Author: Chris Jones, Independent Multichannel Retail Consultant
I remember some years ago being invite to consult to an online retailer of mid-prices watches. They sold internationally recognised brands such as Seiko, Omega and so forth, and had just invested a significant amount of money translating / localising their site for a neighbouring country. They then spent another significant sum on PPC marketing to bring customers from that country to their newly localised site. Resulting total sales: zero.
Why? Because there was simply no reason for a foreign customer to buy there. They weren’t cheaper than local retailers, they sold nothing unique, the ranges were readily accessible in their target country, delivery inevitably took longer than local players could achieve, and their site wasn’t otherwise special.
One obvious way to overcome these difficulties is to be a brand and / or manufacturer. Theoretically you have unique products available for foreign customers. Quite likely you already see a reasonable level of traffic, and even (if you offer shipping) purchasing, from attractive target countries. For established brands, however, there’s usually a snag: typically they have well-established overseas distributors already in place in such countries. Targeting the same end-customers via your own online store is apt to be unpopular if not actually futile.
So what other options are there? One possibility is to look for places where your product-range is still reasonably unique. It’s unlikely that you’ll find such destinations in a “mainstream” online country such as USA, Germany, Australia or Sweden. But there are niche possibilities.
One such possibility is Croatia, which I visited recently to present at a retail conference, and which I’ll use to illustrate some key points.
To begin with Croatia is small: only 4.4 million people. It’s also not apparently particularly wealthy: average wages are 26% of the UK figure. Only 22% of its population shopped online last year compared with 79% in the UK. Superficially is doesn’t seem very attractive.
Over three quarters of Croatians that do shop online make purchases from overseas sites (see chart ), and it’s a reasonable assumption that those who do so are amongst the wealthiest. The fact that they are shopping overseas anyway makes them good prospective customers.
Moreover, the local competition is somewhere between weak and non-existent. There’s no Amazon to start with. eBay is just about to start up there. If you look at international retailers, such as Asos, they might be shipping there but certainly don’t have a Croatian store, while many others (e.g. H&M, Zara or IKEA) are present but don’t have transactional sites for Croatia.
OK, there are barriers, but they aren’t as great as you might think.
Starting from absolute basics: Croatians do have the necessary devices to access the internet, supported by good broadband penetration too.
Then, yes you will need to localise your site, although if you already have a German version, the combination of German and English might well make a reasonable initial job of it. There are reasonable local logistics companies (which will typically give you access to the rather similar Slovenia too). Most importantly of all, Croatia is a member of the EU, so a legal framework exists and there aren’t any customs barriers. Croatians pay with mainstream credit cards, and with eBay entering the market, almost certainly also with PayPal in future; there is, however, a local currency to cope with, not the Euro.
On the marketing side, Croatians search with Google and network on Facebook, just like their more mainstream-country cousins, so there are few technical barriers to overcome apart from language. And the costs of PPC/SEM type techniques are low compared with Western Europe (around 20%-35% of typical UK costs per click based on a brief analysis (see Global SEM Costs), making it relatively cheap to get going.
In summary, a reasonable comparison would actually be with a Northern Ireland where there was effectively NO local competition: not so huge, but possibly a very soft target. In fact if you’re a multibrand retailer, there is even a reasonable chance to develop a first-mover advantage in at least some of your categories.
Tempting, isn’t it?