Recently, Forrester published an updated version of its report on The Age of the Customer. The report discusses the fact that competitive differentiation has been based upon the power of manufacturing, distribution and subsequently information. We’ve now entered an era in which “the only sustainable competitive advantage is knowledge of and engagement with customers.”
The report gives great examples of brands that have used both digital and traditional channels to become customer obsessed and the benefits they’ve realised as a result. Yet for a large number of brands, the journey is just beginning. This early stage is often reflected in brands’ e-commerce offerings around the globe, many of which still reflect a product-centric rather than a customer-centric approach. Today we find that:
Many customer-obsessed e-commerce brands aren’t equally obsessed in all global markets. Brands’ e-commerce websites around the globe often pale in comparison to their core offerings at home. Some small markets may not merit substantial investment; however, many brands still fail to carry over best practices into markets with enormous opportunity. At our Forrester Summit in Shanghai last spring, we highlighted a number of areas where global e-commerce brands lagged in China in comparison to their local counterparts. For example, many brands that offer an extensive product selection online in the US and Europe – and have mastered areas like product recommendations and user reviews in these markets – have not extended these offerings into China. This approach means global brands’ offerings often fail to stack up against those of local players. Leading Chinese online retailers across different categories, from Dangdang to Jingdong to Yihaodian (now majority owned by Walmart), have all focused on these core site features.
In some markets, only a few e-commerce brands provide online experiences that truly center on the customer. In markets like Brazil, a handful of forward-thinking local e-commerce players such as Netshoes have taken a highly customer-focused approach and offer online experiences that clearly address key customer pain points. By contrast, many players in the market still lack a sufficient customer focus, ignoring key must-have e-commerce features. The situation in Brazil is not unlike that in many other markets: Quite recently in Australia, for example, a few small or online-only players such as City Beach and Kogan offered robust online experiences while many large omni-channel retailers lagged behind.
International shipping unlocks access to new customers and customer-obsessed e-commerce brands need to think about increasingly global shoppers. The heaviest demand for products from US-based online retailers tends to come from English-speaking countries. Canada and Australia are two of the English-speaking markets that tend to rank highly for most US-based online retailers: Canada largely due to the geographic proximity and familiarity with US brands and Australia due to the slow development of domestic online shopping options and the $1,000 duty-free import exemption. Retailers that take the steps to incorporate global expansion into their initiatives could see serious results in the long run. In the same way that retailers are thinking about the future implications of digital trends, they should be thinking about global trends and the effect that increasingly global shoppers will have on their businesses.
The ‘Age of the Customer’ is a global phenomenon: Brands that fail to plan with core customer needs in mind will be surpassed by savvier, more nimble companies that prioritise their customers above all else. How are brands in your country or region becoming more customer focused?
LEGAL FOCUS: ANALYST OVERVIEW
E-commerce in Australia is interesting in that consumers spend across a wide variety of categories as they do in other mature online retail markets, but the market didn’t evolve the same way as it did elsewhere. In Australia, cross-border online shopping became a phenomenon quite early on. The $1,000 low-value threshold (LVT) drove Australian consumers to shop from overseas online retailers; at the same time, the slow pace at which domestic Australian retailers embraced e-commerce impeded domestic spending. While great progress has been made by domestic retailers recently, part of the reason why Australian online shoppers buy across so many categories today is due to the fact that they have tapped into the broad product selection offered by online retailers in other parts of the globe, especially those in the US and UK.
THE EVOLUTION OF GLOBAL ECOMMERCE MARKETS
Online retail revenues around the world are growing: In no market that Forrester forecasts are online revenues dropping year-over-year. A look at markets around the world, however, reveals that the size of e-commerce markets varies greatly, with online retail market size not necessarily equating with the overall size of the economy. The following summarises and compares two of the key markets around the globe – the US, the single largest online retail market in the world, and Asia-Pacific which is growing consistently [see Figure 1]:
• US. The US remains the single largest online retail market in the world. With $231 billion in B2C online retail sales in 2012 growing to $345 billion in 2016, growth in this market remains steady. Competition in the US market is steep, with a number of both online and multi-channel players seeing over $1 billion in online retail sales. In comparison to other global markets, however, the market is neither heavily concentrated nor fragmented: Online sales are not dominated by a single player as they are in China, nor does the US see the same level of fragmentation that a market like Russia does.
• Asia Pacific. Forrester currently forecasts B2C online retail revenues for Japan and Australia, as well as combined B2C and C2C revenues for China and India. In markets like Australia and Japan, the online retail markets are relatively mature, with growth rates that reflect that maturity. And while the highly developed online retail market in Japan once dominated Asia Pacific, China has overtaken the market to become the single largest e-commerce market in the world after the US. Online retail revenues of $169 billion in 2012 are set to reach $356 billion by 2016. E-commerce in China is also more developed than in other emerging economies in the region: China’s economy, for example, is about four times larger than that of India, yet its online retail market remains about 100 times larger.
Source: Forrester: The Evolution Of Global eCommerce Markets report by Zia Daniell Wigder.
INTERNATIONAL SHIPPING OPTIONS
Tackling both international logistics and localisation can be tasking and expensive for a retailer that is in the stage of testing new markets. The first and most important step for e-business professionals is to find a vendor that can ensure seamless delivery to global customers – clearly the most crucial component of an international shipping option. A second step is to ensure that risky areas of the global business are managed effectively; for example, e-business professionals must make certain their business is protected against fraudulent transactions from global online shoppers. A third step is to offer some form of localisation to unlock the true potential of global markets: This area can include translated website content, localised marketing campaigns, and payment types that resonate with different consumers around the globe.
When it comes to this final localisation step, retailers are still at a very early stage: 41 per cent of retailers that ship internationally do not translate any part of their website, for example, and only five per cent translate parts of their website for every market they enter [see Figure 2].
For online retailers to truly tap into a market of shoppers abroad, they will ultimately need to address these shoppers in their own languages – a step that is not a top priority for most brands shipping internationally today. Similarly, when it comes to promoting their products internationally, most online retailers are still only dabbling in marketing campaigns that support their international shipping initiatives – many will target international shoppers with email marketing campaigns and make small investments
in paid search, but the resources devoted to these types of initiatives tend to be very limited. And while vendors expand their lists of online payment types, very few online retailers that are shipping internationally today offer consumers the same array of payment options that these consumers would see from their local online retailers.
Source: Forrester: International Shipping Solutions report by Kelland Willis and Zia Daniell Wigder.