E-commerce is booming, and that’s no real surprise. According to a recent survey, 93 percent of international consumers polled have shopped online. They are also shopping frequently — nearly half of respondents had shopped online in the past 30 days. Those are just two of the encouraging facts uncovered in a survey we conducted with polling firm ORC International. The survey explored global purchasing behavior and attitudes among 10,000 consumers from 10 countries representing a wide variety of markets, including developed economies in Europe to emerging markets in Asia and South America. The surprise element of the survey is the subtle variations in consumer expectations by market.
These insights can be important for retailers seeking new market opportunities in tough economic times. International e-commerce can be a great source of incremental revenue without the bricks-and-mortar expense. Retailers need to understand the international marketplace elements that do not fluctuate as rapidly as others, and efficiently outsource concern over those elements that are in constant flux to competent partners. These high-concern issues include shipping costs, duties and taxes—items that survey respondents rank among the highest barriers to purchase.
Look both ways before crossing the border
While the Internet has helped to blur cultural borders and spur the open exchange of ideas, geo-political borders still remain very real obstacles for U.S. retailers looking to expand overseas. Governments regulate duties, tariffs and taxes as they see fit within their own borders, and it’s the responsibility of the merchant to play by the local rules if they want to expand into foreign markets. Each country also has its own import and export laws. International shippers need to know in advance whether they can legally ship their goods to a customer in another country. While some items are prohibited nearly everywhere, such as currency, livestock and radioactive materials, each country has a long list of prohibited and restricted items.
In many cases, the best way for a retailer to expand internationally, while reducing the impact of local commerce regulations, is to collaborate with a service provider with international shipping expertise. In that way, the retailer can focus on what they do best – developing and marketing desirable products.
Online shopping is a global phenomenon
Retailers new to international e-commerce would benefit from looking at differences in online shopping patterns by country. Germany, South Korea, and the U.K. had the highest rate of Internet shoppers in the survey with a 98 percent positive response rate, while Japan ran a close second at 96 percent. Even in Canada, where online shopping was the least prevalent, 82 percent reported having bought goods online. In terms of frequency, two-thirds of shoppers in Germany, Japan and the U.K. had made online purchases within the past 30 days.
Similarities across markets can be leveraged
According to the survey, international shoppers want four basic things when purchasing online: competitive prices; a broad selection of products; easy, intuitive checkout; and low costs for shipping, duties and taxes. In fact, consumers across all 10 countries in the survey shared a top concern about cost—it seems that seeking out bargains is an international pursuit.
The survey also indicated that online buyers do not like surprise expenses. Preventing the unexpected requires advance planning by the retailer. The ability to calculate all applicable cross-border duties, taxes and shipping costs up-front during the online purchasing process can help ensure that consumers can have a successful shopping cart experience.
Beyond cost and product selection, the concerns of international shoppers revolve around the overall customer experience, from ease of checkout to ability to track an order to easy returns. For U.S. retailers considering global e-tailing, it is critically important to create an infrastructure that will be flexible and adaptable to all these factors.
Select markets that fit your strengths
Retailers can choose to target markets based on their core product line. The survey studied online consumer purchase preferences across seven categories. Books, music and videos were the most common and frequent purchase category for the majority of the countries. Computers, electronics and household goods were the next most popular category of items purchased online with overall respondents. In the majority of countries surveyed, consumers prefer to purchase apparel, footwear and jewelry in person. However, Chinese consumers are more likely to purchase clothes and footwear online. In fact, for almost every category included in the survey, respondents in China are more likely to purchase products online.
As the survey demonstrates, U.S. retailers can gain an advantage by selecting a market that best suits their product mix, price and their online infrastructure. Retailers can play to their strengths, and if there are weaknesses, seek out technology and logistics service providers who can provide strength and structure when and where needed.
Communications preferences differ
The survey also asked consumers “how do you prefer to receive communications,” an important consideration factor for retailers in the new world of multi-channel communications. Fifty-nine percent of international consumers prefer to receive information and promotions from retailers via e-mail. Twenty-five percent of respondents—representing millions of shoppers worldwide—prefer to receive information in catalogs and direct mail. This indicates that mail is another strong channel for online retailers. Asian consumers are much more open to receiving promotional offers via text message and even via social media. This would suggest that U.S. retailers design multi-channel communications strategies to keep pace with the international consumer and make sure they understand communications preferences in each market.
Building a solution for your e-commerce needs
The survey findings helped us conclude that, while the world may be flattening out, online consumer behavior and preferences do vary by country. The things people buy online differ by country. There are subtle differences in the obstacles to purchase according to market. To succeed, U.S. retailers must find a balance between the right product mix, competitive pricing, and convenience. For instance, ease of checkout must be balanced with a site’s ability to accurately calculate and provide costs up-front during the buying process.
When considering selling in international markets via the Internet, there are several key elements to consider such as cultural norms, buyer comfort levels, varying demand for goods, and language and currency barriers that directly affect commerce. In some individual international markets, language or currency may be considered much more important during the online buying process. In order to make a simple and seamless online buying process and encourage shoppers to continue in the process until the purchase confirmation, an online retailer must understand the nuances in each individual country.
Easing the challenges of international shipping
International shipping is more complex than domestic package handling. Online retailers who fail to address international shipping complexities can end up with a poor customer experience, low sales revenue and higher-than-expected costs. In order to avoid these problems, it is important to understand the factors that complicate international shipping. Local postal administrators establish rules in each country that impact how shipments are addressed and prepared. For example, in addition to customs forms, value limits and size limits, most countries do not follow the U.S. standard of street address, city, state and ZIP code.
Two factors add to the complexity:
• Shipments must be coded using a HS (Harmonized System) number. These classification numbers are assigned to individual products and are used by customs authorities around the world for the application of duties and taxes. These numbers are typically six to 12 digits long. The first six digits are standardized worldwide, while some governments to further distinguish products in certain categories use additional numbers.
• Shippers also need to confirm the country of origin for the goods being shipped. Regulations and fees are often based not on the location of a company or warehouse—but on the locale of the original manufacturer. Retailers who sell goods that were produced in countries around the world need to create a mechanism to identify, capture and communicate that information as part of their shipping documentation.
Proper addressing helps ensure that parcels bought online reach the intended recipient. This is obviously of paramount importance, and helps underscore one basic message every retailer wants to send: it understands and values its customers’ business.
Companies that sell via the Internet know how important it is to have a good returns process. However, international returns processing can be far more intricate and survey respondents count online return policies among their top five obstacles to purchase. Procedures established for outgoing shipments must also be created in reverse. Establishing a process for documentation, cost-effective shipping and returns back to the U.S. is only part of the challenge. Organizations must also clawback the duties and taxes paid to foreign governments.
Some retailers also look to simplify shipping by engaging a single high-cost carrier who provides door-to-door service. In most cases, these unnecessary shipping expenses can make the overall cost to the targeted consumers too expensive. It is not unusual to see a higher abandon rate for shopping carts when higher shipping costs are revealed.
The businesses that succeed internationally will be the ones who can manage shipments across multiple carriers while also taking advantage of reliable, efficient postal networks. Over the past few years, several technology providers have introduced technologies that support international e-commerce. Even some of the largest retailers have opted to collaborate with service providers on key aspects of the shopping experience in order to deliver a world-class customer experience. E-commerce platform providers are also making it easy for retailers to automatically present and settle transactions in foreign currencies, handle international payments processing and simplify logistics. These aggregators and systems integrators have also collaborated with international shipping providers.
The integration of third-party shopping carts and international shipping solutions is enabling retailers to fulfill orders much more cost-effectively and efficiently by shipping goods to centralized service facilities in the United States. This can help eliminate the need for cross-border infrastructure or up-front capital purchases. Retailers should select international service providers who deliver end-to-end support, with scalability and the flexibility to lower costs and improve customer satisfaction at every step.
There is no one-size-fits-all solution
International e-commerce success requires the flexibility to respond to cultural norms, local market conditions and evolving consumer preferences. It also requires flexible options that can help retailers select the best distribution method, tracking capabilities and return management process for their duty and duty-free products. Finding a solution provider with the resources and expertise to provide these services should become an integral part of the expansion plan.
The best way to start, or to expand your international e-commerce efforts in this brave new world is to build on a foundation of good old-fashioned market research. Armed with this research, you can pinpoint exactly which factors will impart your business plan going forward, and choose your technology and shipping solutions with those factors in mind.
These insights can be important for retailers seeking new market opportunities in tough economic times. International e-commerce can be a great source of incremental revenue without the bricks-and-mortar expense. Retailers need to understand the international marketplace elements that do not fluctuate as rapidly as others, and efficiently outsource concern over those elements that are in constant flux to competent partners. These high-concern issues include shipping costs, duties and taxes—items that survey respondents rank among the highest barriers to purchase.
Look both ways before crossing the border
While the Internet has helped to blur cultural borders and spur the open exchange of ideas, geo-political borders still remain very real obstacles for U.S. retailers looking to expand overseas. Governments regulate duties, tariffs and taxes as they see fit within their own borders, and it’s the responsibility of the merchant to play by the local rules if they want to expand into foreign markets. Each country also has its own import and export laws. International shippers need to know in advance whether they can legally ship their goods to a customer in another country. While some items are prohibited nearly everywhere, such as currency, livestock and radioactive materials, each country has a long list of prohibited and restricted items.
In many cases, the best way for a retailer to expand internationally, while reducing the impact of local commerce regulations, is to collaborate with a service provider with international shipping expertise. In that way, the retailer can focus on what they do best – developing and marketing desirable products.
Online shopping is a global phenomenon
Retailers new to international e-commerce would benefit from looking at differences in online shopping patterns by country. Germany, South Korea, and the U.K. had the highest rate of Internet shoppers in the survey with a 98 percent positive response rate, while Japan ran a close second at 96 percent. Even in Canada, where online shopping was the least prevalent, 82 percent reported having bought goods online. In terms of frequency, two-thirds of shoppers in Germany, Japan and the U.K. had made online purchases within the past 30 days.
Similarities across markets can be leveraged
According to the survey, international shoppers want four basic things when purchasing online: competitive prices; a broad selection of products; easy, intuitive checkout; and low costs for shipping, duties and taxes. In fact, consumers across all 10 countries in the survey shared a top concern about cost—it seems that seeking out bargains is an international pursuit.
The survey also indicated that online buyers do not like surprise expenses. Preventing the unexpected requires advance planning by the retailer. The ability to calculate all applicable cross-border duties, taxes and shipping costs up-front during the online purchasing process can help ensure that consumers can have a successful shopping cart experience.
Beyond cost and product selection, the concerns of international shoppers revolve around the overall customer experience, from ease of checkout to ability to track an order to easy returns. For U.S. retailers considering global e-tailing, it is critically important to create an infrastructure that will be flexible and adaptable to all these factors.
Select markets that fit your strengths
Retailers can choose to target markets based on their core product line. The survey studied online consumer purchase preferences across seven categories. Books, music and videos were the most common and frequent purchase category for the majority of the countries. Computers, electronics and household goods were the next most popular category of items purchased online with overall respondents. In the majority of countries surveyed, consumers prefer to purchase apparel, footwear and jewelry in person. However, Chinese consumers are more likely to purchase clothes and footwear online. In fact, for almost every category included in the survey, respondents in China are more likely to purchase products online.
As the survey demonstrates, U.S. retailers can gain an advantage by selecting a market that best suits their product mix, price and their online infrastructure. Retailers can play to their strengths, and if there are weaknesses, seek out technology and logistics service providers who can provide strength and structure when and where needed.
Communications preferences differ
The survey also asked consumers “how do you prefer to receive communications,” an important consideration factor for retailers in the new world of multi-channel communications. Fifty-nine percent of international consumers prefer to receive information and promotions from retailers via e-mail. Twenty-five percent of respondents—representing millions of shoppers worldwide—prefer to receive information in catalogs and direct mail. This indicates that mail is another strong channel for online retailers. Asian consumers are much more open to receiving promotional offers via text message and even via social media. This would suggest that U.S. retailers design multi-channel communications strategies to keep pace with the international consumer and make sure they understand communications preferences in each market.
Building a solution for your e-commerce needs
The survey findings helped us conclude that, while the world may be flattening out, online consumer behavior and preferences do vary by country. The things people buy online differ by country. There are subtle differences in the obstacles to purchase according to market. To succeed, U.S. retailers must find a balance between the right product mix, competitive pricing, and convenience. For instance, ease of checkout must be balanced with a site’s ability to accurately calculate and provide costs up-front during the buying process.
When considering selling in international markets via the Internet, there are several key elements to consider such as cultural norms, buyer comfort levels, varying demand for goods, and language and currency barriers that directly affect commerce. In some individual international markets, language or currency may be considered much more important during the online buying process. In order to make a simple and seamless online buying process and encourage shoppers to continue in the process until the purchase confirmation, an online retailer must understand the nuances in each individual country.
Easing the challenges of international shipping
International shipping is more complex than domestic package handling. Online retailers who fail to address international shipping complexities can end up with a poor customer experience, low sales revenue and higher-than-expected costs. In order to avoid these problems, it is important to understand the factors that complicate international shipping. Local postal administrators establish rules in each country that impact how shipments are addressed and prepared. For example, in addition to customs forms, value limits and size limits, most countries do not follow the U.S. standard of street address, city, state and ZIP code.
Two factors add to the complexity:
• Shipments must be coded using a HS (Harmonized System) number. These classification numbers are assigned to individual products and are used by customs authorities around the world for the application of duties and taxes. These numbers are typically six to 12 digits long. The first six digits are standardized worldwide, while some governments to further distinguish products in certain categories use additional numbers.
• Shippers also need to confirm the country of origin for the goods being shipped. Regulations and fees are often based not on the location of a company or warehouse—but on the locale of the original manufacturer. Retailers who sell goods that were produced in countries around the world need to create a mechanism to identify, capture and communicate that information as part of their shipping documentation.
Proper addressing helps ensure that parcels bought online reach the intended recipient. This is obviously of paramount importance, and helps underscore one basic message every retailer wants to send: it understands and values its customers’ business.
Companies that sell via the Internet know how important it is to have a good returns process. However, international returns processing can be far more intricate and survey respondents count online return policies among their top five obstacles to purchase. Procedures established for outgoing shipments must also be created in reverse. Establishing a process for documentation, cost-effective shipping and returns back to the U.S. is only part of the challenge. Organizations must also clawback the duties and taxes paid to foreign governments.
Some retailers also look to simplify shipping by engaging a single high-cost carrier who provides door-to-door service. In most cases, these unnecessary shipping expenses can make the overall cost to the targeted consumers too expensive. It is not unusual to see a higher abandon rate for shopping carts when higher shipping costs are revealed.
The businesses that succeed internationally will be the ones who can manage shipments across multiple carriers while also taking advantage of reliable, efficient postal networks. Over the past few years, several technology providers have introduced technologies that support international e-commerce. Even some of the largest retailers have opted to collaborate with service providers on key aspects of the shopping experience in order to deliver a world-class customer experience. E-commerce platform providers are also making it easy for retailers to automatically present and settle transactions in foreign currencies, handle international payments processing and simplify logistics. These aggregators and systems integrators have also collaborated with international shipping providers.
The integration of third-party shopping carts and international shipping solutions is enabling retailers to fulfill orders much more cost-effectively and efficiently by shipping goods to centralized service facilities in the United States. This can help eliminate the need for cross-border infrastructure or up-front capital purchases. Retailers should select international service providers who deliver end-to-end support, with scalability and the flexibility to lower costs and improve customer satisfaction at every step.
There is no one-size-fits-all solution
International e-commerce success requires the flexibility to respond to cultural norms, local market conditions and evolving consumer preferences. It also requires flexible options that can help retailers select the best distribution method, tracking capabilities and return management process for their duty and duty-free products. Finding a solution provider with the resources and expertise to provide these services should become an integral part of the expansion plan.
The best way to start, or to expand your international e-commerce efforts in this brave new world is to build on a foundation of good old-fashioned market research. Armed with this research, you can pinpoint exactly which factors will impart your business plan going forward, and choose your technology and shipping solutions with those factors in mind.
