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eTail 2011 Conference

International expansion continues to represent a tempting opportunity for online and multi-channel retailers who recognise the potential to leverage their e-commerce infrastructures into a cost-efficient route into new territories. By Glynn Davis

OMNICHANNEL

eTail 2011 Conference

International expansion continues to represent a tempting opportunity for online and multi-channel retailers who recognise the potential to leverage their e-commerce infrastructures into a cost-efficient route into new territories. By Glynn Davis

At the eTail 2011 Conference in London this week the topic of internationalisation was prominent as the likes of Debenhams and Alexon from the UK and US-based Zazzle all highlighted overseas expansion as part of their strategies.

Simon Forster, director of Debenhams.com, told delegates: “The challenge for us is to also look overseas as e-commerce is a great way to expand without the need to invest in store chains.” And although it is still very early days in his tenure as group e-commerce director at Alexon, Giles Delafeld also recognises the “huge opportunity” for his company to extend its reach internationally through its online presence.

For some businesses – especially the pure plays – taking their stores overseas is a core part of their strategy. Among these globe-trotting operators is personalised and customised products retailer Zazzle that started out trading online in the US but in late 2008 ventured into the UK and is now in 16 countries with localised websites.

Mike Karns, director of international at Zazzle, says that in 2007/8 as many as 30 per cent of the unique visitors to the US site were coming from foreign IP addresses but that international sales were a mere three per cent of revenues. This clearly highlighted demand for the group’s products but the conversion rate of only one tenth was something that the company sought to address through the launch of localised sites.

Growth rates from its international business in the first two years since first launching in the UK in November 2008 has been 900 per cent and accelerating, according to Karns, who suggests the route to success overseas is to undertake internationalisation first and then localisation on your websites.

He says the former requires “designing a software application (website) so it can be adapted to various languages without engineering changes”. The next step is to then apply localisation, which involves the “process of adapting internationalised software for a specific region or language by translating text and adding locale-specific components”.

Such is Zazzle’s expertise now in adding new countries to its empire that Karns says a new localised and internationalised site can be launched in only one-to-two months.

For newcomers to overseas expansion there are many aspects to consider, including the myriad payment methods that are utilised by consumers around the world. Nile Younis, business development manager at Global Collect, told delegates that the “payment options are bewildering and there are questions over the longevity of certain payment instruments” especially as there is a lot of innovation taking place in this part of the market.

He recommends retailers embrace the payment behaviours of consumers in local markets, which ultimately means having to “take a leap of faith” with certain payment methods but it has to be done if large percentages of online payments are being made in a particular way.

For retailers with between Euros 5 million and Euros 100 million of sales, Younis suggests outsourcing the payment service requirements to a specialist provider but for merchants outside this band he says it might be better to take the do-it-yourself route.

One of the innovations retailers are dealing with is mobile payments, which represent just one of the challenges that smart devices are throwing up for the sector. Mark Adams, sales and marketing director at Portaltech, suggests: “Mobile is the glue for the whole shopping experience and through innovation in mobile we will see massive growth. It’s now a no-brainer [adopting mobile] and is affecting retailers’ businesses right now.”

He says the problem at present with mobile is that retailers have separate teams running it, just as they do for each of their other channels. The challenge of bringing the channels together to create a true multi-channel proposition is one that arguably the entire retail industry is grappling with at the moment.

This involves removing silos within retailers’ businesses and creating a single data repository that can deliver a single customer view. John Ashton, head of e-commerce at Screwfix, says: “We’ve changed over all the platforms [in Screwfix] to give us a single customer view as this is the most important aspect to the industry. It’s the most crucial thing we do. It’s the start of personalisation. It’s hard and not for the faint hearted but when you get to the end then boy can you get results.”

Robin Terrell, executive director of multi-channel and international at House of Fraser, is not surprised that such developments are a tough ask for the industry as the traditional way of retailing has been “entirely challenged” by e-commerce. “Retailers see technology as something that turns the lights on and not as a strategic asset. E-commerce has challenged all aspects of their businesses,” he explains.

Such is the challenge most operators admit they are only part way down the journey. Among them is Forster at Debenhams.com: “We’re right at the beginning because the journey is so long. Every function in retail has been focused on selling through stores so it is no small thing to think what’s multi-channel?”

It’s the same story at Alexon where Delafeld ays: “We’re at the beginning of multi-channel. The business has been massively under-invested over the past 10 years. Online has been very low cost and so is very un-fit for purpose. We’re all retailers with multiple channels but multi-channel is something different.”

Terrell says to achieve success requires lots of small actions. “You have to keep building blocks. Everybody looks for a silver bullet but it’s always lots of small things,” he says, adding that it is also imperative that people throughout the business understand “what’s in it [multi-channel] for them”.

There was unanimous agreement among retailers at eTail 2011 that having buy-in throughout the organisation to multi-channel was essential to success. The reason Delafeld believes Alexon has been successful online, despite little investment in the channel, is because “everybody buys into it”.

Providing accountability helps achieve the necessary buy-in, as does crediting online sales and Click & Collect transactions to store-based employees as well as the online team. These represent big cultural changes for many organisations but without implementing such actions then the multi-channel model will be very difficult to achieve.

 

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