INTERNATIONAL GROWTHKEY FINDINGS FROM THE “OMNICHANNEL OPPORTUNITY” REPORT TO HELP RETAILERS CAPITALISE ON THE CROSS BORDER TRADE OPPORTUNITY

INTRODUCTION

A new system of retailing has evolved – connecting stores, e-commerce, mobile apps and social media. It’s known as omnichannel retailing and at the heart of this revolution is the customer.

Understanding that customers want to shop anywhere, anytime, on any device, eBay asked Deloitte to examine the impact this behaviour has on retailers and brands, and the opportunities it presents when supported by omnichannel retailing.

Omnichannel strategies can help retailers expand their international presence and capture sales in an agile fashion.

This guide looks at how retailers are using omnichannel retailing to capitalise on the international opportunity – and how eBay can help.

This booklet is written and produced by eBay. Key results and retailer views are taken from the Deloitte report “The Omnichannel Opportunity” supplemented by eBay’s own perspective and other sources. The full report from Deloitte is available here.

THE INTERNATIONAL POTENTIAL OF OMNICHANNEL RETAILING

The number of EU residents who have made an online or mobile purchase from an international seller has more than doubled since 2008, and in 2013...

Those retailers who can support an international customer base through shopping anytime, anywhere on any device are well positioned to take more than their relative share of what’s on offer.

IMRG , the UK industry association for online retail, expects that by 2020, cross border sales will soar to a third of all online trade worldwide. And despite its overall economic state, the online market in Europe continues to grow strongly.

Cross border online trade between the 6 largest markets worldwide is big and growing fast.

15% of EU residents made a cross border purchase**.

It’s estimated to be worth over $100bn annually*, and this figure is predicted to triple by 2018.

More than a third of annual global cross border trade takes place in Europe.

Proportion of EU cross border shoppers who have bought from each of the 5 largest EU countries:

24%27%

14%4%

5%

*PayPal, “The Modern Spice Routes,” 2013. **EU Commission, Consumer attitudes towards cross border trade and consumer protection, 2013.

Source: EU Commission Survey

The number of EU consumers who have bought cross border has doubled since 2008.

Retailers in UK and Germany generated over

€8bn in

ONLINE RETAIL EXPORTSin 2012.

Books, DVDs and electronic products such as computers and cameras are among items most likely to be purchased cross border*.

2X

*EU Commission and Civic Consulting Survey, 2011

UNLOCKING CROSS BORDER OPPORTUNITIES

As internet access and mobile penetration continues to increase, geographic barriers are being further reduced, opening up important new markets to retailers.

This increased product awareness and the associated higher share of searches increases total sales.

Omnichannel strategies also allow retailers to receive real-time local feedback of their products, and customise product offerings and prices to consumers in different markets.

In the coming years,

Omnichannel retailing helps retailers pursue new opportunities in foreign markets and capture sales in new markets cost effectively and with agility.

Retailers who establish a broad presence across channels and markets are upping the opportunity for consumers to search for, and engage with, their brands.

affordable shipping and a wide range of products will prove vital in unlocking international markets.

ROUTES TO THE INTERNATIONAL MARKETS.

BUILDING LOCALLY CUSTOMISED WEBSITES,

OPENING OUTLETS ON THIRD PARTY ONLINE MARKETPLACES,

LEVERAGING ALTERNATIVE PAYMENT METHODS

ACCEPTING INTERNATIONAL SALES

Considering whether to use your existing (domestic) website, offering translation and local currency options, or to use an established online marketplace.

combined with the range of delivery options mentioned on the left.

which facilitate interoperability between payment systems to further unlock the omnichannel cross border trade potential.

as an effective way of entering new markets and addressing new audiences without bearing the marketing costs associated with establishing and promoting an independent site.

through your domestic website, and delivering to these territories, via domestic logistics centres, through third party international delivery networks, or through local delivery/collection centres.

Establishing the most appropriate PARTNERING WITH THIRD PARTY WEBSITES

and using these marketplaces’ international delivery networks, or other delivery options, to get the product to the customer.

RETAILER STRATEGIES HOW EBAY CAN HELP

Partnering with eBay enables retailers to side-step the significant investment associated with developing global operations at scale, and to test new markets rapidly.

eBay supports retailers with branded storefronts that mirror the brand experience across channels and keep the retailer in control. This is supported by promotions, advertising and various other services to help retailers appeal to omnichannel consumers.

Retailers can also take advantage of eBay’s international delivery networks to ship the product to the customer.

PayPal, a leading innovator in the payment space serving 143M active accounts in 193 countries*, makes it easy for retailers to enable payment internationally and meet local expectations and preferences.

Through the 3 eBay Inc companies - eBay, PayPal and eBay Enterprise – eBay helps support retailers with a seamless shopper experience keeping them present at all stages of the shopper journey.

*Source: PayPal 2013

In 2012, Mountain Warehouse - selling a variety of equipment related to camping, hiking and winter sports - implemented a growth strategy based on

GLOBAL EXPANSION WITH MINIMAL CAPITAL INVESTMENT.

It partnered with eBay in order to reach a potential base of

increasing sales across the board and enabling its seasonal products a year-round market.

OVER 120M CUSTOMERS WORLDWIDE,

Its strategy delivered rapid and cost-effective international expansion. Total sales

with online sales doubling in value.GREW BY 19% TO £75.1M IN 2012,

The company expects online revenues to continue to grow as its eBay stores are used to test new markets, whilst

prompted Mountain Warehouse to open local stores in these markets.

POSITIVE CONSUMER REACTIONS IN GERMANY, FRANCE AND ITALY

UK RETAILERS ARE ALREADY EMBRACING CROSS BORDER OMNICHANNEL RETAILING Cross border shoppers represent a particularly attractive demographic. As industry analysts Forrester found in their report “Targeting the European Cross Border Buyer”,

Projected value of online and cross border retailing for the UK (£ billions)*

UK retailers have been quick to embrace the international opportunity with online exports projected to increase by 26% year-on-year; whilst retail exports are presently growing at 9%.*

Markets like Italy and Japan are well known for their appreciation of British fashion labels. As part of its Omnichannel report, Deloitte looked at the top 100 UK retailers of women’s dresses on eBay and noted that about £1 out of every £5 spent on the site is cross border. Between them, these retailers have sold to 182 markets, with the average retailer reaching 138 markets.

“they’re young, well-educated and experienced online shoppers with a high disposable income who tend to out-spend domestic shoppers across a number of categories.”

*Source: OC&C Consulting and Google, “Britain’s Retail E-mpire”

Key markets for UK cross border retailers include

of cross border online shoppers in these countries have

Online exports

All retail exports

GERMANY, CHINA & AUSTRALIA. BOUGHT FROM UK RETAILERS**.

>40%

**PayPal “Modern Spice Routes” 2013; EU Commission

2013 3.8 23.8

2014 4.8 25.9

2015 6.0 28.3

2016 7.6 30.8

2017 9.6 33.6

RETAILER STRATEGIES

PARTNERING WITH THIRD PARTIES

SHARING ASSETS

COLLABORATING WITH PARTNERS

USING FLAGSHIP STORES

can help retailers sell and deliver internationally while reducing the costs associated with marketing, promotions and supply chain.

with other non-competing retailers to deliver a more flexible, personal and relevant shopper experience.

to develop economies of scale in expanded omnichannel markets, for instance with delivery networks.

to showcase products and act as collection/delivery points, linked to a local online presence from which a wider range of orders may be taken.

HOW EBAY CAN HELP

As a global online marketplace, eBay can help retailers access more than 128 million users* whilst reducing the costs of geo expansion associated with marketing and promotions.

Based on 2012 research we know that 80% of our buyers would buy cross border for the product they want.*

eBay can support retailers in their geo expansion plans with market intelligence, shipping, payments, global promotions and account management.

Retailers can maximise their chances of international orders on eBay via its Advanced International Selling Programme, listing and selling their inventory directly on eBay’s international sites, and acting as a local with translated listings.

Alternatively, retailers can sell internationally via Basic International Selling where they simply make their listed items available for international purchase and delivery on ebay.co.uk.

*Source: eBay internal research 2012-13

CAPTURING THE OPPORTUNITY IN EMERGING MARKETSWhilst market growth rates for exports from UK and Germany exceed 20%, the highest rates are typically in emerging markets including the BRIC economies

Planning entry into these markets is key. In its white paper “Stepping Across Borders”, PayPal cites the following 7 areas as

Tapping into these markets effectively can offer lucrative returns for omnichannel retailers, but against a backdrop of shifting politics, unstable economies and often limited infrastructure,

– that’s Brazil, Russia, India and China - where millions of consumers are turning to online shopping every year.

geo expansion can come with added cost and risk.

KEY CONSIDERATIONS:

Source: *Euromonitor April 2013. **emarketer, Boston Consulting Group.Other findings based on Accenture report: “Global Logistics: Challenges for expansion into emerging markets”

Demand for your product(s)

Local infrastructure

Customer insight

Competition

Routes to market

Cultural differences

Promoting your presence

The online market in Russia alone is expected to triple

by 2015 to of ecommerce growth is from

ofarising from these markets too.**

With

EMERGING ECONOMIES*

NEW INTERNET USERS

$36bn.

58%

91%

RETAILER STRATEGIES

BALANCE THE EXTENT OF LOCALISATION

ASSESSING LOCAL INFRASTRUCTURE

REPLICATING THE BRAND EXPERIENCE

versus integrated globalisation. Should you look to depend more on local partners and supply chain relationships, or should they be integrated into global operations and scale?

Considering which strategies to adopt to

including internet, payment and delivery networks to ensure you can do business effectively.

across channels and maintaining a customer-centred omnichannel strategy to maximise the chances that consumers find and engage with your brand(s).

* Source: eBay research 2013

HOW EBAY CAN HELP

Sellers can leverage eBay’s global infrastructure to reach and support buyers in over 190 countries including Brazil, Russia, India and China as well as all other countries where eBay does not have a local site.

Without the investment associated with developing global operations, eBay can help retailers test new markets at low cost, rapidly.

Partnering with eBay enables retailers to tap into these global markets with lower risk.

At any time, shoppers across the world can browse over 550 million listed items on eBay.*

©2014 eBay. All rights reserved. eBay and the eBay logo are registered trademarks of eBay. Designated trademarks and brands are the property of their respective owners.

This is the third of 3 observation guides based on thereport “The Omnichannel Opportunity”. This Deloitte reportand the other 2 guides can be downloaded here.

For more information, or to discuss the omnichannel opportunity with eBay, please contact your account manager or email us at merchantdevelopmentuk@ebay.com