-Kelland Willis
Not all markets return similar results. Knowing which metrics matter and how they may differ from one country to another will help eBusiness professionals better assess how well they are doing in a market. Additionally, eBusiness professionals will be able to better understand which areas need investment.
Understanding what the drivers of long-term success are in a market will prevent investments that only return short-term results. Our research indicates that global businesses often have unrealistic expectations around the time frame in which they expect to see a return on their investments in new markets.
eBusinesses looking to establish themselves in new markets may consider focusing on revenue growth instead: Wal-Mart, for example, has invested heavily in new markets to generate online growth.
The company reported that global eCommerce sales increased by about 27% in Q1 2014, fueled in large part by acquisitions in China and strong growth in Brazil. Indeed, Wal-Mart’s success in Latin America has not gone unnoticed in the company — the new head of Wal-Mart was previously the CEO of Wal-Mart in Latin America, a region that has driven significant growth for the company.
Site Traffic Is An Essential Metric To Start With
Every eBusiness must monitor its website and mobile traffic to understand customers’ purchase paths and to identify untapped opportunities: Many retailers, for example, look at the global traffic to their websites to determine in which markets they should be launching new localized offerings.
eBusiness leaders must also understand how their traffic is split between smartphones, tablets, and desktops in order to optimize the experience for clients. In many emerging eCommerce markets — China, for example — the number of online consumers accessing the Internet via mobile has already surpassed that of desktop use.
While both mobile traffic and revenues are skyrocketing, the market is now at a stage where mobile revenue growth is outpacing mobile traffic growth in some industries, including retail. According to a recent study put out by Branding Brand that tracked retailers with mobile optimized sites, retailers saw smartphone traffic grow 85.5% between 2013 and 2014, while revenue grew by 111%.
Conversion Rates Vary Greatly By Country And Category
Metrics like conversion rates vary greatly by category — and can be hard to estimate accurately —yet eBusiness professionals still often rely on industry averages to guide their businesses. In the US,Forrester and Shop.org’s 2014 study on the State Of Retailing Online (SORO) survey found the average conversion rate among US retailers surveyed to be 2.7%.
A recent eCommerce Quarterly report by Monetate that compared conversion rates across countries showed those in the UK to be lower than those in the US, while those in Germany were significantly higher.
Australia, too, has seen high reported conversion rates: A Forrester study conducted in 2011 found average conversion rates in the country to be 4.9%.
In emerging eCommerce markets, conversion rates tend to be much lower than those in the mature markets: One recent estimate for Brazil, for example, put conversion rates in the country at 1.04%.
Every retailer will have its own list of high conversion markets: A popular cosmetics brand operating a website across Europe and in China reported that its US site had the highest conversion rate with Germany a close second. In China, its conversion rates are half of what they are in the US.
Additionally, conversion rates tend to grow as businesses make improvements in their eCommerce functionalities such as payment options and shipping times. One vendor we spoke to commented that offering free shipping to online shoppers in Canada will, on average, double conversion rates during the duration of the shipping campaign. Conversion rates will also differ by platform and category: Smartphone conversion rates can be as little as one-tenth of what they are on desktop, as reported in Forrester’s latest mobile phone and tablet commerce forecast.
Repeat Customers Are An Essential Component Of Successful Businesses
A repeat customer is a crucial metric for any eCommerce business. Forrester’s SORO survey found that at large online businesses doing over $100 million in online business annually, over half of their sales came from repeat customers. Repeat customers indicate satisfaction, brand awareness, and deeper engagement. The director of eCommerce for a large lifestyle brand noted that repeat customers shopping on the company’s direct-to-consumer site not only spent more than first-time shoppers, they bought across more categories, making the business more profitable overall.
If an online business is not seeing repeat customers, it is critical to dig deeper to find out why. For one large nutraceutical company selling cross-border into the Philippines, the lack of repeat customers led it to realize that large orders for over 400 products were being placed by a single individual who would then play the role of a distributor and sell the products. The brand realized there was, in fact, higher demand for the product in the Philippines than the basic number of orders indicated, and that it had missed out on key localization opportunities: The reason end users weren’t shopping its site was that local payment options weren’t available and most of its customers did not have a credit card.
Average Order Values Can Be Affected By Adding Some Key Features
Like conversion rates, average order values vary from retailer to retailer and market to market. In the US, our research shows the average order value is $158 and this figure increased from 2012 to 2013 for 65% of the retailers surveyed.11 Internationally, businesses may see something different. In conversations with international shipping vendors, we have heard on a number of occasions that international average order values tend to increase as a result of high shipping costs as well as high import duties in some countries.
We have also heard that average order value tends to increase when shoppers have access to local customer service representatives. An eBusiness executive at Farfetch, a multibrand online retail platform, noted that offering 24×7 click-to-chat customer service in a number of languages has resulted in a high return on investment as witnessed by the increased average order values. The key for eBusiness professionals is to understand what the variance is between countries and adjust localization efforts for a market as necessary.
Recommendations
■ Understand that KPIs vary greatly by market. Many businesses launch a website — or some form of a global eCommerce offering — and expect to see results similar to what they see in their most successful markets. However, KPIs vary greatly from market to market and are notably lower in emerging markets. eBusiness professionals should prepare for these less-than-appetizing KPIs initially — in many markets, it will be years before eBusinesses see results similar to those in their home countries.
■ Prioritize customer-centric metrics. In the age of the customer, customer engagement metrics should be as important as sales metrics. In global markets, this will be especially true as brands try to figure out how to win market share among a new demographic.
■ Optimize mobile from the get-go. Mobile plays a massive role in influencing sales. In new markets, a mobile strategy will be especially crucial as eBusiness professionals work to drive overall impressions and customer contact.
■ Transact from the perspective of a local. Many global websites lack empathy for the international consumer, as witnessed by, for example, limited international payment or currency options. eBusiness professionals must strive to create an online experience that helps reassure customers while they shop that they will receive what they ordered, that returns are an option, and that their financial information will be protected. Seasoned online shoppers may not worry about these simple reassurances but online shoppers engaging with your brand in a new market for the first time will.
(The author is an associate analyst serving ebusiness & channel strategy professionals in Forrester research and tweets in @KellandWillis. The views expressed in this article are those of the author and do not represent the views of Channel Times or any of the websites managed or operated by Trivone Digital Services)