THE 4 KEY FACTORS TO DE-RISKING YOUR EUROPEAN GROWTH
By Rick Davis
You’re a European e-commerce business venturing into cross-border selling for the first time. You’re looking to grow sustainably and organically into new markets. Your priority concern should be to de-risk the venture and make smart, controlled moves into identified markets with a clear opportunity for your business.
We spoke to Susanne Svoboda; a sales leader for DHL based in Austria. Her location at the heart of Europe gives her great insight into how businesses can prosper when growing sustainably lane-by-lane.
You already have a lot of the information you need
The international nature of the internet means your webstore probably already receives visits from customers outside of your immediate market. A quick check of your Google Analytics Geo-Report will tell you where potential customers search from.
However, if you currently only offer domestic delivery, those potential customers aren’t going to get any further than browsing. Converting cross-border visitors into cross border shoppers is a question of logistics.
A quick win, of course, is to start by offering a European delivery service for your cross-border prospects. Testing the waters by selling a few items to your most committed cross border visitors is a good way to gain insights into new markets.
- Use search analytics to identify potential lane-by-lane markets
- Connect with a logistics provider that can deliver across Europe.
Market size matters more than location
Shipping a few items each week isn’t going to build you a sustainable cross-border business, but it will provide enough data to help you target your next trade lane. In the past, geographic location was often the deciding factor in growing lane-by-lane, but the pandemic has changed the dynamics, as Susanne Svoboda says, “Nowadays, there is no geographic reason to choose markets. It could be the UK, it could be the Nordics, it could be Italy, if the product is a good one. I think e-commerce market size is very important.”
Germany, UK and Netherlands are the three largest and best established e-commerce markets in Europe. However, the fastest growing markets between 2017-2021 were Italy, Spain and Norway1.
The key here is to identify those lanes where customers historically buy the products you sell cross-border – because any geographical challenges can be overcome, as long as the market is there.
- Market size and potential is the most important metric in choosing new lanes.
- Work with your logistics provider to find ways to reduce costs in different markets
Language matters, but don’t rush at it
Now you know who might be interested in your products and you have a means of delivering to customers in new lanes. Is this the time to go ‘all-in’ and build a focussed cross-border business - maybe get your website translated into a wide variety of European languages?
This is certainly a huge benefit in the long term; native language websites tend to provide much higher conversion rates - but if you’re building sustainably lane-by-lane this might not be the most viable move.
In fact, German is the most widely spoken native tongue in Europe followed by French. However, 44% of Europeans use English as a lingua franca - or 2nd language, So, if you begin by offering an English version of your website, this might be a cost-effective option to reach a broader audience. Spanish, French or German are also good options as they are not only widely spoken in Europe but around the world. By starting with one key language, at the very least, you can reduce your website’s bounce rate whilst mining useful data on the appeal of your products to a wider range of customers.
- Search analytics will tell you which languages your visitors speak
- Although translation services have reduced in price in recent years, it can still be costly to provide multiple translations. Focus on one language at a time.
Shopper expectations – the critical success factor.
Often, the key to succeeding in new markets isn’t size or even language. It’s something much more subtle. Susanne quotes the example of an Austrian e-commerce retailer with a popular footwear range. As an Austrian business, their first ‘trade lane’ was Germany where location and language barriers were minimal – and market size attractive.
German sales were strong and the seller was keen to expand to another market. The data showed that the next logical step was to move into the French market where clothing, footwear and accessories make up 66% of all cross-border purchases.
However, the true key factor for cracking the French market was delivery method. 85% of French shoppers expect delivery to the door (many more than in Germany). By providing efficient, reliable doorstep delivery to customers in France, the retailer has been able to establish a fast-growing and profitable new trade. As Susanne says, “The doorstep delivery was really important. Our French customers are used to having goods sent to their homes by companies.”
So, when growing a lane-by-lane business model, it’s important to understand the purchasing demands of your new customers. In one market, it may be doorstep delivery; in another, it might be parcel lockers or service points. Even neighboring countries with close cultural bonds may have very different expectations when it comes to how they receive their online shopping.
- Ensure you understand what motivates e-commerce shoppers in each lane.
- Work with your logistics provider to identify the best delivery options in each market.
A smart move at this stage would be to bring in an expert. DHL offers a free consultation for customers looking to expand into Europe, helping to predict the viability of your business in key markets – and your key competitors there. In addition, they can also advise you on what customers in those markets will expect in terms of delivery, returns and transit times – and find you a realistic range of solutions to meet those expectations. When growing lane-by-lane, it’s vital to work with a partner you can trust.