Last modified: October 29, 2018
The world may be shrinking, but e-commerce opportunities are booming as global markets become increasingly interconnected. Just as the internet broke down global information silos, technological advances have ushered in a new era in which the sale of goods and services is no longer constrained by the barriers that stood just five years ago. Consider this: in 2017, worldwide retail e-commerce sales were $2,290 billion U.S. dollars. By the end of 2018, Statista predicts sales to reach $2,774 billion, representing a 21 percent increase in just one year. More than half of shoppers report they have purchased from an overseas retailer.
While the market has blossomed, brands that want to take advantage of the opportunity to expand e-commerce operations outside their home market must recognize that one size doesn’t fit all. Instead, it requires balancing the fine line between being global and acting local — without the accent.
A company cannot simply set up an e-commerce site in a new country and expect success. Instead, it must consider local preferences, common practices, regulations, and more. What’s at risk if it doesn’t? While not specific to e-commerce, a common illustration often used in marketing classes to showcase why localization is key revolves around Chevrolet’s push to sell its Nova model in Mexico. “No va” or “no go,” as the phrase translates in Spanish, has never been a vehicle selling point. And even though this textbook example isn’t actually true, it paints a memorable picture.
So, what should companies consider when taking their e-commerce operations global? Piggybacking off of the above example, the first consideration — language — is important to ensure an optimal user experience. Consumers want to believe that a brand understands them. For instance, if a British consumer is presented with American English or vice versa, it can be a deterrent from going through with a transaction. And it’s more than simply evaluating language on your e-commerce site. What about language that the customer sees related to checkout? Marketing? Returns?
While localizing language is important, that’s not where it ends. Another vital consideration is understanding common local payment methods. Every country has a preferred payment method, so engaging Visa and Mastercard isn’t enough. A few global payment factoids to consider:
- In Japan, cash on delivery is the second most widely used payment method, with 16 percent of Japanese consumers preferring to use this method to pay for their e-commerce purchases.
- In Spain, 39 percent of consumers would abandon their shopping cart if their chosen payment method wasn’t available.
- In Mexico, cash payments and interest-free monthly payments are popular for consumers, even for online transactions.
As global e-commerce continues to grow at a rapid pace, retailers need to have a system in place that will help them understand and keep track of local payment options as they become available. Having this information and putting it to use can make the difference between the shopper completing the transaction, resulting in a pleasurable and repeated experience, or abandoning the shopping cart and moving on to another merchant.
Even with a localized, ship-shape front-end experience, there are still a multitude of post-sale experiences that must be evaluated. For instance, German shoppers have the highest rate of product returns in Europe and expect free returns. How does the business plan its supply chain and returns policy for this market-specific demand? This type of insider knowledge of local consumer preferences cannot be faked. It requires access to on-the-ground resources that have a pulse on local expectations and culture.
Last but not least, the GDPR has taught us that it’s imperative for sellers to have a deep local knowledge of taxes and regulations to account for even the slightest variances. Fines and other penalties can be substantial and debilitating, so this expertise is essential to protect your business from legal risk and to understand its obligations. In Italy and Brazil, for instance, merchants must register transactions at a country and local municipality level, creating a substantial reporting burden if your business isn’t adequately prepared to track the correct information.
As the cliché goes, think global, act local. E-commerce without the accent is a tried-and-true recipe for global e-commerce success, and one that organizations must comply with if they want to grab a piece of the growing global market.