A time and cost efficient approach to invest in the European market
Often times, the internationalization of an e-commerce website starts with neighboring countries, or, in case of a European company, with European countries. Conquering the European market brings a number of important advantages, including the single market, the common currency, a progressing harmonization of regulations and a dense, high quality transportation infrastructure. Moreover, many European markets are comparatively mature when it comes to the internet as a sales channel.
The growth of the online sales channel is not slowing down on a global level, and neither is it in Europe. Cross-border e-commerce is one of the fastest growing segments. According to research by OC&C in collaboration with Google, cross-border transactions between the six largest e-commerce markets (US, UK, Germany, France, NL and the Nordics) will increase from $25bn in 2013 to $130bn in 2020, which implies an average year-on-year growth of 30%. Vast opportunities are out there, so it is now up to the sellers to seize them (more effectively).
In order to maximize benefit from this favorable development, one option is to expand your offer to a maximum of foreign countries without allocating a great deal of investments for marketing and promotion. Performance will show you which products deserve more investment in which markets. This is the ‘Theory of the Low hanging Fruit’.
What is this ‘Low-Hanging Fruit’ Theory exactly?
The metaphor low hanging fruit is often used to describe making use of the most simple and easy way to achieve a solution to a problem. Talking sales, this means setting a realistic target which is achievable in the light of the performance of a product or service in a certain market. A low hanging, ripe fruit is thus an opportunity which is easy to achieve, without great (financial) effort, and which quickly generates revenue.
Low-Hanging Fruit and international e-commerce, Phase 1: The launch
The core idea is to test markets without large investments in order to reduce risks. In this first phase, the e-commerce sites are launched in several countries without translating the product descriptions (in order to save on translation costs) and with only one active channel of client acquisition (Google Shopping, which has a good conversion rate).
As many countries as possible
From an operational point of view, the seller will cover a maximal number of countries in a single move, for instance the UK, Germany, Austria, Switzerland, The Netherlands, Belgium, Italy, Spain, Sweden and Denmark.
Localization of core elements
For each target country, certain features are going to be localized:
- Legal Terms and conditions should be edited and adapted
- Local payment methods
- Delivery options fitting the customer preferences
- A local phone number for customer care
- A local return address
Translating only the structure and the titles of product pages
Translation costs can easily rise to an enormous extent when retailers choose to translate their entire catalogue. According to the Low Hanging Fruit Theory, only the main structure and the titles on product pages are translated. This way, retailers can offer their entire product assortment without having to invest heavily in translations.
Only one marketing channel
Google Shopping is the perfect way to drive customer acquisition without investing large amounts of money from the beginning, because this tool generates a high ROI within a short time frame. In addition, Google Shopping is relatively easy to implement and does not necessarily need product descriptions.
Identifying the ‘runners’
For every country, selling via Google Shopping helps indicating which products generate the highest demand. These products are the ‘runners’ or ‘ripe fruits’. Merchants should identify their best sellers for each country.
Phase 2: Growth
Translation of product descriptions
After having identified successful products for each country, the seller knows for which products there is already demand. He can now proceed and translate the product descriptions for those products. This investment has a lower risk, because the ROI can be forecasted by the performance identified for the product. From time to time, new products can be added to this group, which makes the budget controllable.
Activation of other marketing channels
The new, localized product pages open up doors for other marketing channels. In order to promote the ‘runners’, Adword campaigns and xml-feeds to marketplaces and price comparison tools can be put into action.
Internationalizing an e-commerce business according to the ‘Low Hanging Fruit Theory’ allows a large-scale international expansion and the time-efficient exploration of multiple markets at the same time. This approach allows the seller to focus their investments on products and markets that show satisfactory performance, which makes the risk of an expansion controllable and expenditure scalable.
By Cyril du Plessis, Marketing Director Salesupply France