Neil Kuschel, chief executive officer at Europe at Global-e
Online shopping is continuing to grow worldwide, according to data from PWC’s global consumer pulse survey, with more than half of the global consumers surveyed in 2021 say they’ve become more digital over the last year. Moreover, there is an increase in the frequency of those shopping online, with 23% saying they now shop online daily for products that are not groceries. There are therefore huge opportunities for brands to capitalise on this online potential.
With this in mind, many merchants are now focusing on enhancing their digital direct-to-consumer (D2C) approach, and data from YouGov reveals that D2C sales in the UK alone are expected to grow to £120 billion in 2023. D2C holds many benefits for merchants over alternative channels, such as marketplaces, because it enables them to maintain a direct relationship with their shoppers, gain insight into shopper behaviours and preferences and have full control over the brand experience. Shoppers also have added benefits from a D2C approach, which can sometimes provide more competitive pricing, guaranteed product authenticity and a tailored user experience.
Moreover, there is a growing global D2C opportunity for brands. The cross-border ecommerce market is growing, expected to reach $736 billion by 2023, according to Forrester. This rise has been further accelerated by the role of social media, which has created a significant marketing channel for merchants to reach new audiences in foreign markets through targeted ads and influencers.
Understanding local market preferences
Expanding your D2C online store to reach shoppers in international markets might sound simple, but it requires the brand to understand each individual market in order to provide an optimal experience, which must meet the expectations of the shopper.
Offering global consumers an end-to-end localised shopping experience, from browsing to checkout and delivery, is key to converting international traffic into sales.
This means ensuring that all prices are displayed in local currency and rounded according to local market conventions. More than this, pricing should be set according to local market best practices, for example, shoppers in France should have prices listed in Euro and inclusive of the local VAT, whilst shoppers in Australia will have prices displayed in Australian dollars and inclusive of GST. In the USA, where local sales tax applies on all purchases including online cross-border, which differs according to state, brands should enable local shoppers to pay the sales tax fee at checkout, as they are accustomed to when purchasing from domestic websites.
Allowing online shoppers to pay for their purchase using their preferred payment method is essential to ensure a frictionless and hassle-free experience, especially in markets where local and alternative options are very popular. In the Netherlands, for example, Global-e’s data reveals that over 50% of cross-border purchases are made with the local payment method iDeal while in Germany over 80% of cross-border purchases are made using alternative options, including Klarna’s BNPL and Sofort. Therefore brands should ensure they have good knowledge of the most popular payment options in each market and the ability to offer this flexibility at checkout.
International shoppers should have confidence that if an item isn’t suitable, they can send it back hassle-free. In many cases international shoppers check the return policy before making a purchase. According to the PWC June 2021 Global Consumer Insights Pulse Survey, a good return policy is the third-most important consideration for consumers when shopping online. Brands selling D2C must therefore understand what is common across different markets and should tailor their delivery and return offering to the local shoppers’ expectations, to common best practices per their vertical, as well as to their business strategy and goals, in order to preserve profit margins.
Markets differ not only in languages, currencies and regulations, but also in the retail calendar. Though Black Friday has become a global phenomenon, there are many local shopping peaks all year round. Local market knowledge can help brands better plan their international marketing promotions, to capitalise on these sales opportunities. In April, for example, Golden Week is a national holiday in Japan and one of the most lucrative periods of the year, especially for luxury brands. Meanwhile, in the Arab world, the weeks prior to Eid al-Fitr, which is celebrated in May, are the busiest time for online sales, with shoppers buying new clothes and gifts. Keeping track of when these events and holidays are happening and triggering activity in the local market when relevant, enables brands to capitalise on local shopping peaks in target markets and maximise sales and revenues throughout the year.
Navigating the challenges of cross-border D2C
International D2C online trading presents many challenges for brands. It is understandable that many brands can feel overwhelmed by adjustments to the changes to local trading rules and regulations. However, all brands selling cross-border must factor in being prepared for these constant changes and ensure they stay compliant and adjust their offering accordingly. Such as with Brexit and the latest changes to the EU VAT regulations, for example. Many UK merchants selling to the EU are faced with challenges of adjusting their outbound logistics to meet the new import taxes which are due at point of import, while keeping a seamless experience for their customers, ensuring they are not hit by unexpected charges upon delivery.
Once a customer has made a purchase, it is then important to ensure the item is delivered with no delays. However, global logistics present many challenges, such as border closures due to the pandemic or political situations. While these changes may be unavoidable, they can definitely be managed. Adopting a multi-carrier approach, i.e. working with various global and local shipping carriers, can help reduce the impact of logistic obstacles by shifting volumes from one carrier to another.
As consumers continue to shift online, many UK brands are under growing pressure to gain shopper attention, grow sales and in turn increase the chances of shopper loyalty. Many already recognise the benefits of owning the customer journey via a D2C approach in their domestic market, but to reach new customers and grow, it is essential to expand to international markets. However, to do this effectively, brands require a firm understanding of local market best practices and the ability to tailor the online shopping experience to suit international shoppers’ needs and preferences. Working with a partner with international trading experience and advanced capabilities as well as extensive cross-border knowledge, enables brands to optimise their international offering to local markets while adjusting it to their ecommerce growth strategy, to maximise their growth potential and optimise international margins and revenues.
One thing that all shoppers globally have in common is the desire to have a seamless online shopping experience. Merchants should ensure their international offerings are consistently up to date, and that they have the ability to adapt to changes where necessary. Getting this right can allow D2C brands to reap the rewards by boosting sales and conversion rates and benefitting from a new international customer base that can in turn lead to long-term loyalty.