The Global Access Blog

Thoughts on building and growing globalized products

Will 2018 be the Year of the Smartphone in Brazil?

April 17, 2017

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Data disputes e-commerce growth and ad spending in 2018

An interesting divergence in indicators has emerged in Brazil between e-commerce projections and advertising projections. These two industries are painting very different pictures of the immediate future.

First, the e-commerce data suggests that nearly 80% of Brazilians prefer to make online purchases from a desktop or laptop. (By contrast, in other developing and developed e-commerce markets, mobile shopping is a significantly higher percentage. For example, in South Korea, Indonesia, and Japan consumers prefer mobile shopping over desktop or laptop at 44.2%, 66%, and 65.8% respectively.)

However, when examining the desktop/laptop advertising projection data, there is a different story. 2018 will be the year that more ad spending gets directed to smartphones rather than desktop advertising, suggesting that those purchasing the ads are anticipating more conversion will begin happening on smartphones.

The divergence in e-commerce growth and advertising spending could be attributed to the fact that Brazilians’ mobile internet access officially surpassed desktop internet access only 3 years ago in 2014. (Also note that smartphone penetration doubled in Brazil between 2014 and 2016.)

Given this, although more Brazilians are accessing the internet via mobile, there may have been a lag in consumers feeling comfortable purchasing goods from their phones, leading to larger portions of this newly mobile internet landscape preferring to shop online via desktop.

E-tailers are anticipating the growth of m-commerce to catch up to the growth of mobile internet, according to the observed increase in mobile advertising spending.

While there are different estimates for smartphone penetration in Brazil, the trend is a general increase—either 30%+ or as much as 52% of the population will have a smartphone in their hands by 2018.

Hence, advertisers are betting on a larger m-commerce market opportunity and increasing conversion rates. If other regions and countries are to serve as an accurate barometer, we can predict that Brazil will start turning the corner on m-commerce in 2018.

Conclusion

Armed with this new knowledge, there is a tremendous opportunity for either entering or re-entering the market in Brazil. Going straight for mobile commerce and focusing efforts on mobile advertising beginning next year offers significant growth returns as the market shifts from desktops and laptops towards mobile.

Brazil E-Commerce 2017: Ripe for Social Shopping?

April 12, 2017

Brazil is big and important

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The e-commerce market is growing modestly at 2.8%, but it’s still the biggest e-commerce market in Latin America, by far. Moreover, the country is expected to maintain its stronghold boasting the largest e-commerce retail sales numbers in the region, reaching $22 billion by 2020. Brazil’s sizeable population is ahead of Mexico in disposable income, at nearly $600 compared to Mexico’s $535, making it an attractive market for consideration.

Retail e-commerce and m-commerce are growing in 2017

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Brazil’s retail market size is $615 billion: proof that Brazilians are still consuming, providing new international retailers a rich foundation with which to establish roots, even in the midst of economic recovery. Some evidence suggests the recession has prompted Brazilians to shop more consciously, with search engines especially driving e-commerce growth as citizens seek price advantages.

As the most populous nation in Latin America at 210 million (and the 4th largest population of internet users in the world,) Brazil’s retail m-commerce sales are expected to climb to 34.3%, with total retail e-commerce sales reaching 22.6 billion between 2017 and 2020.

In Brazil, clothing has been one of the top 3 most popular e-commerce categories for nearly 5 years now, especially when it comes to cross-border purchases. Recently, leading Brazilian apparel retailer Guararapes invested $9 million into launching its online division, leaning into Brazilians’ preference for buying clothes and accessories online.

Brazilians love to socialize online, and 49% of them purchase cross-border

Even though smartphone penetration recently doubled in the 10th largest e-commerce market in the world, 80% of Brazilians are still opting to follow through with online purchases via desktop and laptop. Additionally, 49% of online shoppers in Brazil are making both domestic and cross-border, or only cross-border purchases.

It should also be noted that over 60 million Brazilians are on Facebook—even more interesting, they spend the most amount of time on the social network per visit, averaging around 21 minutes. To this end, the landscape suggests that international merchants might do well to invest in social shopping and advertising.

Conclusion

The breadth and maturity of Brazil’s e-commerce marketplace seems to have mostly insulated it from the economic stressors of a challenging recession, where both e-commerce and m-commerce continue to grow and evolve. Even local investors are responding, especially in the fashion sector. By leveraging social shopping and mobile optimization strategies, international e-tailers interested in Latin America can look to Brazil. While the market has challenges, e-commerce and m-commerce growth shows the market is complex, yet robust.

Mexico E-Commerce is Growing 25% Annually. Is it Time to Finally Get Serious?

April 7, 2017

The players

Mexico’s e-commerce market has excited both retail and tech companies alike, in spite of the fact that there have been several false starts over the years. Recently, Amazon.com launched its Prime delivery service in Mexico. Meanwhile, with $198 million initially earmarked for e-commerce and logistics, Wal-Mart increased its investment in the country by $863 million.

Not only are international retailers paying attention to the market, but homegrown e-commerce player Linio recently raised $55 million in funding. With this in mind, people may be questioning whether or not the time is finally right to take the plunge.

The data

A raft of new data suggests growing momentum for the Mexican e-commerce market, due to internet penetration, smartphone adoption, retail, e-commerce growth and demographics in Mexico all converging.

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E-commerce and retail

The numbers tell us that Mexico’s e-commerce market is projected to grow at a 25% clip this year, pushing the estimated market value to around $7.58 billion (eMarketer). Retail mobile commerce sales is also estimated to grow significantly by 57.9% (2017), according to eMarketer. Similarly, the general retail market in Mexico is growing at a healthy 6.3% (2017), with the total retail market size projected to be around $447.69 billion. With all this growth, both immediate and future opportunities look excellent.

Demographics and disposable income

Even the country’s demographics are heading in the right direction. Mexico’s already large and youthful population will become even more populous, and even younger from 2020 to 2050. There are some strong indicators of improving consumer health, too, such as the 45% homeownership rate among millennials, and disposable income at $535.42/month according to numbeo.com (net pay, after taxes, including salaries and financing).

Mexico’s place in Latin America

Moreover, there are several unique features of the Mexican market when compared to the rest of Latin America. For instance, Mexico is the second most populous country in the region. With almost 70 million people online, it is the 9th largest by internet population. Compared to Brazil, the retail market is sized more or less similarly given the population, however, the Mexican e-commerce sector has not yet reached a Brazilian level of maturity. Getting into the Mexican market now can afford retailers the opportunity to benefit from the forthcoming growth.

Finally, as a member of both NAFTA and the Pacific Alliance, Mexico is in an even more advantageous position to grow, compared to other countries in the region that aren’t members. Because of these memberships, Mexico has access to large international markets like the U.S., as well as important local markets like Chile and Peru.

Using Email to Retarget Cross-Border E-Commerce Customers: Stats and Strategies

April 4, 2017

Seasoned e-tailers know that abandoned online shopping carts can provide a golden opportunity to connect with customers who may be on the fence. More often than not, this is accomplished by way of varying retargeting and recapturing tools, the most basic of these being email.

While research has proven that email is an effective means by which to recapture abandoned carts, global retailers using email as a tool to retarget cross-border customers will occasionally be met with some unique challenges. (Learn more about counteracting international shopping cart abandonment in our recent blog series, here.)

To this end, global e-tailers may benefit from arming themselves with a few relevant stats and strategies.

Key stats.

European shoppers are more likely to follow through with cross-border purchases when there’s clarity surrounding return policies.

 

As you craft your cross-border customers’ retargeting emails, here’s something to think about: B2C Europe recently conducted a survey of over 2,000 cross-border shoppers in the EU to learn what drives their cross-border purchasing motivations and challenges, with special emphasis on e-commerce returns. Their results suggested that 36% of European shoppers would be more likely to complete purchases on cross-border e-commerce sites if there was more clarity surrounding return policies.

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Source: B2C Europe. “Making money out of returns: The essential guide to managing international returns.” https://www.b2ceurope.eu/news/mini-guide-lost-sales-at-checkout/ Accessed April 3, 2017.

 

Marketing email open rates vary considerably from region to region—

IBM Marketing Cloud recently published another highly relevant guide with data on international email marketing entitled, “2016 Email Marketing Metrics Benchmark Study.” This study compares data across 750 companies and over 3,000 brands from 2015, both by region, and by category.

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Source: IBM Marketing Cloud: “2016 Email Marketing Metrics Benchmark Study.” http://www.silverpop.com/marketing-resources/white-papers/all/2016/email-metrics-benchmark-study-2016/ Accessed April 3, 2017.

According the data, open rates vary significantly from region to region, with Australia and New Zealand at the top for the top quartile, and the Middle East and North Africa with some of the lowest for the bottom quartile.

Additionally (according to this specific survey) it would appear that Commonwealth countries and countries with higher instances of English literacy exhibit generally higher email open rates. From this, we might assume that the emails studied for this survey could have primarily been in English, and well-localized for the regions in which they were delivered.

 

—and industry to industry.

 

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Source: IBM Marketing Cloud: “2016 Email Marketing Metrics Benchmark Study.” http://www.silverpop.com/marketing-resources/white-papers/all/2016/email-metrics-benchmark-study-2016/ Accessed April 3, 2017.

We just observed that the differences in marketing email open rates between Oceania and MENA are significant—an important consideration.

However, note the differences in email open rates between industries. According to the data, retail e-commerce marketing emails experience some of the lowest open rates. This suggests a serious challenge to companies in the e-commerce space—challenges which may be overcome by companies who invest time crafting effective international email retargeting strategies.

 

63% of cross-border, online shoppers have visited a retailer’s brick-and-mortar store abroad before they felt comfortable purchasing from them online.

 

While many cross-border customers are reaching out to your website because of product pricing, availability, or perceptions of quality, some research suggests that a prior physical, in-store visit (perhaps while on a trip abroad) may also drive customers to make purchases from e-commerce sites outside their region.

As many as 63% of cross-border online shoppers (and as high as 84% of total shoppers) say they visited a retailer’s physical store before they felt comfortable buying from them online. Pitney Bowes refers to this phenomenon as “in-store global, online local” in their 2016 online shopping report, “Global E-commerce Continues to Rise.”

Strategies.

Armed with information, here are a few important tactics you may want to try in order to evolve your company’s international retargeting email strategy, and increase conversion rates:

  1. Remind customers (Europeans, especially) of your return policy. In general though, many consumers will want to know exactly how your return policy works, how much it costs, and if they can use the same shipping and packing materials to return goods. Specify all of these things, and provide options such as scheduling return pick-ups, or allowing customers to ship goods back.
  2. Remind customers about the in-store shopping experience and your brand’s quality—especially for your online customers in Asia. Pitney Bowes estimates that 84% of Chinese shoppers, 82% of Indian shoppers, and 75% of Korean cross-border e-commerce shoppers have been to physical store locations while traveling, and therefore are more likely to shop cross-border online (see page 3 of their 2016 shopping survey).
  3. Reassure customers of your trustworthiness. Emphasizing transparency and localization will help customers feel that, even though your company may be far away, they can rely on local payment methods (and policies) and reliable shipping. Consider including trust marks at the bottom of your retargeting emails. (Know that, some trustmarks are considered more reliable than others, depending upon the region: see our international trust tips blog post for more on this.)
  4. In any email communication, consider including reviews from other cross-border shoppers either from that country, or the region. More importantly, make these available in the local language.

 

Taking E-Commerce Global: Indonesia

March 30, 2017

In the first installment of Qordoba’s “Taking E-Commerce Global” blog series, we look at the Indonesian e-commerce market and provide key, data-backed tips for success in this rapidly expanding digital marketplace.

Next week, we’ll take a look at Mexico’s e-commerce landscape.

***

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Indonesia is one of the fastest growing e-commerce markets in the world with retail e-commerce sales growth projected to average 37.1% between 2015 and 2020. The conclusion to draw from this is that Indonesian retail is booming and e-commerce isn’t far behind.

This means that there is a current and growing potential for companies looking for international expansion opportunities. In our analysis below, we’ll provide some insight demonstrating that companies interested in the Indonesian market should focus on localization, and emphasize enhancing their mobile experience; having a strong social media presence; and ensuring superior product and e-commerce localization for a satisfactory shopping experience.

Indonesia is the largest retail market in Southeast Asia

In 2016, the total retail market in Indonesia was 5x the size of Singapore. As we recently discussed, Indonesia is projected to grow significantly over the next 2-3 years. The sheer size of the population and retail market potential makes this a potentially lucrative target for brands and companies considering e-commerce expansion.

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Indonesia’s retail sales are projected to grow 7% annually through 2020

Indonesia’s retail sector is projected to grow around 7% for the foreseeable future, indicating not only strong growth, but also a relatively stable market trajectory through 2020. 

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Indonesia has the world’s 5th largest online population

In 2017, Indonesia is projected to have over 100 million individuals online for the first time in its history, which is a little under 50% of its population. Indonesia now has more internet users than Japan (6th in the world), and is just behind Brazil (4th in the world), according to the website Internet World Stats.  While the Internet user growth rates are leveling off, Indonesia’s online population will have more than doubled over the course of the decade, with lots of room to continue growing.

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Smartphone users are catching up to the general online population in Indonesia

Due to the difficulty of expanding landline internet across islands in Indonesia, mobile internet and smartphone adoption will outstrip landline internet. Existing predictions already suggest that smartphone users and internet users are projected to track closely over the next 2-3 years. In fact, Bain and Co. published research suggesting that 80% of the total commerce in rural Indonesia takes place on a mobile phone. In urban areas, this statistic is expected to be over 30% by next year.

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For brands and companies wishing to sell to Indonesians, it is critical to have a website that is optimized for mobile browsing and mobile commerce experiences, in addition to thoroughly localized mobile apps.

Facebook is popular with over 80 million people in Indonesia, with as many as 30% of online buyers shopping socially

Data from eMarketer (October 2016) indicates that Indonesians’ preferred social media site is Facebook, with more than 83.2 million users. In Indonesia, this is an important phenomenon. According to a 2016 research report by Bain and Co., two-thirds of Southeast Asians shop online, with upwards of 30% of that activity happening on social platforms like Facebook and Instagram.

While Facebook is certainly not the only option for targeting new customers, in Indonesia, it’s a significant opportunity for cross-border companies.

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Indonesia’s business landscape is blooming with companies and service providers for almost every aspect of e-Commerce

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Indonesia is an archipelago nation that consists of approximately 17,000 islands. While the country’s population is spread across these islands, there are significant concentrations on the four main islands. Java, the main island, is home to nearly 140 million people—roughly 60% of the total population. Add in the other most populous islands—Sumatra (47 million,) Borneo (15 million,) and Sulawesi/Celebes (17 million)—you’re looking at nearly 219 million potential customers.

17,000 islands might conjure images of nightmare shipping scenarios. Fortunately, there are numerous shipping options. Partnering with a reputable service provider to tackle logistics will be key.

Consider looking into the following logistics providers:

See the link to the Indonesian service providers and the ecosystem graphic here. There is a lot of useful information regarding logistics from the World Bank here: Indonesia’s Connectivity and Logistics Challenges: Findings from World Bank advisory work for IPC.

Indonesian shoppers overwhelmingly prefer a localized shopping experience

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Know that Indonesians overwhelmingly prefer to shop locally for three reasons: variety, price sensitivity, and convenience. Moreover, when Bain and Co. analyzed the Net Promoter scores of local, regional, and global e-commerce players, they found that local and regional players generally performed better.

That doesn’t mean there isn’t a market in Indonesia for foreign products. Rather, it suggests that global e-tailers looking to compete with local companies will need to better localize products; price them for the market (or fill a niche); and ensure their presence is accessible to Indonesian consumers in a convenient and familiar manner. As such, it is important to localize in terms of language, as well as website look, feel, and layout.

Conclusion

The market growth in Indonesia is being driven through the robust retail sector and consumer demands, increasing mobile and internet penetration, as well as through social commerce.

There is a higher (and growing) payoff for efforts applied toward mobile optimization, social integration, and localization, as well as choosing the right local service providers for things such as fulfillment. There is huge potential for current and future success in the rapidly growing Indonesian marketplace for non-local firms.

Citations/ links:

  1. https://www.qordoba.com/blog/2017/03/2017-e-commerce-growth-forecast-3-takeaways/
  2. https://www.emstatic.com/images/chart_png460/204001-205000/204302.png
  3. http://travel.nationalgeographic.com/travel/countries/indonesia-facts/
  4. https://ecommerceiq.asia/indonesia-ecommerce-landscape-ecommerceiq
  5. http://na2.totalaccess.emarketer.com/Chart.aspx?R=189232&dsNav=Ntk:relevance%7cbarriers+to+purchasing+from+foreign+ecommerce+sites+%7c1%7c,Ro:0,Nr:NOT(Type%3aComparative+Estimate)
  6. http://www.bain.com/Images/BAIN_BRIEF_Can_Southeast_Asia_Live_Up_to_Ecommerce_potential.pdf
  7. http://isd-indonesia.org/wp-content/uploads/2015/12/Indonesia-Services-Dialogue-IPC-The-World-Bank.pdf
  8. http://www.internetworldstats.com/top20.htm

 

7 Pricing Tips to Reduce International Shopping Cart Abandonment

March 27, 2017

This is part of our 4-part series on reducing international shopping cart abandonment. You can read the other three parts here: 4 Shipping Tips, 4 UX Tips, and 4 Trust Tips.

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When selling internationally, you can help cut down on shopping cart abandonment by making sure that all facets of your pricing are localized, appealing, and well-understood by local shoppers. Consider that 61% of international online shoppers say they’ve made cross-border purchases because of price—in fact, it’s the #1 reason they do.

Bear in mind, however, that localizing prices means more than just swapping out the word “coupon” for “voucher,” or dollars for pounds sterling. Prices communicate different things to different buyers for different products in each market; in a way, it’s a language of its own. Thus, reducing shopping cart abandonment requires a thoroughly localized pricing strategy that takes into account everything from local pricing perceptions, to shipping cost considerations and more.    

Get the basics right: currencies.

The idea that shoppers need to see prices listed in their local currency may seem obvious, or even rudimentary, but given its importance (and how surprisingly easy it can be to overlook) it still bears mentioning. Research shows that 13% of customers will abandon their shopping carts, or even leave a retail site completely, when they discover that prices are not listed in their local currency. After all, asking shoppers to do something as basic as convert prices into their own currency is dead giveaway that a site doesn’t value that local market.

Having to translate foreign currencies also makes it difficult for customers to predict exactly how much something costs, and most people aren’t going to buy something unless they know the exact price.

The solution here is fairly straightforward: list prices in the currency relevant to the shopper to encourage trust, and keep the funnel flowing smoothly and speedbump-free for your customers.

Base prices on local market elasticity.

Different markets will place a different value on your products, and have different purchasing power parities, which means you’ll need to price accordingly. You may need to lower your price in markets where your product may not be valued as much in order to keep customers from walking. That said, you may also find that you can actually increase prices in other countries: consider the classic “big mac index.”

Of course, while the big mac index is a fun way to get started on pricing, it takes into account neither tastes, nor perceptions of quality. For instance, Chinese consumers like luxury products, and historically have been willing to pay premiums for foreign brands in the fashion, automotive and wine industries. Even now, they continue to be willing to pay foreign premiums for staples, like powdered milk, in cases where their local brands aren’t as trusted.

However, as high quality local brands start emerging with staples like toothpaste, cosmetics, and juice—and, consequently, gaining and maintaining local consumers’ trust and loyalty—these same consumers become less and less willing to pay premiums for imports.

This is an example of why it’s important to pay close attention and respond quickly to changes in the markets you’re building in. One sign that it may be time to re-evaluate your pricing strategy in a given market would be the emergence of gray-market middle-men: for instance, nearly $11B in goods were brought into China in 2013 through shopping agents in order to get around high import costs.

Keeping an eye on such local issues will help you maintain an attractive pricing strategy, ensuring more of your international shoppers actually purchase the items they place in their carts.

Localize shipping costs.

Shipping costs can skyrocket when it comes to cross-border sales. Making matters even more challenging, 61% of online shoppers say they’ve abandoned their carts due to price shocks after shipping, taxes, and fees are added in.

A few key issues global e-tailers will need to navigate here include balancing cost and shipping wait times; running effective and appealing free shipping promotions; as well as issues with taxes, tariffs and other fees.

To learn more, check out our full article: 4 Shipping Tips to Reduce International Shopping Cart Abandonment.

Offer customers their preferred method of payment.

As one might assume, when customers are presented with unfamiliar payment options, trust is diminished—in fact, one of the leading reasons shoppers abandon their carts is because their  preferred method of payment isn’t supported.

eMarketer_Preferred_Method_of_Payment_for_Digital_Purchases_According_to_Digital_Buyers_Worldwide_Oc..._222905

For example, online shoppers in India and Indonesia still love to pay with cash. In fact, you may be surprised to learn that young mobile online shoppers in India—who, in many cases, are also the most tech-savvy—still prefer to pay for goods using cash on delivery (COD.) Similarly, in Indonesia, COD remains the #2 most preferred method of payment.

For the most part, though, shoppers the world over still prefer credit and debit cards. Visa and Mastercard remain popular options in many regions, but exceptions, like China, where regulations are only now starting to allow foreign payment cards, remain.

Here are some preferred payment options you should be sure to consider, by country. (Also, an interesting note—most of these involve cash payments):

  • China: AliPay, UnionPay, and WeChat Pay
  • India: Cash options (especially COD,) and online bank transfer
  • Indonesia: Online bank transfer, cash options
  • Japan: Konbini (where shoppers pay for items by cash at kiosk-type locations)
  • Thailand: 123 (a payment location where shoppers can pay cash for goods purchased online)
  • Argentina: Cash options including PagoFácil and RapiPago
  • Brazil: Boleto, a type of payment ticket that permits online shoppers to pay in cash at ATMs and other locations
  • Mexico: Cash options, such as OXXO, a convenience store where shoppers can pay for online purchases
  • France: CarteBancaires
  • Germany: SEPA direct debit
  • The Netherlands: iDEAL

Reconsider promo or coupon code boxes—they may actually contribute to international shopping cart abandonment.

The presence of a coupon or promo code box at checkout may be driving customers away. Why? Seeing the promo code box can trigger shoppers to navigate away from the shopping cart in order to search the web for applicable coupon codes. Often, they either become distracted, or they find a better deal somewhere else.

One way that Macy’s (the #1 department store chain ranked by e-commerce sales) has mitigated this problem is by enabling shoppers to look up coupon codes right in the shopping cart during the checkout process.

If you decide to go this route, keep localization in mind: though your primary e-commerce system may be impeccably localized, if a 3rd party service powers the coupon search, it can be easy to forget to localize content in that service. For example, an international shopper may find themselves frustrated if your site encourages them to search for a coupon, only to find results that aren’t in their local language or currency.

Understand local perceptions of discounts.

It’s common for e-tailers to drive sales via promotions, discounts, and coupon codes. However, non-localized promotions could fall short in international markets for a number of reasons. While discounts are typically appealing, there’s still a chance that they may convey your product as a lesser quality in different cultures.

There are other ways international customers may misinterpret your promotions or discounts if you haven’t carefully localized them. A Chinese customer on a North American retailer’s site, for instance, would be far more excited to see a “10%” sale advertisement than a North American might be. That’s because in China, a sale advertisement for a “10%” discount indicates that the product costs just 10% of its full retail price—in other words, the product is actually 90% off.

Flip that around, and imagine a Chinese customer browsing your site on a day where your store is having a huge 75% clearance sale. The Chinese customer, thinking that the products are currently at 75% of the retail price—and not 75% off the retail price—probably wouldn’t get too excited about the promotion. The takeaway here: before offering a sale or discount, don’t forget to research how these function in your specific market, and always double-check to make sure the promotion is communicated accurately and clearly.

Additionally, consider how you offer the coupon. Increasingly, vendors are offering coupons to shoppers who take specific actions, such as referring a friend, signing up for a newsletter or through various social media posts. Hence, it’s important to understand which types of personal information your local market values. If your international customers are uncomfortable offering up an email address, refer-a-friend or social media strategies may perform better than newsletter sign-up promotions.

However, if you do offer coupons in exchange for a retweet or the use of a specific hashtag, just remember that social outlets, too, require localization. Popular North American social media outlets like Facebook and Twitter aren’t dominant in every market. In fact, both these mega social networks are blocked in mainland China, so offering promotions via them would likely lead to higher cart abandonment rates in this country (where social networks like Weibo and WeChat rule) rather than lower.

Test, test, optimize, and test again.

Pricing is so important that, regardless of what best practices are employed, it should always be driven by internal testing and optimization. Why? Dan Ariely demonstrates the fact, as consumers, we often aren’t as aware of our personal preferences as we think we are.

In his example, he showed the following 3 options for subscriptions to the Economist to a sample group, and asked which of them they’d prefer to purchase:

  • $59 for a digital subscription
  • $125 for a print-only subscription
  • $125 for both a print-and-digital subscription

The $125 print-and-digital subscription proved most popular and 0% of those surveyed saying they would choose a $125 print-only subscription. Presented this way, the print-and-digital option looked like a great deal, with the digital option basically appearing “free.” So, UX best practices would suggest removing the $125 print-only option—right? After all, no one chose it.

Dr. Ariely ran the survey again, this time removing that option. The sample group was left to choose from these two:

  • $59 for a digital subscription
  • $125 for a print-and-digital subscription

This time, those surveyed overwhelmingly chose the $59 digital-only subscription, even though the more expensive print-and-digital option had been favored last time. Without the print-only subscription as an option, the print-and-digital subscription didn’t look nearly as valuable or attractive anymore. Therefore they chose this option 2.6X less frequently, leaving tons of potential revenue on the table.

This example serves to show that even the best, most meticulously planned pricing strategies (even those built around some evidence-based practices) can be counter-intuitive. Thus, when entering new markets where your organization may not have as much expertise, it’s even more important to double-down on driving decisions based on data!

VIDEO: How Qordoba’s Architecture & Machine Learning Work

March 23, 2017

At the Spark Summit 2017 East, Michelle Casbon, our Director of Data Science, gave an under-the-hood look at our architecture, machine learning and how they power some of our localization features.

The challenge with supporting multiple locales is the maintenance and generation of localized strings, which are deeply integrated into all facets of going-to-market: design, development, marketing, sales, and support. To address these challenges at Qordoba, we’re using highly scalable technologies and machine learning to drive massive customer efficiencies.

In her presentation, Michelle describes the techniques we’re using to deliver:

  • Continuous deployment of localized strings
  • Live syncing across platforms (mobile, web, photoshop, sketch, help desk, etc.)
  • Content generation for any locale
  • Emotional response detection

Michelle also shares our architecture for handling billions of localized strings, in any language, including:

  • Scala and Akka as an orchestration layer
  • Apache Cassandra and MariaDB as a storage layer
  • Apache Spark for natural language processing
  • Apache Kafka as a message bus for reporting, billing, & notifications
  • Docker, Marathon, & Apache Mesos for containerized deployment

Check out the presentation and request a demo to see how Qordoba would work in your environment.

3 Takeaways From 2017 E-Commerce Growth Forecasts

March 14, 2017

Retail e-commerce is projected to continue to surge through 2017, growing 22.9% to $2.352 trillion. While growth numbers are healthy in nearly all markets, global averages hide significant differences between them.

Non-English speaking markets are driving growth

The top 6 fastest growing retail e-commerce countries (Indonesia, India, Argentina, China, Mexico, and Russia) and 7 of the top 10 (including Brazil) aren’t native English speakers. Their combined weighted average growth of 24% (19.4% w/o China) in 2017 is nearly double the 13% average of the fastest growing English-speaking countries (USA, Canada, and Australia). It is also worth noting that no Western European nations cracked the top 10.

 

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Primary growth factors: internet, smartphones, and disposable income

In much of the developing world, growth is being driven by the convergence of reliable internet access, smartphone adoption, and increasing disposable income. Unlike North America and Western Europe, where consumers have long had high disposable incomes and reliable internet access, consumers in these new markets are seeing the growth factors come together at the same time. Therefore, many developing markets are actually growing faster than North American and Western European e-commerce markets ever did.

It’s not just growth—these markets are big

Sometimes, it’s easy to discount rapid growth because the total numbers are small. However, that’s no longer the case in these e-commerce markets. Excluding China, these markets are projected to generate $80.6B.

While it’s no surprise that China is a big market, the numbers themselves are staggering. China is projected to end 2017 at nearly 3X the size of the U.S. retail e-commerce market, and it is growing over 2X as fast. In fact, the Chinese e-commerce market is so big that its projected 2017 growth alone approaches what the entire U.S. market was worth last year.

What it all means

E-commerce retailers must act now to enter growing markets as local-first and mobile-first vendors or risk being left behind by more agile competitors.

The consumers driving growth in the developing world are primarily net-new. They are making their first e-commerce purchases, and they don’t have established brand preferences. Moreover, unlike consumers in Western Europe and North America, these consumers prefer to buy on their smartphones. Lastly, English isn’t their native language.

The winners will be those who can provide the best overall experience to establish their brands in these new markets. For example, this means treating Mexico and Argentina as different markets, despite the fact that they both speak Spanish. It means respecting their different tastes, conventions, and language subtleties to provide an authentically native experience. While delivering on local-first may seem difficult, when global brands don’t, the simple fact is that someone else will. As developing markets grow, more well-funded, local-first competitors are emerging, and numerous examples demonstrate the difficulty of unseating local competition once established.

4 Trust Tips to Reduce International Shopping Cart Abandonment

March 9, 2017

This is part of our 4-part series on reducing international shopping cart abandonment. You can read the other three parts here: 7 Pricing tips, 4 Shipping Tips, and 4 UX Tips.

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Trust is an essential part of the online shopping experience. e-tailers that don’t establish trust with the customer throughout the buying and checkout process will see much higher shopping cart abandonment rates. In fact, 70% of shoppers have canceled their online orders simply because they didn’t “trust” the transaction.

While veteran e-commerce managers know this, it’s still easy to overestimate how trusted one’s brand may be in international markets. In mature markets like Western Europe or Japan, this could be due to lack of brand reach.

However, in developing markets (e.g. China, Southeast Asia, Latin America, Eastern Europe, Middle East, etc.,) much of the e-commerce growth is from net-new shoppers who are coming online for the first time, and who don’t yet have any established brand tastes or preferences.

When you can’t rely as heavily on your brand, it becomes that much more important to go the extra mile to establish trust with your international customers through other means.

Use culturally appealing photography and design

We know that a big part of product photography and design involves encouraging the shopper to think about who they aspire to be, and how the product can serve as a means to that end. Naturally, these considerations may shift when thinking about the perceptions of international audiences, since design that feels native and modern, and that includes culturally appropriate photos will be more trusted.

Always consider whether the culture you’re marketing to is motivated more by notions of individuality or collectivism, for example, or if your audience perceives products as higher value when they’re local versus when they’re imported. Build customers’ trust by photographing products in locally-appealing situations, with locally-appealing models.

When it comes to design, colors and symbols are also important. Writing someone’s name in red is a taboo in China, for example, as this can indicate that someone has died, or been cut out of your life. Also in China, blue is a more feminine color, as opposed to many Western countries where blue is a masculine color. In the Middle East, orange is associated with mourning and loss. We should also consider the watersports company whose globalization efforts failed in Malaysia because their main company color (green) was actually associated with death in the Southeast Asian country.

The more your UX feels authentically native and local, the more shoppers will trust your products are right for them.

Localize product reviews & ratings

Trust built early can go a long way when it comes to reducing shopping cart abandonment rates. Implementing well-localized product reviews that your international customers can connect with will play a big role when it comes to establishing this trust—and the more trust a customer has in you, the more likely they are to follow through with their purchases.

Research published this February shows that the #1 thing customers rely on to help establish trust with a brand and make purchasing decisions are customer product reviews. It’s important then, to consider how your international customers may feel about the reviews on your site.

For vendors that have reviews, the ideal scenario is displaying local ones for each market, e.g, Brazilian shoppers see Brazilian reviews that address Brazilian concerns.

However, if you don’t have local reviews, consider translating them from other languages. Translated reviews in local languages should read as naturally and organically as possible. If your reviews have awkward wording or phrasings, it may come across as disingenuous and actually erode trust.

Additionally, consider using reviews and ratings to address international shopper concerns in each market, such as shipping issues or potential customs issues.    

Lastly, if your core product information is stored in an e-commerce system, but other integrated 3rd party systems display complementary content, like reviews, it can be easy to forget to localize the content in a 3rd party system. If you’re using a 3rd party service for reviews, be sure to include it in your localization process!

Use the right trustmarks at checkout

Badges at checkout—like security, privacy, trust or assurance seals—are also helpful in reducing shopping cart abandonment. One Marketing Sherpa study found that trust badges increase conversions by as much as 14%.

Another study found that as many as 79% of online shoppers expect to see a trust badge on the retailer’s website, and 61% actually decided against completing a transaction because there were no trust badges, or they weren’t familiar with the ones they saw.

It is, however, important to consider the power trust badges may—or may not—hold in each market. For example, trust badges are virtually a necessity in Latin America, where shoppers can be highly distrustful of online stores. The same is true for Spain, where 43% of shoppers have avoided shopping online because they’re worried about the security of their banking information. Conversely, trust badges have a negligible impact on South Koreans’ buying perceptions and behaviors, as well as on Scandinavians’.

As you think about which international markets are important to your business, consider these locally or regionally popular trustmarks:

  • Norton security badges rule the U.S. (SSL)
  • Webshop Trustmark is the seal of choice for Germany, the Netherlands, Belgium and France. (Measures the reliability of online shops.)
  • ConfianzaOnline represents over 10,000 online retailers in Europe (A quality assurance mark that also helps mediate any issues that may arise between retailers and shoppers.)
  • iCERT is highly recognized in Spain (Measures both security, but also reliability of an online store.)
  • eCommerce Europe is a trustmark highly valued in 11 European nations (Quality assurance, and mediation between customers and retailers.)
  • eInstituto provides trustmarks for Latin American countries (Quality assurance.)
  • eKomi is valued in South Africa (Inspires shopper trust in customer reviews.)
  • The Hong Kong trust mark helps global shoppers trust Hong Kong-based businesses.
  • This resource lists The European eCommerce and Omni-Channel Trade Association (EMOTA) provides recognized trust marks for a host of countries including Austria, Belgium, Croatia, Estonia, Lithuania, Russia, and more.
  • idEA provides retailers with a trustmark for Indonesia shoppers
  • The Association of Internet Trade Companies (AITC) provides a trustmark honored by Russian online shoppers.

Deliver outstanding local support

A study by the Atlantic Marketing Journal found that non-localized customer service can have a marked impact on customer trust and satisfaction.

Consider your international customers who are poised to buy, but who have additional questions or concerns they want addressed first. If they aren’t confident that your customer service team  will be able to answer their questions due to a language barrier, you may lose an opportunity to nurture trust and a relationship with the customer, and they’re likely abandon their cart.

That said, sometimes it’s hard to localize customer service, especially when you haven’t set up local offices or don’t yet have the means by which to hire local talent.

Thankfully, there are some less expensive avenues to consider, such as self-service. For example, when your local content doesn’t inherently answer a customer’s questions, they’ll likely turn to your FAQ. However, if your FAQs were developed for North American shoppers, they may not be the right questions to address a Russian, Thai or Argentine shopper concerns.  

This isn’t any different than the best practices involved when developing any content, however it’s doubly important when you’re working to build relationships with new customers—especially those who don’t yet demonstrate brand preferences. To that end, forums are also a great opportunity to serve potential buyers by enabling happy local customers to advocate on your behalf!

If you are able to hire local customer service reps to communicate with your customers, be sure to use regional phone numbers that signal this. If building local support teams in each market doesn’t make sense for your business, consider a chat app translates language naturally in realtime. (To learn more about realtime chat translation, request a Qordoba demo here)

4 Shipping Tips to Reduce International Shopping Cart Abandonment

March 2, 2017

This is part of our 4-part series on reducing international shopping cart abandonment. You can read the other three parts here: 7 Pricing tips, 4 UX Tips, and 4 Trust Tips.

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Shipping costs are known to dramatically impact online shopping, and nowhere is this more true than in cart abandonment. In fact, high shipping costs are one of the top causes of shopping cart abandonment, with a whopping 61% of online shoppers saying it’s made them walk away from a purchase. Transborder shipping increases costs, wait times, taxes, tariffs, and logistics. Furthermore, as international markets grow and become more lucrative, well-funded, local-first competitors, without international shipping burdens, will continue to establish themselves.

Understand local priorities to balance cost and wait times

International shipping presents a paradox. The better the native local experience is, the less likely an international customer expects to pay more or wait longer for an item. However, priorities vary strongly from market to market. It’s not just cost that’s involved; 16% of shoppers report abandoning carts because delivery speeds were too slow. For example, Dutch and Belgian customers want the fastest options. Conversely, customers in developing markets may be more price sensitive and prefer cheaper, slower options. Scandinavians prefer to pick up packages at collection points, whereas the Japanese often choose cash on delivery, so be sure to research the tastes and preferences of each market you’re attempting to enter.

Two potentially “best-of-both-worlds” solutions are leveraging local fulfilment centers and drop shipping. With the combination of increasing production and the rapid growth of e-commerce demand in regions, such as Southeast Asia, shipping directly from your manufacturer to your international customer may save both time and money. While potentially more cost is involved to set up and maintain fulfillment centers, warehousing closer to your customers has obvious cost and speed advantages. Local fulfillment centers also have the advantage of reducing customs-related risks for the buyer (more on this below). However, if local isn’t right for your business, a regional fulfillment center may be the best place to start.

Be upfront with taxes, tariffs, and customs issues

The US International Trade Administration recommends displaying international shipping policies, such as the following, to disavow the vendor from responsibility for customs-related issues:

“Orders that are shipped to countries outside the United States may be subject to import taxes, customs tariffs, and fees levied by the destination country or the shipping company. These charges are the customer’s responsibility and will be billed by the delivery company. We have no control over these charges and are unable to estimate them. Tariffs and taxes are neither collected nor included in your price calculation at the time of your order; for an estimate of these fees, which vary by region, contact the customs office in your area.”

However, calculating many of these costs is possible, and setting accurate expectations with your customer is clearly better. International buyers are keenly aware that importing products can potentially lead to additional fees, wait times, and restrictions from customs authorities. However, shoppers won’t necessarily know how their country’s customs policies apply to your products, and the more you make them guess, the less likely they are to buy.

Sales taxes, value-added taxes, and tariffs vary by product and country. If your product catalog is small and static, collecting and maintaining tax/tariff data may be straightforward. However, as your catalog scales and changes rapidly, the challenge becomes increasingly complex, and you may want to consider integrating with a service provider.

Understanding export regulations and controls is also important. You probably don’t need to worry much about export controls related to arms, munitions, or nuclear non-proliferation, and US trade sanctions generally apply to less lucrative e-commerce markets. However, electronics, computer hardware, and consumer software vendors may be affected by export controls.

Lastly, consider inspection-friendly packaging for international customers. Agents performing customs inspections are often careless in re-packaging boxes they’ve opened, which can lead to product damage and/or a mediocre impression upon arrival.

Ensure shipping promotions are localized

Adding shipping promotions at particular spend levels is a popular way to increase both cart size and conversion rates. For example, while $50 is a common spending target for free shipping in North America, this same target may not work in other regions.

First, understanding the local spending power of your given market is important. If you’re selling into developing markets, for instance, you may need to tweak the ratio of your average purchase-to-shipping target, as well as your total customer wallet.

Second, you’ll need to understand the unique buying patterns of your market. If your most popular products are complementary and/or disposable, free shipping spending targets can help increase overall cart values. However, if your target international markets tend to buy durable and stand-alone products, focusing on lower-cost shipping options is probably more effective than cart value promotions. While in this example, using a personalization system to offer promotions based on the product and locale could be very effective, failing to localize third-party services that insert content is a common UX mistake. For example, offering Indonesian shoppers a shipping promotion in dollars wouldn’t be as effective as one in rupiah and would erode the authenticity of your native Indonesian experience.

Act now to establish beachheads in emerging markets

The pressure to offer shipping discounts, with the reality of increased international shipping costs, can put best practices in direct conflict with profitability. For some, such as global luxury brands, profitability may be the right focus from day one. However, for mainstream products, numerous examples (e.g., Tabao/Ebay, Mercado Livre/Amazon, Ctrip/Expedia, Weibo/Twitter, Didi/Uber, and HelloFresh/Instacart) demonstrate that investing early is far better than allowing local-first competitors to establish themselves. Furthermore, by establishing local brand presence and gaining market share, economies of scale can drive shipping costs down for both buyer and seller. However, the more lucrative international markets become, the more competition they will attract, whether global, regional, or local-first. The time to act is now!