do so, says Rob Rosenthal, research analyst with IDC in Framingham, MA. Registering in foreign countries is similar to the process used to register within the U.S.

  2. Get export and import licenses, says William Claire, CEO of Pittsburgh-based consultancy Innovate E-Commerce. To do so, you have to present your products to the Department of Commerce, where officials will make sure, for instance, that no high-tech secrets are leaving the country. They’ll also check that the products are not going to nations with which the U.S. doesn’t trade. Once you’ve got the license from the Department of Commerce, you then have to go through a similar process with the regulators in the countries you want to sell into, to determine if the products are subject to tariffs, quotas, and other restrictions. In all, it is an involved process and has to be done country by country. Claire says you should plan on the process taking at least several months for each country you deal with.

  3. Determine any hurdles your products may face in other countries. For example, selling food or medicines across borders often means contending with especially onerous regulations, points out Claire. And some products need tweaking before they’ll find an international market. Clothes are a case in point, as different countries have different sizing systems, says Rory Cowan, CEO of Lionbridge Technologies, a Waltham, MA-based provider of multilingual content management products and services.

  4. Let users know whether measurements on your site are in metric or English systems.

  5. Also let visitors know how they should enter in dates. The format used in the U.S. (MM/DD/YY) isn’t used universally.
    KK

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