Overseas expansion offers exciting rewards as well as daunting risks for retailers - it’s a step into the unknown, quite literally, that either goes well, as new revenue is successfully unlocked with new customers, or is an expensive disaster if retailers don’t get it right. But, why do some retailers struggle to effectively expand overseas? Localisation is key to successful market entrance, however the strategy needs to be tailored on a country by country basis. One of the top reasons why most companies fail in their expansions, is that their business models don’t reflect the end customer in the designated markets.
Retailers want to avoid investing lots of time in expanding overseas and then falling at hurdles when it comes to launching. For instance, home assistants are becoming ubiquitous - smart speakers are expected to be the fastest growing connected device in 2019, with 164 million units to be sold globally, up from 98 million in 2018 - but it’s been found that smart speakers stumble when it comes to Finnish language. This is a great example of how localisation can flounder if differences aren’t properly taken into account. Needless to say, the inability of these devices to adapt to Finnish commands is holding back their potential growth in this market. If a smart speaker doesn’t work effectively, it could severely impact the company’s expansion efforts to excel in that market.
Consumer brands also need to consider the payment methods that are used most in different countries. For example, does the brand accept the major credit and debits cards used? Does the checkout process allow consumers to make purchases with Apple Pay? In fact, several factors need to be considered when expanding globally, including companies failing to consider culture, language, payment and purchasing habits. Ultimately, human centric crowdtesting may be the answer to the fast-moving needs of international commerce.
Another example of language not quite translating as well as intended is when the U.S fast food restaurant chain KFC launched in China and their catchphrase “fingerlickin’ good” didn’t quite translate as smoothly as anticipated. In certain languages, translating a phrase word for word can drastically change its meaning. In this unfortunate case, the end result was “eat your fingers off!”. It’s often worth having a dedicated language team in the new country to confirm that all messaging works equally as well.
To mitigate risks of failure abroad, cultural differences in language including idioms, regional dialect and slang should also be considered. Being conscious of international traits may appear obvious and simple, however as many brands have discovered in the past, if done wrong, results can be catastrophic - potentially offending entire nations. Specific idioms could be a potential barrier to entry. If a Liverpudlian asked their Alexa for a ‘proper boss scran’, it may be a little confused (and who could blame it), but it would need to be trained well enough to recognise that they are looking for good food or restaurant recommendations.
What may not be considered, but if overlooked can be calamitous, is a simple hand gesture used in a marketing campaign that may be considered offensive in other countries. Some cultures even have issues with using images of different parts of the body and the position of the feet. The ‘OK’ sign is understood in many parts of the world as a sign for ''okay.'' However, in Japan, it is a sign for ''money'' and in France, it is used to indicate a ''zero.'' This could be detrimental if used incorrectly by a Japanese banking app launching in France. Retailers need to do their research to safeguard themselves from causing offense or making a mockery of themselves over simple language translations.
Sometimes a product may not exactly meet the needs of international consumers. McDonalds understood that they couldn’t launch the Big Mac in India due to religious customs prohibiting the eating of beef and port. But instead of giving up on expanding they came up with alternative menu items including the aloo tikki burger. Approaching hurdles like this don’t have to mean the end for expansion plans, but instead just require a little creativity and thought.
The marketing strategy of retailers will need to be adjusted depending on which channels, (mobile vs. in-store vs. web browser) dominate in the market they are looking to enter. For example, in Asia, consumers predominantly use their mobile devices to search for, compare prices on and purchase a product. On the other hand, UK consumers often include many different devices in their purchasing process. This includes researching a product through mobile, comparing on a laptop before moving in store to complete their purchase. In fact,52 per cent of UK shoppers believe that retailers need to focus on the omnichannel, a seamless experience between online and offline commerce. It’s therefore of utmost importance that all channels are efficient. If not, one might risk alienating a group of people. When expanding overseas, if one of the countries places emphasis on the in-store experience, it really is worth investing extra time in designing the physical store.
The preferred payment methods vary from country to country, so it’s crucial to conduct research on each market before expanding, to avoid alienating a country in its entirety. For example, in the Czech Republic more than 50 per cent of payments are cash on delivery, in the Netherlands 60 per cent of payments are by direct debit and in Germany 46 per cent of payments are by online bank transfer.
Aside from method of payment, one of the most important things that a company must consider when selling internationally is to price its products or services in the local currency. This can be daunting with fluctuating exchange rates but potential buyers might not be happy to learn that they must pay in a foreign currency, especially if it involves incurring hefty conversion fees. To avoid investing time in getting a product and marketing right but then falling at the last hurdle, retailers should aim to simplify the process as much as possible for consumers abroad.
True localisation may seem a daunting and complex process but it is one that retailers need to get right in order to expand successfully. It may seem tempting to take shortcuts but this is ill-advised and could risk losing potential loyal customers, revenue and brand value. The key to truly perfecting this experience is to keep all efforts customer-centric at heart. For instance, a community of ‘in-the-wild’ crowdtesters can ensure that all digital retail experiences and apps are tested for usability and appearance in the desired market. That way issues arising from different cultures, languages, payments and services can be quickly spotted and dealt with. This human-centric approach allows businesses to keep pace with the fast-growing expectations of today’s customers, while understanding common patterns of behaviour, which will help prepare them for the customers of tomorrow.
Mike Plachta, Solutions Engineer, Applause
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