Three Rules When Exploring New Markets

I consider myself incredibly fortunate to have the job I do: Every year, I get to explore new markets around the globe and meet people who are equally passionate about building eCommerce businesses.

It's sometimes challenging to try and balance the fact that at Forrester, we are often brought to new places specifically to share our expertise — at the same time, our goal is to learn as much as possible while we're there. Many professionals looking to launch new offerings or pursue new partnerships outside of their own country face similar issues: They aim to both provide insights based on their experiences as well as to absorb knowledge that will help inform corporate strategies.

Having had some great meetings over the years and others where I’ve regretted my approach, I now try to adhere to three rules whenever I start a conversation with executives in a new market:

1. Come with a hypothesis, but prepare for it to evolve. Conversations flow much more easily if you have a framework or hypothesis for what trends you're likely to see in a market — just be ready for holes to be poked in different parts of your theory. In a recent conversation with the CEO of an online retailer in Russia, for example, I indicated that online travel sales often paved the way for retail eCommerce to take off, and asked if the situation was similar there. The CEO explained that in Russia, consumers' reliance on package tours — which are not generally sold online — meant that online travel hadn't flourished to the same degree as it had elsewhere in the world. Finding these exceptions is essential to understanding the nuances of each market. 

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Tools & Technology For eCommerce Globalization

I’m currently tackling a report on the tools & technology necessary for eCommerce organizations to expand internationally. It is one of the reports for the eCommerce Globalization playbook and aims to put a global lens on some of the research we’ve done on the eCommerce solution provider landscape.  Numerous types of vendors contribute to the globalization process – in this report, we’ll examine only a few key areas including:

Global-Ready Commerce Suites. Pulling from our B2C Commerce Suites Wave last year, we’ll analyze which of the included companies scored particularly well on their globalization capabilities. We’ll also look at the commerce platforms that SMEs tend to gravitate toward around the globe, and identify some of the country-specific solutions that have emerged in different regions.

Global Commerce Service Providers. We will also be discussing which of the companies included in our Global Commerce Service Providers Wave excelled when it came to helping brands with their global market expansion and which ones have the most extensive global footprints.

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eCommerce Logistics Players in Emerging Markets

In my post last month about global themes from recent events, I cited logistics as the scariest part of international expansion for eCommerce organizations. Nowhere is this more true than in emerging markets. Only a small percentage of warehousing facilities tend to be modern enough for eCommerce operations and identifying reliable fulfillment providers is a particularly thorny challenge. Horror stories abound:

For North American and European brands, one of the issues is that many of their existing logistics partners are not present in emerging markets – or do not provide the same depth of offerings in these markets – requiring brands to forge new relationships. There are, however, some less traditional types of players that brands are turning to as potential partners in the logistics space. Below are three models that have emerged beyond the typical suite of solution providers and examples of each:

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The Path Toward eCommerce Maturity

Last year, we introduced our framework for how eCommerce markets evolve: Consumers come online to connect and entertain, then start to engage in eBusiness basics like online banking and travel.** Only later do they tend to start purchasing physical products online, with readily comparable goods like mobile phones, computer hardware and books being some of consumers' first online purchases. The final phase involves consumers buying across a wide variety of categories online, including those with a strong “touch and feel” component to them:

Clients can access our recently updated report on this topic, which includes lots of new forecast data and notes how countries have moved through these phases. Brazil, for example, which was solidly in phase 3 last year, has started moving toward the final phase, where categories like apparel and beauty start to become a much more critical piece of the eCommerce market. A look at the shift in MercadoLivre’s GMV category ranking in 2012 gives one snapshot of this evolution:

Source: MercadoLivre

Also included in our updated report is a look at how online retailer offerings in each market tend to differ depending on the phase the country is in. This report forms the vision report chapter of our upcoming eCommerce globalization playbook. 

 

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More Global Themes From Recent Events

The past few weeks have involved travel to a few different events, ranging from eTail Latin America in Miami to Internet Retailer Conference & Expo in Chicago to the Goldman Sachs dotCommerce Day in New York. Rather than summarize the events, all of which were incredibly valuable, I wanted to highlight some themes from conversations I had at these events with brands looking to expand into new markets.

Leading global brands are increasingly aware they need to vary their approach globally. A common assertion in articles about localization is that companies erroneously view Europe or Asia as “one country” and fail to take into account key differences between countries. My experience is that global brands have largely moved beyond this phase: The brands I spoke with are keenly aware that each market is different, and are anxious to understand how they’ll need to adapt their online offering. They may not understand all of the differences inherent in each market, but they know — or are learning — the right questions to ask. The challenge for brands is understanding which parts of their offering really need to change to meet local expectations (and therefore merit the investment required to make the shift) and which offerings will still resonate even if they differ from those provided by local players.

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Welcome Ken Calhoon to Forrester

I am incredibly excited to announce that Ken Calhoon joins Forrester today in our eBusiness consulting practice. Ken has a fantastic background working with different organizations expanding internationally: Most recently he ran his own consulting firm focused on global expansion; prior to that, he spent seven years at eBay in different positions including VP, International Headquarters and VP, International Trust and Safety.

Ken is well known for his insights and thought leadership in the global eCommerce space: I highly recommend reading his recent Harvard Business Review blog post on What US eCommerce Can Learn From Its Global Copycats.

Some additional highlights from Ken’s background:

  • He's worked internationally for twenty years - in twenty countries - and has developed a great network of business experts around the world.
  • He's worked on growth initiatives not only with large companies such as eBay, Mitsubishi, and PayPal, but also smaller ones such as Ancestry.com, Art.com and Blurb.
  • He's helped many companies with strategy and operations, based in the US and the UK, as a Bain & Company consultant.

We are thrilled to have Ken on board!

Non-US Marketplaces For Brands

I’m currently finishing up my presentation for the Internet Retailer Conference & Expo in June: I’ll be presenting on the non-US marketplace options for brands as part of the global eCommerce track. In preparation for the session, I’ve had a chance to catch up with a number of established global online marketplaces for brands as well as agencies helping to develop some of the marketplace storefronts. 

While many North American and European brands are familiar with local marketplace players, it’s worthwhile highlighting just a few key marketplace options originating outside of these two regions:

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The Global eCommerce Opportunity

At Forrester, we've recently launched playbooks on topics such as Agile Commerce, Retail eCommerce, and B2B eCommerce. We are now getting underway with an eCommerce globalization playbook: Our first report on The Global eCommerce Opportunity (subtitle Landscape: The eCommerce Globalization Playbook) just went live. In the report, we discuss topics such as:

Which regions of the world are top of mind for brands today. The idea of a globally connected world is appealing, yet we are very much at the early stages of international expansion when it comes to eCommerce.** We look at typical global expansion paths and which regions are seeing an influx of new eCommerce initiatives. US and European retailers have tended to expand into each other’s regions first with an eCommerce offering – increasingly, however, both US and European brands are taking a much more Asia-centric approach. Coach, for example, only offers eCommerce-enabled sites in the US, Canada, China, and Japan.

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Some global themes from recent events

Over the past month, I’ve had the great fortune of taking part in three fantastic events: Forrester’s own Marketing & Strategy Summit in Shanghai, Demandware’s XChange Conference in Las Vegas, and Borderfree’s (formerly FiftyOne) Global eCommerce Forum here in New York. Several themes around global eCommerce came up in conversations at all three events:

Consumer online spending is driven by more than price in emerging eCommerce markets. In markets like China, it’s well established that consumers use the online channel to bargain-hunt. Yet there’s much discussion of the fact that consumers are moving beyond chasing the lowest prices online – instead, they are looking to trusted online retailers that provide a superior customer experience and guarantee authenticity.

International expansion involves a mix and match of different approaches. It’s now common to see companies taking a variety of approaches to global markets. Brands may operate a series of country-specific websites with local fulfillment, offer a branded store on a marketplace such as Tmall in China, and serve a large number of other markets through an international shipping model.  The one-size-fits-all approach has given way to a more complex set of different global options.

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On Building A Global Digital Team

Executives at digital businesses cite a wide variety of challenges when expanding globally, but “finding the right talent to run our organization” inevitably factors high on their lists.  Yet despite the extensive preparation that goes into international expansion efforts, it’s rare to find companies staffing up far in advance of these initiatives. Some thoughts for digital organizations with increasingly global aspirations:

Think international – even before you are. It’s common to hear of multinational corporations thinking globally when creating content. For example, by avoiding website or marketing content that includes numerous local references, it becomes easier to translate that content into other languages. Executives need to extend this idea of early preparation from content to people as they staff up their teams: If digital leaders know they want to operate in multiple markets going forward, they need to start building teams with global knowledge well before they start their international expansion.

Hire candidates with international experience across the organization. Companies do not need to hire global talent with the sole purpose of contributing to international expansion. To the contrary: Many digital businesses bring in employees with strong language skills and knowledge of different global markets to work in a wide variety of capacities within the organization. A more globally experienced workforce can provide more diverse insights – additionally, as international markets rise in importance, those organizations that have hired and mentored employees with knowledge of these markets will be better positioned for success later. Some smaller vendors, for example, were able to establish a foothold in emerging markets relatively quickly by relying on executives with existing knowledge of these countries to guide their market entry strategies.

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