Mickael Froger, CEO at Lengow, shares some top tips for international e-commerce success, especially when it comes to payment and fulfilment.
What is e-commerce
Online retailers are looking more and more towards international markets, especially given the increasing growth of e-commerce in countries which were at first slower to embrace online shopping. One of the great advantages of e-commerce is the opportunity to reach new international customers without needing a physical presence in the country.
However, before making the (virtual) leap across the border, there are several points to consider in order to maximise your chances of international success – being an e-business isn’t as easy just setting up a site, you need to make sure you’ve got a well through through ecommerce strategy.
First and foremost you need to ask yourself if there is sufficient demand for what you sell in international markets. If yes, keep on reading!
Know your market
In addition to researching potential rivals, you need to know the shopping habits of your new market, particularly in relation to payment and delivery options. Read this article on getting started in international market research for more advice.
Embracing local payment methods
Adopting local payment methods is a great technique for increasing the likelihood of international success. Although credit/debit card is the most common payment option in the UK and the USA, this is not the case everywhere.
According to Forrester, PayPal remains the preferred option in Germany and Alipay is the most popular payment method in China, where “traditional” Visa, MasterCard and Amex players are largely absent among consumers. So it pays to find out how your customers prefer to pay. Make it as easy for them to buy from you as possible!
For more information read this article about different payment methods.
Displaying the price in the local currency is also a great way of increasing international sales. If you are unable to do this, at least let the customer know what they can expect to pay at the end, for example after the payment has been converted into the currency required for payment.
One of the advantages of systems such as PayPal is that customers know the exact amount they are paying.
These pros and cons of local currency pricing may be of assistance.
With regards to delivery, if you use an international carrier to ship your goods, you can track the transfer. Make sure you look into import and export fees and don’t forget to complete a customs declaration form.
Preferences for delivery also vary depending on country. A recent study by MetaPack found that 63 per cent of UK online shoppers have used “click and collect” in the past 12 months, whereas 72 per cent of French online shoppers preferred to pick up their e-commerce goods at the local shop.
Furthermore, you need to consider what is valued most in the country you are selling in with regards to delivery. The same study by MetaPack asked consumers what was most important to them in delivery out of being free, being fast and available timeslots.
While the majority of British (55 per cent) and French (56 per cent) online shoppers highly rate free delivery, German customers place less importance on this (41 per cent). German shoppers place more importance on timeslots available (19 per cent) than French (8 per cent) or British (11 per cent) shoppers. With regards to speed of delivery, this again was more important to Germans (27 per cent) than to British (22 per cent) or French (18 per cent).
A great way of testing the waters of an international market is by using marketplaces such as eBay or Amazon to sell your products in the territory. Through using these established channels, you can take advantage of their qualified base of customers. Furthermore, Amazon has unified its European marketplaces meaning that a single seller account can be used to sell products in the UK, France, Germany, Spain and Italy.
Furthermore, with Amazon’s service “Fulfilment by Amazon” you can send your products directly to an Amazon distribution centre and the storage, packaging and shipping will be taken care of by the company, as well as the customer service, which is available in multiple languages. This way, online retailers only have to worry about the restocking and pricing of products.
Do your research beforehand, as certain types of channels may be used more in certain countries, plus there may exist channels which are unique to the country.
For more information you can read this Open to Export article on the different delivery methods available to you.
Getting to grips with taxes
Make sure you do your homework on taxes! Be aware that if you are selling to non-UK businesses, they can be exempt from VAT if they are registered for VAT in their own country.
Furthermore, as of 1 January 2015 a tax regulation change took place meaning that within the EU countries, businesses that sell electronic products and services are now taxed in the country where the customer is located, no matter if this person is a private individual or an entrepreneur.
Thus, if you happen to sell in multiple countries within the European Union (this only applies to the EU of course), you must register in every EU member state where you provide services/ products.
However, the Mini One-Stop-Shop Scheme (MOSS) enables entrepreneurs selling digital services to declare the VAT in one single EU member state. Check out the guide to the VAT MOSS published by The European Union for more information.