Presentation to Internet Retailing Research Briefing

– presented to the Internet Retailing International Research Briefing in London recently.

https://www.youtube.com/watch?v=KBL8V8RmVzA

We’ve included the video and the transcript of David’s speech which was about the challenges of Internationalisation.

It’s great to be here to share some of the insights, challenges and solutions that are raised by the Internet Retailer International Research Report. I’m David Fuller, I am the Managing Director for Redbox Digital’s Middle East and North Africa business based in Dubai. I’ve also recently taken over the role of Marketing for Redbox Digital for all our international offices.

Redbox Digital is an Ecommerce consultancy with global reach. We operate in the UK, Middle East and Australia with clients in many countries. Our experience with internationalisation comes from local knowledge – learning the customs and cultures of local consumers by having people on the ground. Recent work includes sites for Paperchase, Screwfix and Conran Shop – all projects that included a language or internationalisation element.

Redbox Digital became involved in this project because we know that internationalisation – and unlocking growth from being able to sell to a world of customers is important to all our clients. Understanding the challenges faced by a wide variety of retailers helps us to adapt solutions for specific markets and market conditions, and as we will see in the next couple of slides, you can never be too prepared to go into new markets.

The results of the Internet Retailing International Research Report confirm our own experience.
Less than 5% of respondents say that technology is an issue – rather – it is things like fulfillment and local customs that are the biggest challenges. Some of the practices and processes that are taken for granted in Silicon Valley or Shoreditch don’t exist in international markets, but this can provide as much opportunity as it does challenge.

If there was one piece of advice I could give you from our experience – its keep your eyes open and be prepared to change your direction quickly based on new information. “Googling it” is not enough. You can do all the desk-based research you want, but it won’t make up for the lessons learned by being there. For example – postal code is a pretty fundamental piece of data in ecommerce. It drives a whole lot of things like fraud checks and delivery options – but what if there is no postcode in the country you are selling to? It’s amazing how many websites have postal-code as a mandatory field – even for things as simple as signing up for a newsletter.

81% of the respondents to the survey said that localisation is important, they also said that localisation is more than just translating content. From an ecommerce point of view, there are things that we have to deal with in some markets which are hard to conceive in London – like cash on delivery for example. Over 75% of all online transaction in the Middle East are still cash on delivery. Forget PayPal or mobile wallets – Cash on delivery is the Ecommerce reality in 2014 in many countries. We’d read the reports, we’d heard the stories, but it’s not until you sit in front of an online retailer in Dubai and he tells you that the site has to support cash-on-delivery does it really hit home. It’s not just the Middle East – countries closer to home – like Germany have payment options that are very different to how we do it here.

Scratch that…

Remember I said that things change fast and you need to be ready to react to change?
The previous slide is at least a week old. Things have moved on already. As I paid CASH for my groceries yesterday in the biggest supermarket in one of the biggest malls in Dubai, the option to use a mobile wallet was front and centre. There are 24 other shops in the same mall that accept this payment type – some with incentives to switch to a non-cash payment… Suddenly – one of the biggest barriers to entry for a market like this is removed – or at least lowered a little. Of course there is issues around adoption, but standing at the tills and watching, I could see people using it to pay for their groceries.

Which brings me nicely to the consumers in international markets. Just because they are doing something today, doesn’t mean they won’t do it a different way if it is offered to them. It might seem like a simple concept, certainly not a new one – but retail not about the product anymore – it is about the consumer. Taking time (and spending money) on understanding what your consumer wants can save expensive mistakes.

• Don’t make assumptions about your customer.
• Don’t overestimate the level of technology they have access too (Just because they have a smartphone, doesn’t mean they have a data plan)

but at the same time…

• Do not underestimate how well informed they are, or the influence social recommendations play in their purchase decision.

If you haven’t heard of Google’s concept of ZMOT (or the Zero Moment of Truth)… I recommend it to you. It builds on Procter & Gamble’s ‘Moment of Truth’ idea from a few decades ago and shows how consumers have made their decision well before they reach for the product on the shelf. Personalisation is a global concept, so if you are segmenting your consumers, analysing their behaviour and habits here, don’t treat your international markets as country segments only. In many cases, international markets are more regional, tribal and diverse that markets like the UK.

We recently launched Screwfix.de as part of a larger project which includes several countries for the brand.
Many of the issues raised by the Internet Retailer Report were on our mind during this process.

Delivering Omnichannel ecommerce solutions in places like Germany with Screwfix or here in the UK through Paperchase allows us to think about innovative ways to get around challenges in other parts of the world. Remember the tough challenges from the report – one of the biggest ones is fulfilment. In many countries, there is a mistrust of the delivery element of the customer experience. ‘Click and Collect’ (or BOPIS, Buy Online, Pick Up In Store as I saw it reffered to yesteday) solves a couple of problems in one go. It takes out the delivery element, so customers don’t have to worry about the reliability of fulfilment providers but it also taps into customer’s ‘normal’ behaviour in places where a visit to the mall is as much about family entertainment as it is about shopping. The predominance of ‘Stores’ in places like Dubai, gives retailers an edge over pureplay operators – especially in sectors like Apparel.

Other trends that are being explored here in the UK will filter through to other markets. Retailers are watching the UK and schemes like Collect+ with interest. Well funded Entrepreneurs and foreign retailers alike are hiring people with UK experience to help them leapfrog to the latest technologies and practises.
Redbox Digital is a Ecommerce agency first and foremost. We specialise in building large, enterprise ecommerce sites on Magento and our business has become that through our experience in places like the UK and Australia. International expansion though, means that you have to be adaptable. You have to be willing to accept that your business model might need to change. We are used to dealing with retailers who have their infrastructure in place. Companies will have their ERP systems, their hosting, their digital marketing, their fulfillment partners and payment gateways in place. In other markets, markets, we find that retailers are looking to us to help them with an end to end solution. They are looking to us to help them with company setup questions or to help them acquire customers and convert them. One way to do this is to add these services to the offer, but a better way to do it is to partner – or to form alliances with companies who share your interests.

Doing it alone can be hard, which is why it’s great to share the stage with companies like Peer 1 who we know can help us deliver a better product through leveraging our strengths.

The top tip that comes out of this slide is one that relates to the people you hire in your international markets – they need to be able to think strategically, creatively and perhaps sometimes with expediency. It’s why I used the word alliances for this slide rather than partnerships.

And speaking of people. Finally, a word about getting ready to go international. The report published today talks a lot about external factors – different technologies, barriers to entry as a result of laws or regulations, but changing from a UK business to an international business requires a culture shift. Often it’s the little things that you never think about – like the fact that your UAE team’s weekend is Friday and Saturday or that your Australian team is going to bed as you wake up. Some might see these things as reasons not to do business with the rest of the world, but exposing your people to the way other cultures work is a great thing. You make better informed decisions, you can re-use best practise from markets that your competitors might not have visibility of. Having a diverse team allows you better serve the needs of diverse customers and consumers.

I hope that these few slides in combination with the Internet retailer International Research Report gives you more information with which to make an informed decision about which markets you choose to expand into. If you have any questions, please don’t hesitate to ask.

Thank you.