Report: How to succeed in cross-border commerce by learning from the best
July 11, 2018
Sponsored Content

This post is sponsored by Loqate, a GBG Solution.

Growth in smartphone adoption and innovations in retail technology have unlocked unparalleled access to customers across international markets. Enterprising partnership models, greater efficiencies in shipping and logistics and new methods of leveraging data to power localized experiences have lowered the barrier to global entry, enabling businesses of all sizes to reach customers around the world. Location intelligence company Loqate recently released the Retail Internationalization Index report, which identifies the top 30 retailers in terms of innovative global commerce strategies. While it’s no surprise to see Amazon at No. 1 on the index, it was unexpected to see Apple (No. 5) trail behind digital-first brands like ASOS (No. 3) and Boohoo (No. 2), demonstrating the power of the digital experience for international success.

Overall, the most successful retailers have chosen partners and technology that allow them to offer localized experiences with global applications. While costly traditional methods such as acquisitions and physical expansion still have a strong effect on global brand success, the report found that by focusing on convenient and intuitive omnichannel experiences, retailers could acquire customers with diverse backgrounds at a much lower cost.

Amazon landed at the top of the ranking, with about 40% of its $180 billion in sales last year taking place outside of the US. What the e-commerce giant lacks in physical retail, it makes up for in logistics – Amazon can make deliveries in less than two hours in several markets through its Prime Now service, it can deliver orders within two days to Prime members around the world and it fulfills orders to more than 200 international markets, utilizing address verification for efficient global delivery. There are many pieces to the puzzle of successful internationalization, and Amazon is not the only one getting it right.

Striking up the right partnerships

Teaming with foreign retailers and global distribution networks has proven to be a successful strategy for several of the ranking’s top 30 retailers.

European online pet products retailer Zooplus ranked No. 7 on the index and has achieved international success through its third-party distribution partnership with Amazon, its strong commitment to fulfillment and its outstanding customer experience. The Munich-based pet food and accessories specialist has customers in 30 countries, an excellent international logistics network and fast delivery available across Europe. Meanwhile, Gap (No. 20) drives its international e-commerce business through a partnership with solutions provider Borderfree, and German fashion retailer Zalando (No. 10) offers its clothing and accessories to customers across Europe.

While retail partnerships have helped some of the top merchants meet international demand by offering distribution and free return services (which are offered by 25 of the top 30 retailers in the ranking), UK-based ASOS (No. 3) turned to logistics solution Temando to power its returns service.

Partnerships can also prove valuable to offset the risks associated with new and unfamiliar market entry. To expand into China’s rapidly growing, mobile-first market, Costco (No. 13) and Apple (No. 5) teamed up with Alibaba’s T-mall, while Walmart (No. 9) and Sephora (No. 8) sell through JD.com.

Third-party payment providers also make a difference when global customers expect local payment options during their online purchasing journey. Twenty-four of the ranking’s top 30 offer flexible payments through providers like PayPal, Venmo and WeChat Pay.

Expanding shopping across channels

The report also found that robust multichannel strategies are key for the most successful retailers. While most industry buzz focuses on digital commerce, physical retail still matters, especially when it comes to international expansion. In an age when a positive customer experience goes hand-in-hand with consumer loyalty, having brick-and-mortar spaces where shoppers can interact with associates can boost brand affinity.

Physical retail continues to play a major role in global growth for many of the ranking’s top merchants. Walmart (No. 9) reached $116.1 billion in international sales last year with help from its network of stores that span 27 markets, while Schwarz Group (No. 17), parent to European discount grocer Lidl, operates more than 11,000 stores outside of its domestic market.

Top retailers leverage their physical presence to bridge the gap across selling channels – 21 of the ranking’s top 30 retailers offer click-and-collect services, while only four have no physical pick-up locations. At Walmart (No. 9), shoppers can get discounts on orders placed online, schedule in-store pick-ups and avoid waiting in line by paying in-store with the Walmart app.

French beauty retailer Sephora (No. 8) combines in-person events like beauty workshops with internet of things technology such as virtual mirrors, sensory tools and iPads that can identify exact skin tones to help customers select the right makeup. As of last year, the retailer offered this multichannel shopping experience at 2,300 stores across 33 countries.

When it comes to multichannel retail, the path can go both ways: Pure-play online merchants are increasingly moving into the physical realm, with Amazon (No. 1) growing its global system of pick-up lockers, and HelloFresh (No. 14) teaming up with UK-based grocer Sainsbury’s to sell its meal kits at grocery stores.

Getting e-commerce right

The index’s top retailers build loyalty among their global audiences by accommodating international purchases with features like global address verification, currency flexibility and location-based language options. Implementing address verification across mobile and web environments improves international user-experience by providing responsive forms that seamlessly accommodate the more than 130 different global address formats. In fact, more than three-quarters of retailers who make use of address verification experience an increase in international orders. The easy-to-implement technology also compliments checkout fraud solutions while significantly decreasing failed deliveries.

Finding the right formula for cross-border e-commerce does not stop with the desktop experience – it must include a mobile strategy. Each of the index’s top 30 retailers offers mobile-optimized websites. While only 10 offer international delivery via mobile app, all of the top 30 offer a transactional mobile app experience. Address verification is again present in the mobile experience for two-thirds of the top 30 retailers, but only Amazon (No. 1), ASOS (No. 3) and Sports Direct (No. 4) offer the feature on an international scale. This number will likely grow in the future – 54% of international shoppers anticipate that cross-border purchases will be affected by delivery issues, making address verification an integral part of a successful cross-border strategy.

Making cross-border shopping easy and convenient

At the end of the day, shoppers – no matter where they live in the world – want to be able to buy things as easily and conveniently as possible. The top retailers have all found ways to deliver against this demand across channels to successfully increase their global footprint.

In addition to partnerships, mobile technology and address verification, the index also highlights innovative ways retailers have adapted in-store strategies for the digital world. Loyalty programs from Amazon (No. 1) and ASOS (No. 3) offer unlimited next-day delivery for a yearly fee, encouraging brand loyalty while also helping retailers gain a better understanding of their customer’s unique buying patterns. German shoe retailer Deichmann (No. 16) provides shoppers across 24 markets the ability to check in-store stock online or from a mobile device, along with easy in-store returns and hassle-free prepaid return shipping for online purchases.

“As retail internationalization accelerates, retailers need to adopt a mindset that embraces innovation, collaboration and the integration of digital and physical capabilities to meet customer expectations,” according to the report. “Those that already have are reaping the benefits, while resistance to this change could see retailers slip out of the top 30 in the years to come.”

To learn more about the strategies featured in the report, don’t miss the International Retail Index webinar on July 18 featuring a panel of retail experts including Ian McGariggle, chairman of World Retail Congress and co-founder of Retail Week; Robert Gregory, global research director at PlanetRetail RNG; and David Green, managing director of location intelligence at Loqate, a GBG solution.