April 2018: Vancouver eCommerce Meetup
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A Pecha Kucha style presentation for the meetup. 20 slides, 20 seconds per slide giving a very quick overview for e-commerce merchants who are considering expanding internationally. Script is in the notes if you download it. So much more to say after 20 years of doing this so if you want to learn more, get in touch with me.
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April 2018: Vancouver eCommerce Meetup
- 4. Merchant Risk & Complexity
- 7. What increases the risk and complexity?
- 8. • Time to Destination • Cost • Labelling • Returns • Inventory
- 9. Canada: Vancouver to Montreal • 2,288 miles • 2 lbs • 7 days $11.27 USD • 2 business days $16.60 USD US: Seattle to New York • 2,442 miles • Up to 70 lbs • 2 days $6.80
- 10. • Freight Forwarders • 3PL’s
- 11. • Foreign Exchange • Market Pricing
- 12. • Payment Processors • Payment Methods
- 13. • Duties • Regulations • Privacy
- 14. • Insurance • Corporate Structure • Taxes
- 15. • Languages & Localization • Timezones
- 16. • Holidays & Celebrations • Expectations
- 17. • SEO • Content Marketing • Email
- 18. • No short cuts • Avoid dead ends • Time & Money
- 19. • Seek Professional Help!
Editor's Notes
- Over the last 20 years we have helped businesses of all sizes expand from simple national sites to seamless global ecommerce operations Most customers follow roughly the same steps and face the same challenges which we will review tonight so that you can be prepared and avoid surprises.
- The first step for most merchants is a National site. It sells in the merchants home currency, has no complexity, and no risk. This is pretty turnkey Most quickly move to a continental site as they learn the ropes of shipping across borders. An Experimental site takes what the merchant has learned close to home to more markets usually shipping from the merchant’s home market.
- With an International site, merchants add currencies and more sophisticated logistics to improve service for foreign shoppers. A Localized site starts to add additional languages and begins to appear like a local business. A truly Global site is indistinguishable from a local merchant. It uses the same vocabulary and competes on a level playing field in foreign markets.
- You can see here the complexity growing left to right With a National site, out of country shoppers are out of luck. Continental & Experimental is a bit more complex for the merchant but foreign shoppers still take most of the risk. International and Localized merchants begin to meet their shoppers in the middle and international conversion rates start to rise. A truly global operation is complex to run but provides a seamless shopping experience in all markets.
- We have found that international conversion rates go up as the merchants complexity goes up With the merchant taking on the complexity and risk they are providing a simpler solution for international shoppers. If the merchant doesn't want the complexity, then they are never going to compete in larger markets. Technology cannot remove all of the complexity for you but it helps
- This is a bit of a chicken and egg scenario. Merchants want to see high conversion rates or sales coming in from overseas markets before making investments but you are not going to have those dramatic results unless you make the investment. Looking at your Geographic user data from Google Analytics will clearly illustrate the huge conversion gap in most international markets. Where does the risk & organizational complexity come from?
- There are Four main areas that merchants have to plan and have a roadmap for. Logistics and distribution: Getting your orders to your customers Cultures and customer service: these are things like languages, vocabularies, and expectations Currency and foreign exchange not to mention fraud. Legal and regulatory requirements differ between markets and impact corporate structures and taxes
- Logistics is the first thing merchants come up against when trying to grow their foreign business. Customers want things fast and borders and distance slow things down Customers want things cheap and borders make things expensive Customs labelling means fulfillment costs go up and the wrong label can create a service nightmare. Returns are more expensive for the customer and the merchant. Merchants have to decide where they are keeping their inventory and how they are tracking it.
- This slide illustrates the huge disadvantage you are at if you are shipping to the US from within Canada. Your products will arrive slower at a higher cost. Yes as your volume increases you can negotiate better rates with your shipper but until that time you either need to absorb that cost hoping to scale or you need to pass it on to the customer. Thankfully there is a whole industry built to support this.
- Freight forwarders take packages across the border daily and ship through USPS. Similar services operate to Europe where you courier a consolidated order to a forwarder who breaks it down and mails it locally. Eventually though you will end up using a 3rd Party Logistics company. These services hold inventory on your behalf and take care of duties, shipping, and handle returns
- No one knows or cares what their exchange rate is with Canada. You must price your products in the local currency. Currency converters just highlight the fact that you are not local Market Pricing can also be a factor. Books are the most obvious example where the price in Canada is not set based on the exchange rate. There are many examples of this and it presents challenges and opportunities.
- Picking your payment provider is an important decision. Some like PayPal charge an extra percentage for transactions originating outside of your home market. Some card issuers also charge their customers a service fee for international purchases even if they are made with a local currency. This can generate negative feedback. Keep in mind that not everywhere has the easy access to credit cards we are used to. There are many regional differences that might require multiple providers.
- Not all products can be sold in all markets. Japan has quotas on leather and closer to home the US has restrictions based on the point of origin of some textiles. Some licensing deals prohibit sales into specific markets. Surprise duties or delays can lead to customer service disasters. Many products require labelling and certifications in other markets. Merchants must have systems in place to prevent these sales. Privacy is also an important topic with vastly different rules in different markets
- Talk to your broker early. Pursuing business in the US will raise your insurance cost and it can be significant. As you expand you will eventually want a legal presence outside of Canada. How your company is structured will impact your ecommerce setup. It will also affect your taxes. Canada’s system is easy compared to the US where some states allow cities and counties to all collect sales taxes. Who gets credit for the sale? Where does the profit end up? What are the tax implications? Washington, California, and New York all require local businesses to collect sales tax which is different by administrative region. Trump and his trade war! Client has a licensed product from Peanuts. Cannot sell it to Japan. Point of origin issues for textiles.
- How we talk (and spell) sets us apart and emphasizes our differences. Localizing a site is about more than translating it, it is about understanding local idioms. Once you are doing business like a local you have to service your customers like a local over all the same channels. We are 8 to 9 hrs behind most of Europe. If someone contacts customer service at 9 am they will wait almost a full business day for a response. If you sell in a language you MUST support in that language Not just catalog but images, error messages. Don’t be the ugly American! Your live chat support is no good to someone in the UK
- Countries have different national holidays but there are also smaller things like Mothering Sunday in the UK in March instead of Mother’s Day in Norther America in May. Make the effort to get to know your markets. You also have to learn what your market expects. For example, in Europe, products are shown including the VAT on product pages, but in the checkout the vat is included as a separate line.
- SEO becomes more challenging when you are localizing sites for different versions of English and you run the risk of competing against yourself. Technical signals for search engines like Canonical, hreflang tags, and multiple versions of XML site maps are crucial Content marketing is also more challenging. How many blogs facebook pages, and Instagram accounts do you really want to run? Email lists must be segmented so merchants send the right messages to the right markets
- There are a lot of pieces to the puzzle and there isn’t any single right way but there are several basic truths about going global First, there are no short cuts Second, avoid dead ends by planning ahead and creating a road map for growth Third, recognize that it will take both time and money
- Finally, Seek Professional Help! Choose the right partners with the experience you need. You are not the first to do this so consult with your lawyers, accountants, and technology partners when creating your plan.
- www.idealever.com/blog for more