Global ecommerce represents an enormous opportunity for online businesses looking to capitalize on new revenue streams.
In 2017, worldwide ecommerce sales amounted to $2.3 trillion, and that number is slated to grow to $4.88 trillion by 2021. In this new global marketplace, digital technology has made it possible for even the smallest ecommerce businesses to compete with multinational giants.
At the same time, selling to international markets presents a whole different set of conditions, with many potential pitfalls along the way. In this article, we’ll take a look at the four most important mistakes to avoid when breaking into new overseas markets.
Breaking into new markets is never an easy task, and the best way to stack the odds in your favor is ensure you’re conducting thorough market research.
Start by determining which markets you want to target. This is possibly the most important step in the process, as market fundamentals can have a major impact on the ultimate success of your program.
Here are some criteria to look out for:
After selecting your markets, you should conduct a deeper analysis of each region. Your goal in this stage is to identify unique local opportunities and challenges, such as:
By researching these issues in advance, you will be able to enter new markets with a substantial informational advantage.
If you’re going to expand to international markets, offering localized pricing is an absolute must.
Due to the intangible nature of ecommerce purchases, online customers often experience a much greater degree of “purchase anxiety” than shoppers at a physical store. Seeing a price displayed in a foreign currency can further increase that anxiety, since customers are not used to thinking in that currency, and don’t have an intuitive grasp of its value. This can make it hard for them to get comfortable with their purchase.
On a pragmatic level, there is also the issue of predictability. Exchange rates can change significantly over time, influencing the real cost of your products for international customers. This is a concern for all types of businesses, but it’s especially important for subscription businesses who depend on recurring purchases. Customers will be very wary about signing up for a recurring billing plan where they have no idea what they will be paying each month.
For these reasons, localized pricing is one of the first things you should implement when entering a new market.
The definition of an ideal checkout experience can differ significantly across international markets, so it’s important to localize the checkout process for each region.
There are three key elements to consider:
1. Offer all popular local payment methods
While credit cards might be the most preferred way to pay in North America, the same might not be true of every region. In China, for instance, a lack of strong consumer protection laws has made secure alternatives like Alipay very popular. If you don’t offer payment through these methods, you’re leaving a lot of money on the table.
2. Pay attention to how you present your prices
According to Worldpay, 56% of customers abandon purchases when the final price includes unexpected costs, which could include shipping, sales taxes or payment processing fees. If you’re only selling domestically, you can simply factor these costs into the price displayed on the product page. But when you expand overseas, things get more complex as each country will have its own unique set of add-on costs. So you should think carefully about how to tailor your pricing presentation to the specifics of each market.
3. Localize your form fields
This could involve a number of different adjustments. The simplest example would be formatting and layout issues for linguistic translations. For instance, the English phrase “Cardholder Name” is a lot shorter than its French equivalent, “Nom du titulaire figurant sur la carte”. Make sure your forms are formatted appropriately for all common local languages.
In addition, fields such as addresses, phone numbers and postal codes will differ greatly in length and format. For example, the standard U.S. telephone number has 10 digits, while the U.K. standard is 11 digits. The U.S. country code has one digit (+1), while Singapore has two (+65). In Japan most streets don’t have names, while in Italy, house numbers come after the street name. When designing your checkout, you should account for all these variations, and make sure that your forms are still intuitive to use.
International ecommerce transactions have a notoriously high failure rate.
Mainly, the reason for this is that acquiring banks often have very strict criteria for screening online credit card payments. This criteria can include the shopper’s personal information, purchase history and physical location, but one of the most important factors is geographic proximity. Essentially, acquiring banks are much less likely to approve payments that have been initiated from another country.
So in order to maximize the success rates of international purchases, you need to utilize the local payments infrastructure, and ideally, route the transaction through a local bank. A sophisticated payments platform like Origins Ecommerce can automate this process through intelligent payment routing.
The software will identify the location of the bank that issued the customer’s credit card, then direct payments from that card to an acquiring bank in the same region. And if the purchase still fails, the system will re-route the payment to another local acquiring bank for a second try.
Using such a system will help minimize lost sales due to failed international payments.
Global expansion can be a great opportunity for an ambitious ecommerce business – if it’s done the right way. By avoiding the four mistakes described in this article, you’ll be able to lay the groundwork for a successful expansion program, while greatly reducing the risks involved.