International e-commerce is an undeniable growth opportunity. In the United States alone, online retailers made an estimated $455 billion in 2017, with current year-to-year growth measured at 15.2 percent.
Outside the U.S., prospects are just as profitable. Eighty-four percent of Canada’s residents have shopped online, with the U.S. Department of Commerce International Trade Association estimates that by 2019, 20 million Canadians will spend $50 billion on e-commerce transactions a year. Sales are expected to reach $43 billion by the end of 2018 and, to the south, 21.1 million Mexican consumers will shop online.
Overseas, the market is wide-open: While 87 percent of Brits have made e-commerce purchases, over 75 percent of local stores dislike their own e-commerce experiences, admitting they aren’t strong enough to meet the market need (a dismal 4 percent are pleased with their mobile apps). Further afield, e-commerce is also booming in Australia, with Power Retail reporting 29 percent year-to-year projected growth through 2020.
In India, for example, e-commerce finds tremendous potential: Customers spent $38.5 billion in 2017, with $64 billion projected for 2020 and a $200 billion forecast for 2026. Less than 65 percent of the population is online, meaning this market is far from peaking: Internet penetration is slated to double by 2021. As a result, the India Brand Equity Foundation projects India’s e-commerce industry will surpass that of the United States by 2034, becoming the second-largest in the world after China. In 2017, Chinese shoppers spent more than $1 trillion online — e-commerce first.
Online retailers are now facing their greatest chance in industry history to expand internationally, especially as the growth of these individual markets directly correlates with profitable opportunities in cross border e-commerce itself. While Stat Trade Times calls cross border e-commerce “the new growth buzzword ticking the world,” there’s more to this trend than talk: It’s slated to expand at twice the rate of domestic through 2020. Forty percent of non-U.S. shoppers have made online purchases from a foreign site, with cross border purchases averaging higher than domestic. Global e-retailers are currently growing 1.3 times more quickly than single-country sites.
What Is International E-Commerce?
International e-commerce is the business of selling a product through an e-commerce website to buyers in foreign countries. As the proliferation of digital tools increases internet availability worldwide, any company can sell online, making international e-commerce easier than ever before for both pure-play companies and brick and mortars. For traditional retailers, e-commerce can also serve as a testing ground to determine whether new, foreign markets will be successful before opening a physical location there.
While it’s tempting for e-commerce professionals to assume expansion into a country with a similar culture will require less work, the word “international” is key. No matter how many countries have in common, each one is unique. Canada is not the United States, Belgium is not France. Every global market deserves its own methodical planning and consideration.
Four Areas to Investigate Before International Expansion
In addition to financial investment, building an international e-commerce presence takes effort. That’s why marketers, logistics professionals, and others must ensure the timing is right. How do you know the business is ready?
1. Start with operations
International expansion doesn’t necessarily need a brand new pool of resources, but it does take a commitment from the ones you already have — namely, people and finances. Regarding human resources, executing marketing and operations on a global level requires a unique skill set. Employees should either have international experience already or be willing to learn something new. If they aren’t, consider hiring new staff or shifting certain individuals into domestic-only roles. From a financial standpoint, it is recommended that businesses with global aspirations carve out an international marketing budget separate from their domestic marketing budget — depending on overall growth strategy and market conditions, of course.
2. Weigh product demand with international supply.
Google Insights and similar SEO measurement tools can track how often consumers search for certain items, as well as to measure existing foreign traffic to your site. High conversion rates and/or average order values from a particular region are strong indicators as well. Additionally, examine international e-commerce figures that measure which products consumers in the target country are accustomed to buying online: For example, 47 percent of India’s online spend goes toward electronics, the country’s most popular e-commerce category. But in China, clothes and paper towels are hot ticket items, selling better online than in-store: Digital Commerce 360 reports these and other “tangible items” make up 28 percent of the country’s e-commerce sales.
3. Look for a competitive vacuum.
In developing countries, new markets show sharp increases in the number of consumers using mobile to go online. Before, traditional retailers made the mistake of ignoring these markets in lieu of focusing exclusively on growth in markets with established, physical operations. Even in their own countries, they failed to see e-commerce’s potential, making it harder to later gain market share. In Belgium, for example, German, French, and Dutch companies actually have larger market shares than Belgian retailers for this very reason: Domestic businesses were too concentrated on brick and mortar while foreign competitors seized the online opportunity. International e-commerce allows smaller, more agile companies to enter emerging markets and establish themselves as early as market leaders.
4. Determine the scope of expansion.
International growth is typically much easier for e-commerce operations than for brick and mortar. Will the company need to open physical locations? Or does international growth simply mean adapting web design, payment, and shipping for global shoppers? As with any other initiative, the better the company defines its needs, the more likely it will succeed. It’s important to decide early on what global expansion looks like for your business.