15/05/2015

By Steve Rivers, CEO of Intelligent Reach


Consumers are increasingly using mobiles, tablets and other electronic devices to make their purchase online; many are moving away from traditional bricks and mortar shops and into more of a multichannel environment. This shift offers the opportunity for consumers in any country to browse and purchase goods online from retailers all over the globe.

As a result, online marketplaces are growing rapidly in size and number, with well-known examples such as Amazon and eBay providing a sales platform for billions of products, and specialist sites such as Etsy and notonthehighstreet.com offering more niche categories. In the past nine months alone, as the biggest marketplaces, Amazon marketplaces in the UK, USA and Germany have expanded by 20 million products, which equates to 75,000 products added every day. According to research by ExportX, Amazon China is also demonstrating vast growth, growing to nine times its size just a single year.

For retailers, this opens up vast opportunities to target consumers across a number of different channels, and ‘set up shop’ online to test out new territories. For example, with British products in demand around the world, online marketplaces can now be used to break down international borders and offer browsing and buying capabilities to shoppers in other countries.

However, targeting consumers in different countries is not as simple as setting up an ecommerce site and waiting for shoppers to find it; retailers need to look at the different strategies available for attracting shoppers and driving traffic to their website.

Going Global

For retailers looking to expand their business into new territories, there are a range of options available to them. Firstly they can choose to open physical stores abroad, allowing customers outside of the UK the chance to enjoy the brand and shop experience in a real world setting. Franchise operations are another option, or retailers may choose to launch and trial their products abroad via the concessions route, whereby retailers pay large foreign department stores to house their products in store. This can give retailers the crucial brand exposure and access to captive shoppers needed to test new territories successfully. However, whilst all of these options offer pros and cons, they cannot offer the flexibility and scalability of an online marketplace.

Retail Landscapes

A safer and more cost-effective option for retailers to expand their overseas reach are online marketplaces; large shopping sites from which retailers can sell their products to the vast audience visiting the site. Amazon and eBay are the most commonly known marketplaces, however other well-known ones include Rakuten, Play.com and Tesco. Such sites are popular with consumers worldwide, offering retailers access to new locations and customers, with low overheads and an established level of trust between seller and buyers.

As such, these platforms are a safe and efficient way for retail businesses to expand overseas, but in order for brands to maximise the benefits of having a global reach, they must first fully understand the online retail landscape and address the finer details.

There are a number of factors that retailers must consider when branching out into new territories, including, but not limited to:

Demographic

Products cannot just be pushed out blindly to consumers. In order to achieve maximum success, retailers must understand the demographic they are targeting and market to those individuals appropriately. Age, gender and culture should be considered, ensuring that products are made accessible to consumers using the right channels and in the right ‘language’ - not just localised language, but for instance the difference between ‘trousers’ in the UK and ‘pants’ in the US.

Processes

When expanding their businesses internationally, retailers must ensure they have appropriate supply chains and back office processes in place to fulfil demand from consumers around the world. They must also consider the cost of deliveries in different locations as well as returns policies and how this will affect their margins. These factors may also influence pricing.

Competition

By expanding into new territories, retailers are also opening themselves up to increased competition from local suppliers, and must consider how to differentiate themselves in the increasingly competitive global marketplace. Retailers would do well to look into local competitors in order to understand the factors that make them attractive to shoppers in that region.

Online Opportunities

Once retailers have gained a comprehensive understanding of the local retail market, international marketplaces can offer unrivalled opportunities. Retailers are able to test out new territories, learning which of their products perform best in certain locations without committing to the cost of physical stores overseas or fully localised transactional websites. In addition, expanding via online marketplaces can help minimise additional complications such as currency conversion and language translation.

For all of these reasons, retailers should take advantage of online platforms in order to maximise sales and keep up with digital opportunities. However, they will also need to consider any potential pitfalls, and will need to decide on how to reach customers in the most effective way while managing, monitoring and optimising which products are listed.