Tuesday, July 10, 2012

The 11 Cs of e-commerce internationalization

Here are the 11 Cs of e-commerce internationalization...

1. Country

There could be many potential countries and markets that at the outset appear to be attractive propositions. In the case of larger, well-established global brands, there will most likely be existing data available from the offline channel to qualify the potential of a market.
Smaller brands and those who have yet to internationalise through any channel may analyse existing web traffic patterns in order to make some informed assumptions around the opportunity from international markets.
But there are also important considerations around PEST analysis (Political, Environmental, Social and Technological factors) that you should review before making a decision on what countries hold the best prospects for you.

2. Customers

Customers are the lifeblood of every business, whether you are selling B2C, B2B or B2B2C. You will need to analyse the market in order to understand what customer segmentation looks like and how relevant and closely aligned is your product or service offer with local market customers.
From an end-customer perspective, it is also advisable to look at market segmentation and consider traditional marketing criteria when determining the relative attractiveness of a market.
For example:
  • Demographic: gender, age, income level, social class and educational achievement.
  • Psychographic: lifestyle factors - activities, interests and opinions.
  • Behavioural: patterns of consumption, loyalty to product category and brand.

3. Communication

You are going to have to communicate with customers in new markets through a number of channels and therefore you will need to consider how you are going to effectively engage customers through both marketing messages and all other forms of communication, including customer service and content.
Therefore, the supply of these services will also become important criteria when deciding upon market entry.

4. Culture

Cultural variances of local markets can impact upon a number of considerations. European markets are hardly comparable with one another. A good example is design. In Sweden, functionality, simplicity and speed are the most important features of an online shop. This is in contrast with France, where the focus is on design.

5. Customer service/Customer proposition

Customers in local markets will always prefer to speak to someone in your customer service team in their local language.
The 'last mile' is the most important leg on the customer journey. If the purchase results in a poor experience when it comes to receiving their order, customers will remember that. A number of international markets have fairly poor delivery options, which will hinder the online opportunity.

6. Competitors

You will definitely want to have a close look at the competitive landscape and your potential competitors, as you may end up getting competition from well-known, established competitors as well as from local market competitors with whom you may be unfamiliar.
You will want to understand what their marketing mix, market share and positioning is in order to understand what you need to do to have a competitive advantage.

7. Currency and payment options

Local market customers will require you to offer a variety of payment solutions and will normally prefer to pay in their local market currency. For example, Germans have a low adoption of credit cards and prefer to pay through ELV and direct debit. A significant percentage of Scandinavians prefer to pay by cash on delivery.
This obviously adds a degree of complexity to systems as you will require your payment service provider (PSP) to facilitate transactions in new currencies and payment methods, some of which they may not already cater for.

8. Conversion

While conversion rates always need to be put into context, some knowledge of KPIs in the local market, specifically within your own category will help to qualify the scope of opportunity you can expect to achieve.
These will be driven by a number of factors, including the local market consumers‟ propensity to buy online, their propensity to buy a specific product or product category online, the delivery and fulfilment proposition and so on.

9. Channels (and category)

E-commerce may not be the only channel you need to consider. For example, in India, due to the cost and unreliable nature of fixed line communication, mobile has a higher penetration.
10. Content
As previously discussed under 'culture', content is always a major consideration in e-commerce but even more so when put into the context of internationalisation.
There are a number of strategic models you can adopt to help you in the decision making process. These include the business portfolio matrix, the Ansoff growth matrix, the 4-risk matrix and Michael Porter‟s five forces competitive analysis model.

11. Costs

The first 10 Cs will play a significant role in helping you determine what cost implications are associated with entering into different market. But by this point you should also have a feel for the potential ROI.

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