Why all-in-one global solutions are failing?
Global eCommerce has the potential to over 2 billion online consumers around the world andrepresents a great oppourtunity for many US merchants.
An ambtious business owner would investigate this opporuity further in detail to indentity what it takes to sell globally and to be sucsesful. A designated employee with an international MBA degree, a VP of Marketting, a sales representitive or the owner himself may conduct the initial investigation. Regardless of the size of the business and the invetigator's educational backgroud, 80% of the business owners eventually reach the conclusion that it is not worth the effort because the project will require a siginificant amount of investment to:
Have your web site and content translated into multiple languages.
Enable your web site to convert the original USD value of the product to multiple currencies based on the daily FX Rate and to provide payment methods that are commonly used at the destination country or region.
Rebuild your backend fufillment system with your logistic partners with international rates that can not simply be calulated by the actual weight of the package.
And there is no gurantee that even having a state of the art multi-lingual, multi-currency enabled online store that supports international shipping, that your product will actually sell internationally or that your revenue will grow five times larger by reaching a five times larger consumer base.
The fundmental obstacles for US merchants to go global online remains today as it did ten years ago when I found that only 20% of the US merchants support international shipping.
Today, US speciality merchants such as cooking.com, drugstore.com, motosports.com, gap.com and its sister companies display an "international" icon on the top navigation bar area which means they really want visitors to their site to know that they are doing business internationally.
Those "internatioinal" sites offer features like setting your currency, JPY for Japanese yen for example, and country of destination for international shipment (See Fig.1).
Fig.1 http://www.cooking.com/guestassist/international.asp?returnUrl=/
Actually, I love how Gap.com does this and it is pretty slick. Instead of selecting two options, by clicking the flag it sets the currency and destination and even offer an option for saving the settings for the future use (See Fig. 2), and sure enough when I cliked on the "Set shipping destination" roll-over button, it takes me back to the page that I was previously looking at. OK, so far so good.
Fig. 2 http://www.gap.com/ (you need to click on the American flag)
I noticed immediately that the icon on the top right of th navigation bar had changed to the Japanese flag. I also, noticed that now the product prices were displaced in Japanese ye, or JPY. (e.g JPY 2971.00) At this point some Japanese consumers will be thrown off by the extra 00 at the end as it looks like 297,100円 which would be 2,971 dollars if the Fx Rate is 1USD = 100 JPY. That's strike one. I had to select my size again for some reason. That's strike two. Then, I clicked the "ADD TO BAG" button and nothing happened. I kept on clicking it like a monkey and NOTHING HAPPENED but I reconginized an obscure icon and the message right next to it: "no international shipping". This is simply a bad user experience and at this point you've lost a customer- one whose life time value may represent roughly $1,000- and it's GAME OVER.
There can be dozens of reason why this is happening but here are three major obstacles:
Global US brands are likely to have local counterparts in countries such as Japan, which are selling the same line of merchandise. So, the US brand will avoid "cannibalization".
Unlike US domestic standard shipping, merchandise is shipped by air, so there are hundreds of products that cannot be shipped because they are considered hazardous.
Every country has their own import restrictions and custom clearance procedures and US merchants would not want to not knowingly ship any products that are likely to be abadoned by the custom office or custom clerance vendors in the country.
These walls stood very high in front of us ten years ago and they haven't gone away.
Next Inside Edge, "Then, Plan B."
COMING SOON! Watch our presentation on how KGS can help your business connect with the Japanese market
The Inside Edge is a must read column on Japan and doing business with Japan. These articles are based on the real life skills and lessons learned by the writers.