E-Commerce international expansion challenge : One size does NOT fit all.

By 2020, over 2 billion e-shoppers, or 60 percent of target global population, would be transacting 13.5 percent of their overall retail consumptions online, equivalent to a market value of US$3.4 trillion. Global B2C GMV, growing at CAGR of 13.5 percent from 2014 to 2020) according to Accenture.

Fuelled by emerging markets and convergence of consumer and market trends, cross-border e-commerce will be a key growth engine for the global e-commerce industry.

Seizing the opportunity : using eCommerce international expansion as a growth driver

Since in the last few years growth rates in mature markets have begun to slow, retailers have had to look beyond their borders to find sustainable opportunities that allow them to meet growth targets. To drive global growth and meet growth targets in today’s competitive marketplace, retailers and brands have started to think about international expansion through leveraging the strength of eCommerce into new markets. Fuelled by emerging markets and convergence of consumer and market trends, cross-border e-commerce will be a key growth engine for the global e-commerce industry. Riding the wave of cross-border consumer purchases phenomenon, retailers and brands have realised that they need growth strategies that will capitalise on this market trend development.

In today's competitive marketplace, eCommerce provides a lower risk, faster avenue to enter and test international markets. However, eCommerce expansion is not a one-size-fits-all solution.

As e-commerce markets in Asia, South America, and Eastern Europe continue to outpace their mature counterparts in the United States and Europe, retailers should focus on the importance of using eCommerce as a growth driver to reach new markets. Not only does it allow retailers to interact with new customers, but it provides an opportunity to better understand new markets through low risk, low cost test-and-learn digital expansion strategies, which then allows retailers to further penetrate those with the highest growth potential. In today's competitive marketplace, eCommerce provides a lower risk, faster avenue to enter and test international markets. When properly executed, this approach will go a long way to differentiate brands and build customer loyalty.

However, eCommerce expansion is not a one-size-fits-all solution. Taking time to understand the roles, entry methods, and operational considerations is the first step for retailers to build out a global eCommerce presence that can ultimately return greater long-term success and continued growth opportunities. 

eCommerce expansion is not a one-size-fits-all solution

Tailoring your eCommerce international expansion

Recognising that each company will have specific needs and issues to consider when turning expansion goals from strategy to reality, retailers should review entry method examples and operational aspects below when assessing market readiness for better understanding how chosen entry method(s) and customer preferences could impact operations.

How will you reach your new consumer base? Do you have the right eCommerce functionality and platform capabilities to provide consumers in your target market with a rich, customised customer experience? Will you localize your product mix? How will you handle global fulfilment? How will returns be processed? These are just some of the questions that retailers planning international e-commerce expansion will need to answer and more importantly, if they want to succeed, align with country distinct local market preferences.

For a global e-commerce growth perspective it is important to realise that with a change in country and culture, purchase habits also change.

Paying Attention to Country Distinct Consumer (Post)Purchase Preferences

When considering entering into new international markets as a business, it is important to carry out in-depth market research into consumer behavior and buying habits. Buying habits are tendencies customers have when purchasing products and services. These tendencies come from a variety of different factors and aligning with or against them will have significant impact on your sales prospects given that customers will feel (un)comfortable buying from you. For a global e-commerce growth perspective it is important to realise that with a change in country and culture, purchase habits also change.

Market by market country distinct consumer purchase habits are not just naturally determined by country culture differences, but when it comes to e-commerce buying habits, also by market maturity in terms of technological level of advancement and e-commerce industry maturity as well as already existing local players. Furthermore, when considering the purchase habits, one needs to know that out of three phases of purchase experience (pre-purchase, purchase and post-purchase) it is the post-purchase that carries most weight when defining positive or negative evaluation of the total buying experience. Thus, when looking across country distinct e-commerce purchasing preferences, one needs to pay special attention to the post-purchase phase as it will have strongest impact on defining total purchasing habits.

Strategic importance of post-purchase average market performance insights

Strategic importance of post-purchase market average performance insights lies in the operational implications those alignments would mean for a company entering certain markets. Namely, in order to compete at all in a certain market, become a part of a consideration set for an average e-commerce consumer, company will need to meet certain market average expectations - say in delivery times, or return & refund policies. Knowing those market averages, will reveal operational and organisational implications for the company - adjustments that will need to be done. Knowing this "Basis of Competition" within a single market and across different markets is of crucial strategic importance. Ability to align operational performance to meet and exceed it will determine whether the international expansion will succeed or fail.

In order to compete at all in a certain market, become a part of a consideration set for an average e-commerce consumer, company will need to meet certain market average expectations - say in delivery times, or return & refund policies.

The Basis of Competition within a market

The “Basis of competition” describes the collection of benefits that are the most important determinants of a customer’s choice between different competing products or services. The basis of competition is not static. It will change over time as competitors match each other in an area, making it a commodity or because customer needs change.

'Hygiene factors” in the example above are important to customers, but they perceive little differentiation. On these factors, you have to exceed a minimum standard or you get no business, but once you achieve this there is no further reward for improving performance. A good example of a “hygiene factor” is cleanliness in Fast Food Restaurants. If the restaurant appears dirty, with cockroaches running around on the floor, you will get no sales. However, once the restaurant looks well looked after, customers will not reward with extra business restaurants that are even cleaner than others. Same logic applies to eCommerce business.

When you are trying to understand the future business environment, it is critical to understand how the “basis of competition” is changing. By predicting the future basis of competition you can gain an advantage before competitors catch up. You will need to invest in new factors that are becoming the basis of competition and stop investing in areas that are becoming “hygiene factors”.

SO DIGITAL GLOBAL E-COMMERCE BRAND EXCELLENCE PLATFORM is a management tool that helps companies formulate, evaluate, and improve their e-commerce strategies by providing a systematic assessment of competitive performance of post-purchase experience across markets. Platform enables brand & e- commerce professionals to define and implement growth-through-differentiation strategies by identifying the basis & dynamics of competition within a market.

Disabled by lack of systematic assessment insight into it’s competitive position and dynamics of competition within and across markets, global e-commerce & brand professionals risk making faulty market steps and costly mistakes by applying “one-size-fits-all” approach which ignores country distinct consumer preferences shaped by e-commerce market maturity and local players. Avoid making flawed strategic moves on gut feelings and without proper insights and contact us today for a free no-commitment 1-on-1 walk through of the solution & service and use client case of Nike (EMEA).

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SO DIGITAL | GLOBAL BRAND EXCELLENCE SOLUTIONS is a technology company based in Amsterdam specialised in serving headquarters of global brands. We are proud partners of leading global digital growth brands like Nike (EMEA) and Uber (EMEA), but also other brands like TomTom (WHQ) and AS Monaco. With offices in Amsterdam, Berlin, Barcelona and Balkans we help global brands reduce complexity cost of global branding by delivering speed, scale and efficiency in execution across markets.