News

Study: Online retailers ramping up global expansion efforts

September 27, 2010

The new frontier in online retailing lies across international borders as U.S. companies attempt to capitalize on the growing demands of foreign consumers. According to the, "State of Retailing Online 2010: Key Metrics, Multichannel and Global Strategies Report," conducted by Forrester Research Inc. for Shop.org, nearly three-quarters (73 percent) of retailers surveyed are already sending merchandise abroad from their home country’s distribution center. Another 17 percent opened a foreign warehouse.

On average, U.S. retailers that ship abroad report that approximately five percent of their revenue comes from foreign orders. The survey of 87 companies is part of "The State of Retailing Online" research series, which provides eBusiness professionals with annual industry benchmarks for marketing and business investment and activities.
 
"International customers have visited U.S. retail Web sites for years," said Fiona Swerdlow, Head of Research for Shop.org. "While still in the early stages, US retailers are starting to monetize that traffic by meeting global consumer demand for their products and services, which in turn should help to bolster their bottom line."
 
US retailers are still developing and testing their operations to sell to and service overseas customers. For example, when it comes to handling international returns, the survey found that nearly four out of 10 (37 percent) online retailers require customers to ship items to a returns center in the retailer’s country of origin. An additional 12 percent of companies had an international returns center located in their own country to handle foreign returns.
 
"A small but savvy group of web retailers recognize the promising opportunity in international expansion," said Sucharita Mulpulru, Vice President, principal analyst for Forrester Research. "If executed successfully, selling globally can generate a healthy double-digit percent of sales. The global online population stands at 1.6 billion today, and the purchasing power of that group represents a significant opportunity for web-enabled businesses."
 
Measuring key performance indicators
 
Many online retailers are beginning to see their hard work payoff. Key performance indicators point to solid improvements in areas such as conversion and repeat customer rates. According to the survey, more than half (54 percent) of retailers surveyed said they have seen increases in conversion rates over 2009.
 
The report also found the following regarding key performance indicators:

• Recent developments in technology have made it easier for retailers to effectively cross-sell and up-sell online. More than one-quarter (27 percent) of web retailers say they have seen increases in units per transaction and nearly half (47 percent) have experienced a lift in their average order values.
• Forty-five percent of retailers surveyed said they had seen increases in repeat customer rates.
• Nearly one-third (31 percent) of survey respondents said they have seen a decrease in their shopping cart abandonment rates.