The rate of change has never been greater — or faster — for the footwear industry, with new challenges popping up every day in nearly all corners of the business, from navigating cash crunches and supply chain issues to understanding the latest technological advances. In its “Ask An Expert” series, FN asks industry leaders — all solutions-based providers — to take on some of the most timely topics.
The need for multiple revenue channels became apparent in 2020, as many footwear businesses found themselves restricted in unexpected ways. Direct-to-consumer selling was the go-to choice, but there has also been significant interest in expanding geographical reach. Selling to an international audience creates significant revenue potential – but it comes with its own challenges. In order to successfully serve global markets and unlock that exponential growth, companies must approach each location individually and strategically.
Tommy Kelly, CEO of cross-border commerce platform eShopWorld, spoke to FN about the necessary considerations of selling internationally, the biggest market opportunities for footwear and why a global presence will be critical for future success.
FN: What are some of the variations in global markets that brands should consider if planning to expand their geographical reach?
Tommy Kelly: It’s a matter of local and cultural preferences. Simply put, people like to shop in different ways and brands can’t afford to take a one-size-fits-all approach to their global e-commerce efforts. In practice, this means adopting the services and technologies that make the online shopping experience feel local and familiar to each consumer. For example, in the US, shoppers are accustomed to having sales tax added at checkout. But in other countries, the norm is to have all charges and taxes included in the sticker price on the item. To sell effectively online, brands need to be able to calculate all applicable charges—which, of course, vary from country to country—and incorporate them into the price of a product.
Another example is payments. Shoppers in the Netherlands like to use an online payment system called iDeal; in some countries, credit cards are not widely used due to cultural imperatives. And buy now, pay later options are gaining traction, especially among younger global shoppers. Global commerce is complex and brands need a strong partner that can take on all of that complexity.
FN: In footwear specifically, what current trends have you observed internationally that U.S. brands should be paying attention to?
TK: Our latest consumer survey data show that more than 15% of consumers have purchased footwear from a website outside their own country, indicating that footwear brands have a significant opportunity to grow e-commerce share in international markets. Interestingly, our study showed that consumers in Singapore, Russia and France were the most likely to buy footwear from a site outside their own country, with 24%, 20% and 19% of respondents in those countries, respectively, saying they had bought footwear online from an international merchant in the previous six months.
We see a number of interesting trends gaining momentum in 2021, particularly in the areas of omnichannel retail and sustainability. Consumer demand for convenience and environmental concerns will be key innovation drivers over the short to medium term.
FN: What are some of the challenges of cross-border commerce that newcomers might not be aware of?
TK: The success of a cross-border initiative can be closely aligned to strategic decision making, even more so than operational tactics. Without a doubt, there are numerous areas to consider from an operational perspective because the entire end-to-end shopper journey needs to be optimized to meet local shoppers’ expectations. That means everything from pricing and payments, to trade compliance, delivery and returns – and each presents its own challenges.
In our view, it’s a brand’s commitment to tackling this array of challenges that separates out the winners. When you look at a brand like NIKE, it’s clear that the company has prioritized the move to digital, particularly in the DTC channel, and that it has made global diversification a cornerstone of that strategy.
FN: From a consumer perspective, what are the most critical factors in ensuring a positive cross-border purchasing experience?
TK: The experience needs to feel local and familiar to consumers; they shouldn’t feel friction at any point along the browsing and purchasing journey. They should be able to browse in their own language, view prices in the currency of their choice and clearly understand the final cost, with no surprises in the form of unexpected additional charges at either checkout or the point of delivery.
In fact, our latest survey data show that consumers rank local language (34%), local currency (34%) and seeing all charges, taxes and duties clearly displayed (33%) as the most important factors when making purchasing decisions. The biggest barriers to purchase are high shipping costs (31%) and concerns about having to wait too long for orders to be shipped (30%). That means it’s crucial to have the functionality to promise a delivery date and ensure orders arrive when they’re supposed to. Predictability is key.
FN: With all these additional components to manage, what are the benefits of global selling?
TK: The benefits of selling globally have never been greater or more apparent than they have been since the pandemic started. Our December consumer study found that more than half (52%) of respondents said they had made six or more cross-border purchases in just the past six months, which shows that consumers are embracing this way of shopping. Brands that were further along on their digital journey, and globally diversified before the spread of COVID-19, have seen incredible returns; they were prepared to meet demand and react quickly to fast-evolving market conditions.
If you have a brand that enjoys high demand around the world, then global e-commerce and DTC in particular is the future—regardless of vertical. The key to unlocking great performance is in the data and the DTC channel is where data can be owned and leveraged. It’s no longer a choice to sell globally; it’s a strategic imperative. Those brands that embrace global e-commerce will continue to outperform their rivals by delighting their customers around the world.