Globalization among the top 50 US online retailers
By Zia Daniell Wigder
The past week has seen two significant online retailers make
announcements about their global plans: last week Gap indicated its intention to
expand into Canada and the UK and yesterday Buy.com launched sites for Canada, the UK,
France and Germany, with Italy
and Spain
to come.
50 already global. Both online retailers mentioned above rank in the top 50 on the
Internet Retailer list (Gap at #25 and Buy.com at #33). They join a growing
number of retailers with international operations in the top 50: according to a
webtrack we did last year, some 34% of the top 50 online retailers were
operating international versions of their websites. Among the top 10, the
percentage is 100%.
top 10 varies greatly. There’s a big dichotomy, however, in terms of the
global expansion rates of the top 10 online retailers. Six of the top 10
operate a half-dozen or fewer transactional sites outside the US
Sears, CDW, OfficeMax, Newegg and Best Buy. By contrast, the remaining four
operate 20 or more non-US transactional sites: Staples, Dell, Office Depot and
Apple.
depth as well as breadth. The number of global sites does not necessarily
correlate with global revenues, however. Retailer/manufacturers such as Dell
and Apple often operate dozens of international sites. Both companies see about 10% of
sales through the online channel and take in around
half of their overall revenues from international markets. Yet with just six international sites, Amazon boasts a similar percentage of revenues from global markets. And Sears, with only one majority-owned
international operation (Sears Canada), sees its Canadian operations generating
almost 20% of the revenues of Sears’ domestic business. While breadth is likely
to be a strategy taken by some online retailers – often manufacturers mapping
their online footprint to their offline presence – depth in certain markets can
also yield significant returns.
media or travel. While leaders in some online sectors such as media and
travel have established extensive global reach (Yahoo
and MSN both offer over 40 localized sites, US airlines such as American and
Delta operate over 20), most retailers are likely to continue their slower
approach to international markets. Indeed, the numerous distribution challenges
and regulatory hurdles that come with global retail expansion will result in
many retailers continuing to take a cautious approach to new global markets.