Cross border e-commerce is growing at more than double the rate of domestic e-commerce and the size of the market is poised to grow to over $300 billion in 2018 across the US, UK, Germany, Brazil, China, and Australia.
Global expansion used to be reserved for large companies, but not so today. The latest in payment technology, accessible data on local payment preferences and the availability of streamlined language solutions for websites mean it is now a realistic ambition
for UK businesses of any size.
Hundreds of millions of potential customers are now within reach and in many cases it is simply a matter of understanding your target markets, your customers and how they like to pay.
Thinking local before going global
British formal menswear brand Moss Bros is a great example. The business recently expanded globally by adopting an online-first international expansion strategy and, within a few months, 6% of its business sales were coming from abroad. Moss Bros understood
the importance of letting its customers pay with their preferred payment method in their own currency, offering local payment methods such as iDEAL in the Netherlands, which now accounts for two thirds of their Dutch sales.
In Europe, countries like Germany, Switzerland, Belgium and the Netherlands represent a significant opportunity for UK businesses. Statistically, shoppers in these countries are more likely to purchase from foreign websites than their southern European counterparts.
To capitalise on this, merchants must understand the local payment culture and support the appropriate major payment methods in these markets, including iDEAL (the Netherlands), SOFORT, Giropay (both Germany), Bancontact/Mr Cash (Belgium) and SEPA Direct Debit
(across all Euro markets).
Looking beyond Europe, there are many rapidly growing markets accessible without the need for a local entity. China is the biggest retail e-commerce market in the world, with local shoppers buying increasingly from abroad, eager to source traditional European
and US brands. It therefore represents a huge expansion opportunity for UK merchants, particularly for those who support leading local payment methods: Alipay, Tenpay and UnionPay, which contribute 80% of Chinese payments. Supporting these payment methods
is a game-changer and doing so will give a business the greatest chance to successfully access over 500 million new shoppers.
Russia is also a market that should not be under-estimated, despite recent volatility in the ruble and political tensions. According to
Russian industry association AKIT, Russian e-commerce grew 31% YoY in 2014, and 30% of e-commerce trade was cross-border, with plenty of room to continue growth due to a relatively low internet penetration compared to Europe. In Russia international cards
are popular, however businesses that support e-wallets such as Qiwi or Yandex can expect much greater market penetration through increased checkout conversion.
Although the prospect of supporting a myriad of payment methods may sound complex and expensive, it needn’t be so. Thanks to advances in payment technology, this can be very straightforward, and will always contribute to the potential success of the launch
into a new market.
Using language to your advantage
Similarly, it can seem a daunting and expensive task to translate your website for each market in which you’re trading. However, UK businesses have a significant advantage as they share a language and cultural values with some of the world’s most enthusiastic
cross-border spenders, including the U.S., Australia, and Canada. In Australia 36% of online retail purchases are from international merchants and this number rises to 75% in Canada. In both cases, international credit cards are dominant and consequently the
entry barriers for UK businesses are very low.
For other markets such as The Netherlands, Germany and Scandinavia, where many local customers are proficient in English, having an English site with a relevant selection of local payment methods will give you the initial uptick in sales. However, translation
is the logical next step and will help deepen your penetration and increase conversion rates in these markets.
Beyond this, merchants will reap the rewards from optimising their multilingual strategies through International Search Engine Optimization (ISEO) and International Search Engine Marketing (ISEM). While these activities can be executed in a piecemeal way
for certain markets (i.e. delivery first, then currency, local payments, language, ISEO etc), others like China and Brazil require a fully localised end-to-end customer journey from the get-go. In this case a holistic approach, including all aspects of cross-border
trading, is essential to maximize success and businesses must ensure that their technology partners are able to support this methodology.
As this upward trend of global e-commerce continues to gather speed, UK businesses have an exciting opportunity to tap into established and expanding markets all over the world. Understanding your customers’ shopping behaviors, your target markets, their
language proficiency and/or preference, and the available payment technology is key to how UK businesses both large and small, can now step into the global arena.