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Michael DeSimone, chief executive officer of FiftyOne Global Ecommerce, which works with major U.S. retailers such as Macy’s Inc. and Gap Inc. to extend their online business internationally, presenting at the WWD Global Markets Forum, said there are different methodologies merchants can adopt in selling abroad.
This story first appeared in the October 12, 2011 issue of WWD. Subscribe Today.
“Outside the U.S., for the most part, e-commerce is growing faster than the U.S., primarily because the American market is so mature,” said DeSimone, whose company supports clients that service more than 120 countries and territories and handles more than 40 currencies. “Technology now allows retailers to easily reach the consumer from beyond the shop door. The average U.S. retailer Web site sees between 10 and 25 percent of its traffic from outside the U.S.”
He said American e-commerce properties have a significant advantage over their foreign competitors due to efforts in search optimization.
“Culture and language have major impacts on buying behavior,” said DeSimone. “For example, online chats are the norm during the shopping session in China and Brazil.”
He said address verification can also be challenging globally. He said the U.S. and Canada are no problem, the U.K. is OK, although an address of “top of the hill” doesn’t really work, and beyond that it can be difficult.
DeSimone said Macy’s has developed what he considers a model e-commerce site.
“It’s a complicated site with a vast range of merchandise, brands and third-party content,” he said. “It uses localization to welcome the international consumer, but doesn’t attempt to create a fully localized experience. Consumers are able to choose their country and shop in their own currency, but orders are dispatched as domestic orders and fulfilled internationally by FiftyOne.”
He said the risk here is the shopper must be comfortable transacting in English and the overall site is oriented to U.S. consumers, as opposed to being optimized for different cultural norms.
On the other hand, Gap has multiple international models. It takes what he calls a “hybrid” approach.
Gap has landed sites in Canada and the U.K. that fulfill orders from local inventory. DeSimone estimates that retailers pursuing the hybrid model offer 20 to 30 percent of its stock-keeping units on their local websites, allowing in-country customers to shop in a way that’s more competitive with local retailers. This also eliminates customs or import issues.
If these products are bought, the shipping time is much shorter then if fulfillment is from the U.S., he noted. At any time, consumers can access other products on the main site and have their purchases shipped from the U.S.
“The hybrid model can require substantial up-front and ongoing investment,” said DeSimone. “There is also risk confusing the consumer,” such as “which site am I supposed to shop from?”
When deciding which approach to take, he said it’s important to “understand what you can sell where.”
In addition, the more localized a site gets, there are licensing and personnel issues to consider.
Overall, DeSimone said the biggest e-commerce market for FiftyOne is Canada, followed by Australia, the U.K. and Brazil. However, China is the biggest and fastest growing e-commerce market in the world, but it is a tricky market to navigate and is highly competitive.