Online Retailers Ramping Up Global Expansion Efforts, According To Shop.org/Forrester Research Study
The new frontier in online retailing lies across international borders, as US companies attempt to capitalize on the growing demands of foreign consumers. According to “The State Of Retailing Online 2010: Key Metrics, Multichannel, And Global Strategies” report, conducted by Forrester Research, Inc. (Nasdaq: FORR) for Shop.org, nearly three-quarters (73 percent) of retailers surveyed are already sending merchandise abroad from their home country’s distribution center, with an additional 17 percent having an established foreign warehouse in place. On average, US retailers that ship abroad report that approximately 5 percent of their revenue comes from foreign orders. The survey of 87 companies is part of “The State of Retailing Online” research series, which provides eBusiness & Channel Strategy professionals with annual industry benchmarks for marketing and business investment and activities.
“International customers have visited US retail Web sites for years,” said Fiona Swerdlow, head of research for Shop.org. “While still in the early stages, US retailers are starting to monetize that traffic by meeting global consumer demand for their products and services, which in turn should help to bolster their bottom line.”
US retailers are still developing and testing their operations to sell to and service overseas customers. For example, when it comes to handling international returns, the survey found that nearly four out of 10 (37 percent) online retailers require customers to ship items to a returns center in the retailer’s country of origin. An additional 12 percent of companies have an international returns center located in their own country to handle foreign returns.
“A small but savvy group of Web retailers is recognizing the promising opportunity in international expansion,” said Sucharita Mulpulru, vice president, principal analyst, Forrester Research. “If executed successfully, selling globally can generate a healthy double-digit percent of sales. The global online population stands at 1.6 billion today, and the purchasing power of that group represents a significant opportunity for Web-enabled businesses.”
Measuring Key Performance Indicators
Many online retailers are beginning to see their hard work pay off, as key performance indicators point to solid improvements in areas such as conversion and repeat customer rates. According to the survey, more than half (54 percent) of retailers surveyed say they’ve seen increases in conversion rates over 2009.
The report also found the following regarding key performance indicators:
- Recent developments in technology have made it easier for retailers to effectively cross-sell and upsell online. More than one-quarter (27 percent) of Web retailers say they’ve seen increases in units per transaction, and nearly half (47 percent) have experienced a lift in their average order values.
- Forty-five percent of retailers surveyed say they have seen increases in repeat customer rates.
- Nearly one-third (31 percent) of survey respondents say they have seen a decrease in their shopping cart abandonment rates.
“The State Of Retailing Online 2010: Key Metrics, Multichannel, And Global Strategies Report” is available to Shop.org members and can also be purchased directly at www.shop.org/soro. Forrester clients will be able to access the report as part of their subscription service one month after publication.
Shop.org, a division of the National Retail Federation, is the world’s leading membership community for digital retail. Founded in 1996, Shop.org’s 700 members include the 10 largest retailers in the U.S. and more than 60 percent of the Internet Retailer Top 100 E-Retailers. It’ class=”newpage” target=”_blank”s where the best retail minds come together to gain the insight, knowledge, and intelligence to make smarter, more informed decisions in the evolving world of the Internet and multichannel retailing. Shop.org programs and activities include benchmarking research, events, and networking communities.