The online route is allowing many retailers to trade in foreign countries without incurring the expense of a physical launch. Joanna Perry assesses e-commerce prospects across the globe

The list of retailers targeting international expansion via the web is extensive and growing by the day. From Monsoon to Mothercare, retailers are investigating how they can let overseas customers buy from sites tailored to their languages and currencies.

Bastien Duclaux, chief executive of European shopping comparison website Twenga, says that the opportunity for UK retailers in continental markets such as France and Germany could be great. He says: “The spread of prices [in the UK] is much larger than in France or Germany. UK retailers have also developed strong customer service and processes, much stronger than in France or Germany. Also they are much stronger at online marketing than in France or Germany.”

Duclaux says that 30 per cent of the traffic to Twenga’s UK site is international, coming from countries such as the US, South Africa and Australia. He says that these international customers know that customer service from UK retailers will be good and that they will also be able to get product and customer review information.

But things get more complicated once you set up sites in different languages and there are many other operational issues to consider country by country.

Duclaux warns against UK retailers trying to move into foreign markets on the cheap. “If you want to establish a strong presence abroad, you need localised sites and to provide a good after-sales service to local customers,”
he says.

E-commerce expert Martin Newman, who has handled international development for several retail brands, reiterates this point. He adds that other issues to consider include pricing for local markets, conflicts with licensees or franchisees, payment methods, fraud rates, fulfilment, delivery and returns.

And while growing internet penetration and sales revenue rates may be appealing compared with the more mature UK market, it is always worth keeping the overall potential size of the market in mind.

Forrester estimates that 54 per cent of adults will shop online in the UK this year. This will generate £38bn in sales, a figure that even with slower growth is expected to rise to £56bn by 2014.

The online world market by market

US

  • E-commerce sales will hit Story text56bn (£104.3bn) this year, according to research from Forrester and Shop.org
  • British eBay sellers sent £9.5m worth of goods to US buyers in January alone
  • There are 155 million active home users of the internet in the US, says Nielsen

PayPal warns that any retailer thinking of selling to US customers needs to take professional advice on the tax issues, as they are complex. For instance, differences between states and how they handle sales tax for online sales still vary. In California it is the duty of consumers to declare purchases made online from outside of the state on their state tax return.

Meanwhile, in New York, state legislation was enacted last year dubbed the “Amazon tax”, which puts the onus on merchants to calculate and collect sales tax from the state’s residents.

France

  • E-commerce is valued at €17bn (£15.1bn) this year and Forrester predicts this will have risen to about €28bn (£24.8bn) by 2014
  • About 35 per cent of French adults will buy online this year
  • Spend per online consumer this year is predicted by Forrester to be €781 (£692) compared with €1,341 (£1,188) for the UK
  • Apparel is the biggest online category – 27 per cent of shoppers say they will buy online
  • A law introduced in 2008 has made free returns compulsory

Forrester believes that poor site design and checkout processes are holding the market back. Meanwhile, Duclaux points out that France is one of the markets where customers who are new to the internet may need very basic information on how to shop online and how a site works.

Southern Europe

  • This year internet shoppers in Italy will spend €792 (£702) each; in Portugal €668 (£592); in Greece €703 (£623) and in Spain €908 (£805)

These markets should be treated with care. Forrester notes that 19 per cent of online transactions in Italy are paid for by cash. And the Italians’ number one payment method is prepaid and gift cards – 45 per cent of shoppers have used them.

Duclaux warns that although broadband penetration rates are increasing in Spain and Italy, the payment and postal infrastructure in these countries is far behind the UK. Countries such as Spain also don’t have the same mail order history that has helped to make e-commerce such a success in other markets.

Germany

  • German consumers will spend €31.3bn (£27.7bn) online this year and this is predicted to rise to about €44bn (£39bn) by 2014
  • Nearly half of German adults shop online
  • The average annual spend per online shopper for this year is €869 (£769.97), according to Forrester

Like several other European markets, German consumers tend to pay for goods bought online through offline methods – either in advance, cash on delivery or via an invoice.

Despite the perception that Germany has shunned e-commerce, Forrester believes this is one market where the culture and infrastructure suits a move to online. Delivery costs are relatively low with many providers, and DHL is more than doubling the number of self-service parcel collection and drop-off points to 2,500 by the end of the year.

Australia

  • Nielsen estimates that there are 11.5 million active home users of the internet in Australia, who make an average of 38 visits to the internet per month
  • Conversion rates on Australian e-commerce sites remain high – 2.9 per cent compared with 1.4 per cent in the UK, according to Coremetrics

The Australian government has announced plans to roll out super-fast broadband across the country beginning next year. 90 per cent of consumers will be linked via 100Mbit-per-second fibre optic networks and the rest will get enhanced wireless broadband.

Russia, Central and Eastern Europe

  • Consumers spent RUB110bn (£2.23bn) on e-commerce last year, according to the National Association of Members of E-Commerce Russia
  • The Polish Direct Marketing association says Poles spent €2.5bn (£2.22bn) on e-commerce last year, up 36.4 per cent on the previous year and giving online a 2 per cent share of the entire retail market
  • Romanian e-commerce sales in the first quarter of last year were €40m (£35.4m)

Research by eMarketer projects that there will be 61.9 million internet users in Russia by 2013. It says that 8.4 per cent of Russian consumers use the internet for purchases and has placed the potential size of the country’s online consumer base at 5.2 million by 2013.

Duclaux says that e-commerce in Russia is concentrated around the urban centres of Moscow and St Petersburg, which makes fulfilment of orders easier than it might first look in a country of Russia’s size.

Northern Europe

  • More than half of Swedish and Danish consumers were already shopping online in 2006
  • The Netherlands is predicted to generate €12bn (£10.6bn) in internet sales by 2011

Duclaux believes that the Northern European markets are harder to enter. Although internet penetration and usage is deep, the volumes are relatively small.

In the Netherlands, customers cannot use debit cards to make purchases online and credit cards are not used as widely as in the UK. However, an online banking transfer system called iDEAL is widely used.

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