Are international sales worth the risk?
Friday January 31 2014
E-commerce technology expert Phil Rothwell examines whether the opportunities of growing international sales online outweigh the additional regulations and costs
Phil Rothwell, marketing director for e-commerce software supplier, SellerDeck, observed that finding new customers overseas is a great way for retailers to grow their online business.
However, he also concedes that selling online overseas carries a higher risk of fraud, as well as the cost of delivery, returns and tax issues to consider. So does he think the pain is worth the gain?
"It is with good cause that the Government has been banging on about the importance of exports to the UK economy," Rothwell said. "I am old enough to remember when exports regularly exceeded imports and, though I do not fully understand the economic problems generated by running a trade deficit, it feels like our country is spending more than it earns."
UK export success story
Fortunately for retailers, this feeling does not convey the whole story. According to the recent Global Retail Empire study
, produced by Google and OC&C Strategy Consultants, the UK is the largest export economy for e-commerce in the world, generating overseas trade worth £720 million in 2013. These sales figures are expected to “soar” in the coming years to £28 billion by 2020 according to the report.
Rothwell questioned whether this is the 'green light' that independent retailers have been waiting for to press the export button.
"That very much depends on the nature of your business," he responded. "If the rise and rise of e-commerce has achieved anything, it’s been to give businesses of all sizes access to international markets. Even in the late 1990s, I was fielding questions from our customers about what to do with overseas orders. In those days, the advice was simple – if they emanate from countries renowned for strong ethics and the rule of law, verify and ship. Otherwise, ignore."
He continued: "For accidental exporters, this advice probably holds true today; though criminals are smarter and verifying transactions is much easier than it used to be using PayPal and other services. For strategic exporters, however, all this approach will do is predestine the business to failure – if you position export sales as the decorative icing on the cake, you will never get to have any cake."
Rothwell suggested independent retailers need four ingredients to build a successful online export business:
1. A strong and relatively diverse product range
"Wherever you go in the world consumers like to have a choice of products," he explained. "If you have a brand people desire that is great, but if you don’t you need to analyse your international competition and identify the gaps in their offering. Specialisation is essential to avoid head-to-head conflicts with the likes of Amazon, but it doesn’t mean you cannot offer customers a choice."
2. Pricing that thrills
"The UK’s retail sector is highly competitive and can work to your advantage from a pricing perspective, especially when the pound is weak, he said, advising, "don’t just compete on price as that usually leads to failure, but do your research and leverage it to the full, making the most of when the pound’s value moves in your favour."
3. Great customer service
Every customer, regardless of where they are located, expects a great buying experience. Rothwell explained: "You need a well presented and functionally rich online store, plus an efficient delivery and returns process. Building a great reputation for customer service can make moderately attractive pricing look like an absolute bargain."
4. Being proud to be British
"We may well be an intensely self-critical race and far from perfect, but in the rest of the world we are largely respected and considered cool," he added. "We may not buy Union Jack embellished couture, but the rest of the world does; make the most of it!"
Whether retailers are accidental or strategic exporters, all the indications are that there is money to be made overseas. Rothwell concluded: "It is not easy and you certainly have no guarantee of success. But if you can run an online business over here, there is a good chance you can do the same over there."
Tagged as: Online | e-commerce | international | sales | export | delivery | returns | tax | regulation | Google | OC&C | SellerDeck