Expanding sales beyond local borders to target an international audience offers a great opportunity for retailers to grow their business. However, retailers looking to expand internationally face increased challenges and competition is intense.
Dealing with different regional cultures, different online purchasing patterns, language barriers, and varying taxation laws can create major bumps in the road. Identifying the challenges and understanding how to overcome them from the outset can help to smooth the journey. Here are some of the challenges retailers face when expanding into new regions and how to address these challenges for success.
Using big data in retail
Identifying regional patterns of behaviour and being able to evaluate this data effectively is an important step when looking to sell into a new market. However, analysing the billions of cookies relating to regional variations and then implementing targeted advertising for overseas customers without impacting the customer experience is difficult. A one size fits all approach generally doesn’t work. Targeted advertising using cookies in multi-regional multi-lingual websites is more effective than a centralised e-commerce website. In the long term, the winners will be the retailers who are able to leverage big data and machine learning based analytics in their international expansion strategies.
For example, online retailers can use data analytics on payment methods to gather intelligence on payment conversion, revenue generation via each payment method, and average order value. Retailers can then use this intelligence to provide targeted offers around different payment modes. Beyond the standard payment options there are also regional preferences to consider such as digital wallets, cash on delivery, and dynamic PIN authorisation. These options however do not have a common standard and are mostly governed by local regulatory authorities.
Managing cross-border challenges
Another challenge when dealing with foreign payments is FOREX conversion. This needs to be dynamically managed by business logic implemented at the website level for multiple geographies. Cart abandonment, a perennial challenge in e-commerce space, is also further magnified when foreign payments are involved. Real-time predictive analytics that marry the customer demographics and behavior with payment options can provide a roadmap to the solution.
Cross border e-commerce necessitates that retailers comply with international rules and regulations. In certain countries the lack of secure infrastructure and legal frameworks to prevent financial crimes can introduce risk to the business itself for the overseas retailer. Countries with a business friendly ecosystem will naturally attract more business. Look for good infrastructure, an efficient supply chain, skilled resource, secure technical infrastructure, transparent taxation rules, and strong internet penetration. The sociopolitical environment, the purchase potential of the customers, and cultural openness are also important as this indicates an openness to try something new and enables higher adoption rates.
How to attract overseas customers
‘Know your customer’ remains the holy grail for the retail industry. Here are four best practice guidelines to attract overseas customers based on our work with e-commerce companies:
1. Go granular to identify your customers
Combine traffic source from ISPs and identify the path to purchase that the customer followed. Further, if information is available, use postcode based household data to zero in on granular customer identification. Use this to do more targeted campaigns and offers.
2. Enrich the customer profile with social
In addition to profiling on the basis of demographic, geographic, transactional and behaviour, augment this data with customer activity and interaction on social platforms.
3. Explore dynamic pricing
Assign personalised pricing based on segmentation, loyalty score, price sensitivity analysis and the economic value of the local product. Dynamic pricing drives customer satisfaction on one hand while on the other improves ROI for the retailer.
4. Reimagine the customer experience
Use the mashed up data from the above strategies to create regional personas and deliver a real-time immersive customer experience.
When looking to expand your retail business beyond borders, personalisation, and actionable intelligence on the back of big data analytics is the real mantra of success. Applying robust structured and unstructured data analytics coupled with Natural Language Processing (NLP) and machine-learning capabilities will form the bedrock for winning in this competitive market.
Salil Godika, Chief Strategy & Marketing Officer and Industry Group Head, Happiest Minds
Image source: Shutterstock/wavebreakmedia