Comment: British etailers are clicking with overseas shoppers

Many British retailers are finding success in exporting online to international consumers. But just a few are showing that they can go beyond the tactical, and have the potential to penetrate deeply into large, international online markets.

To do this requires investment and adaptation, but the opportunity is huge.

Research by OC&C and Google has shown the UK to be the world’s largest online exporter. British retailers are expanding into international etail markets four times faster than their growth at home, and we expect export sales to total £28bn by 2020.

To date that has typically come from skimming many countries, by adding basic international payment and shipping solutions.

Our latest research into the topic, combining OC&C’s client experience with search data from Google and transaction data from PayPal, finds that skim approaches are likely to reach their natural limit quite soon.

More than two thirds of international consumers report barriers that deter them from considering UK brands.

Switching from a broad to deep approach will require specific strategies to penetrate the largest markets.

British brands abroad

We forecast that just three countries – China, the US and Germany – will double their etail demand by 2018 and present a growth opportunity of £300bn. Online consumers in these markets are seeking British retail brands for their unique assortment, value, quality, and trustworthiness.

“UK retailers are finding that customers can be both valuable and loyal, with typical transaction values much greater than domestic online shoppers”

Michael Jary, OC&C Strategy Consultants

Indeed, UK retailers are already punching above their weight in these countries and finding that customers can be both valuable and loyal, with typical transaction values much greater than for domestic online shoppers.

A few brands are beginning to pull ahead and proving that the opportunity can be more than just a useful add-on.

In the US winners include Asos, Wiggle, Topshop, and Graze. In Germany Myprotein, Sports Direct, Superdry and Boohoo are rising fast. These retailers have been willing to change their approach to go deeper.

For example, Asos has developed zonal pricing to offset currency fluctuations, hassle-free returns through local couriers, and not just local language websites and mobile apps but local Facebook and Pinterest pages too.

Graze has added 40% new products to suit US tastes. Myprotein has not only developed German ranges, but has invested in local digital advertising and social media.

The Chinese growth market

China presents the biggest growth market of all and Chinese consumers have shown that they delight in British brands. However, ecommerce routes are different.

Search is less important while presence on marketplace platforms such as Tmall, JD and TaoBao is more likely to be part of the mix, as are mobile and social networks, especially WeChat.

Engaging and converting shoppers in these large markets requires the development of a local ecosystem for logistics, payments, ecommerce (whether vertically or via marketplaces) and for consumer interaction (including search, social networks, media and entertainment, and localisation services).

No British brand has yet developed the full playbook to crack these economies, but a few are leading the way.

• Michael Jary, partner, OC&C Strategy Consultants