Globalizing Ecommerce to Reach New Markets

US web retailers have compelling reasons for selling online to foreign consumers. As ecommerce growth slows at home, they are seeking new revenue streams in foreign markets, especially in emerging internet economies like China, where B2C online sales are forecast to grow at a 94.2% compound annual rate from 2010 to 2015.
“Some US retailers have started to sell online internationally after seeing significant amounts of site traffic coming from abroad,” said Jeffrey Grau, eMarketer principal analyst and author of the new report, “Globalizing Ecommerce: What Retailers Need to Know About Entering Foreign Markets.” “Retailers that hesitate are likely to face higher entry barriers later, as competitors team up with the most desirable in-country business partners and earn the loyalty of local online consumers.”
So far, the most popular foreign countries for US online retailers have been Canada, the UK and Australia—highly developed markets that share linguistic and cultural affinities with the US. However, the markets with the highest growth prospects—and which also present some of the biggest challenges—are emerging ecommerce economies like China, Brazil and India.

B2C Ecommerce Sales CAGR in Select Countries, 2010-2015

According to a March 2011 Internet Retailer survey, a majority of online merchants—led by web-only and chain retailers—indicated they sold online to consumers outside the US. However, the extent of companies’ operations when selling online to foreign consumers can run the gamut, from merely accepting international orders without providing customer support to having full-fledged country-specific websites and operations abroad.

US Online Retailers that Sell Online to Consumers Outside the US, by Business Model, March 2011 (% of total)

Ecommerce adds a new dimension to global retailing. Selling abroad is nothing new for some long-established US retailers. But complementing foreign brick-and-mortar stores with an ecommerce counterpart capitalizes on the burgeoning multichannel shopping trend. And even for experienced retailers, there are new challenges associated with international ecommerce.
“Even in entering highly developed markets like the UK, Japan and South Korea, retailers have stumbled by mistakenly assuming these markets are built in the same mold as the US,” said Grau. “Each market abroad, no matter how developed or superficially similar to that of the US, has unique characteristics that US retailers must take into account if they are to succeed.”

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