Over the years I’ve seen retailers approach Cross Border Trade in a number of ways. Given the very large and global scope of the international retail problem the approaches retailers take can appear infinite, however, they can be filtered down into just 5 broad categories.
- Toe in the water
- Build on existing sales
- Strategically open markets
- Technical solution
- Join a program
Toe in the Water
Usually at the start of a retailers International Expansion journey, or indeed before they even have any intention of focused on cross border, sellers us an approach I like to call Toe in the Water. Retailers are very busy trying to build and navigate their domestic market but also recognize theres a lot of potential buyers aboard and that there are probably some easy sales to be made. By roughly working out the shipping costs to regions, adding these to their existing eCommerce shop and any marketplaces they sell on and making sure they can take orders from countries outside their domestic market.
This approach will indeed likely generate some extra sales and given the domestic focus, some sellers may be happy with that given their current status. It’s worth taking a read through the first few sections of the Expert Guide on CBT Pulse where I outline how to set your foundations for CBT and ensure you’re open to buyers. Follow this and you will be essentially doing Toe in the Water well.
Build on Existing Sales
In this approach, often following on from having their toe in the water, retailers have seen a growing number of sales in a particular country and they look to capitalist on those gains. As an example, a UK retailer has been getting a number of sales from France and decides to build a French version of their website to better serve that market. They may employ a French speaking Customer Support to handle the increase in purchases and help on translation.
This UK retailer has also heard some complaints about the exchange rates from their customers, so build a more generic European site in English or add Euros and point a .eu domain at it. This is done with the intention of capturing more of the European market that may be put off by products only offered in GBP.
In and of itself this is not an inappropriate approach and it has some value. The retailer has noticed their sales increase and acted to grow it more. French sellers are indeed more likely to purchase from a French language site and prefer to pay in Euros. They would also likely rather to speak to a French speaking Customer Service.
The retailer has acted tactically and will likely improve their sales a little more. They have also addressed some concerns they’ve seen around customers preferring to pay in Euros which may increase their sales further.
Strategically Open Markets
In this approach the retailer has usually done some research and established that although they are not necessarily getting a lot of traction yet, there is a good demand for their products in a country and the retailer believes that they are able to service this market successfully.
The level of research here is key to whether or not these sales will materials. Are the seller’s prices right? Can they fulfill at a shipping cost that keeps the price right? Will the buyer purchase from them? Are they able to? There are a large number of retailers with painful memories of trying to crack the Chinese market based on the logic it is a huge economy so they could take a small piece and make a lot of money.
With the right research opening markets strategically of course makes sense. We continue to recommend the Optimal Expansion Process outlined on CBT Pulse so that you can learn and research on your own product offering, giving you much more relevant data than any external research you can do.
There are a growing number of third party technology companies who offer solutions to help retailers grow internationally. In summary they attempt to take away the pain of the various barriers to cross border trade, with varying levels of success.
It often makes sense for retailers to work with these third parties but on their own they will only take you so far. You will often end up needing multiple partners in order to manage all the barriers like payment gateways, returns management, localisation etc as few of these companies will likely ever be great at all the components. This isn’t a bad thing of course but requires management time.
The intention of these third parties is to drive increased sales through solving cross border problems, while taking a fee from you or the buyer for doing so. Overall you will likely get an increase in revenue but at a lower margin. It’s up to you to work out if the increase in sales makes sense .
As a note on potential conflicts of interest. I’m VP, Growth and Partnerships to one of the larger of these third-party firms (www.webinterpret.com) and will avoid recommendations around them on this basis, but will give you factual information you need to make your own decisions.
Join a Program
Similar to the third party technology approach your eCommerce platform provider or marketplace will often offer programs to get their users to do more internationally. These programs are often, but not always, one size fits all due to their scalable nature; but can be low cost and effort and result increase sales. In the past I’ve set up international retailing programs with marketplaces, payment providers, ecommerce platforms and listing tools which have seen 10’s of thousands of customers join. All these platforms recognised the increased value of getting their customers doing more internationally both for the benefit of the retailers and of course themselves.
All of the approaches outlined above have value and all can be used to produce international growth, if managed in the right way and you use them as valuable learning experiences.
As always, I look forward to your comments and feedback. If you have an questions of course feel free to let me know and I’ll do what I can to help. In the meantime, don’t forget to sign up to our newsletter to get updated International Retailing info and posts on a regular basis!