ENTERING GLOBAL MARKETS

How to Support Global Online Sales

Here's how companies such as MotoSport and Zazzle are tackling global e-commerce.
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When MotoSport made its first international sale, things didn't go smoothly. The Portland, Oregon-based online retailer of motorcycle parts and accessories had received a $99 order from Canada. It seemed like a no-brainer to fill it.

But after the delivery truck arrived at the customer's house, the driver immediately demanded $100 worth of unpaid Canadian taxes and tariffs. "It was more than what the guy paid for the item," says Jarrod Rogers, MotoSport's director of marketing operations. "Of course, he didn't want it." It turned out that the item was subject to a particularly high tax, of which the company had been unaware.

As MotoSport quickly discovered, global e-commerce has its challenges. But international markets are becoming too big to ignore. Though the U.S. accounts for about $90 billion of the $309 billion global e-commerce market, other countries are zooming ahead on some key measures, says Daniel Latev, who studies global Internet retailing at market research firm Euromonitor International. In annual per capita online spending, the U.S. ranks third ($355 per person), behind the U.K. ($578) and Denmark ($466). And when it comes to e-commerce growth, China, Brazil, and Mexico are all expecting to see increases of up to 30 percent a year for the next five years, excluding inflation. The U.S. e-commerce market, by comparison, grew 6 percent in 2009. "There is a lot of opportunity in foreign markets," says Latev.

Cashing in on that opportunity wasn't easy for MotoSport. The company discovered that its products were subject to an encyclopedia's worth of government fees and regulations, all of which varied depending on the type of product, what country it was going to, and where it had been made. That was bad news for a retailer with more than 100,000 products from about 400 suppliers worldwide.

So MotoSport turned to FiftyOne Global Ecommerce, a company that handles international shipping and logistics and also makes sure online customers see prices displayed in their local currency. For a $20,000 setup fee, FiftyOne linked MotoSport's sizable inventory to FiftyOne's database of country-specific taxes and updated MotoSport's website with pricing information for various regions.

MotoSport now sells online to 84 countries. When an order comes in from overseas, MotoSport ships the products to one of FiftyOne's warehouses in Ohio and New Jersey. FiftyOne takes care of the rest and pockets a percentage of the sale. Rogers says, at this point, his company has not made a concerted effort to draw in international customers -- it hasn't translated its foreign websites into local languages, for example. Even so, Rogers says MotoSport views international sales as one of the biggest sources of potential growth.

One company that has worked hard to reach foreign customers is Zazzle, a Redwood City, California-based business that specializes in customized T-shirts, mugs, and other sundries. Like MotoSport, Zazzle has faced some challenges with tariffs and government fees, but its main focus has been on tailoring its online shopping experience to each country, says Michael Karns, the company's head of international development.

So far, Zazzle has created standalone websites for 15 countries and offers shipping to another 70 or so. Karns keeps a close eye on Zazzle's Web traffic to determine which markets to target next. When Zazzle began its international push in 2008, it devoted most of its resources to developing an Internet platform that could easily be reconfigured to match the tastes of a local audience. Then, it invested in translating each site, changing its Frequently Asked Questions sections to reflect specific concerns in each country, hiring multilingual customer support teams, and analyzing customer preferences in each region. Germans, for example, buy a lot of custom skateboards, while Japanese customers prefer Zazzle's custom sneakers.

Another critical area to figure out is logistics -- actually getting a product from Point A to Point B. That's easy for a company like HoMedics, which has long worked with overseas distributors. Before it began selling online, the 25-year-old Commerce Township, Michigan, company, which sells personal wellness items like back massagers and sound machines through large retailers such as Target and Bed Bath & Beyond, already had a global distribution network. HoMedics had to integrate its e-commerce software with the disparate order-fulfillment computer systems at each of its international outposts. After that, shipping was a cinch, says Phil Jacokes, e-commerce manager for HoMedics.

But even if you don't have overseas distributors, you can still sell internationally, says Michael DeSimone, CEO of FiftyOne. He says it's a mistake to assume that customers overseas wouldn't be willing to pay higher shipping costs. DeSimone points to an example from his family. His sister-in-law, who lives in Australia, can't find 1,000-thread-count sheets for a decent price anywhere nearby. So she buys the sheets online from American retailers and pays what might seem like exorbitant shipping rates. "But even with that high shipping cost, she's paying half of what she would anywhere in Australia," DeSimone says.

Plus, he says, after an international order comes in, companies often receive multiple orders from people who live in the same town. "People start telling their friends and neighbors where they can finally get 1,000-thread-count sheets," he says. "There's a viral marketing aspect to it."

That's encouraging for businesses like MotoSport that aren't yet marketing to other countries. "If we ever decide to promote MotoSport in local markets," says Rogers, "we expect that it will only grow from here."

IMAGE: Source: Euromonitor International
Last updated: Dec 1, 2010

RYAN UNDERWOOD

Ryan Underwood is a writer and editor living in Nashville, Tennessee.




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