By Karl Young
Back in 2008, the UK and Europe had to start battling against one of the most worrying financial crisis since World War 2. The effects of the continuing crisis can be felt across the world as countries slip closer to seeking financial stability from Europe, in the hope they can avoid the crippling cuts and aid like Greece received over the past 4 years.
The UK economy shrank by 0.3% in the last three months of 2012, further fuelling fears that the UK economy could re-enter recession and join Spain, Italy and Ireland in the debt danger zone.
UK consumer confidence has plummeted, well known and established brands have disappeared from UK high streets; Woolworths, JJB Sports, Peacocks are some of the past victims, with HMV and Jessop’s recently going into administration. Low consumer confidence has been linked to lower disposable incomes, falling by an estimated 1% in 2012 and accompanied by record level unemployment.
The high street as a whole keeps taking hits as the digital world grows and prospers; the web has now more than ever become a place for retailers to trade more successfully and profitably compared to the much loved bricks and mortar of local high streets. As some brands come to terms with high street competiveness and reducing margins of retail sales in the UK other businesses have already integrated their online services into foreign expanding markets.
What do foreign markets have to offer?
The ecommerce wealth of the European countries is on average larger than the rest of the worlds, with the USA and Japan having some the highest online spending rates, making them look rather attractive to brands looking to branch into countries that already have a pre-established and successful online market place.
Even though Japan, the United States of America and the UK have the highest overall ecommerce wealth they surprisingly do not have the highest average annual ecommerce spend per internet users:
1. UK £1145
2. Australia £1011
3. USA £715
4. France £586
5. Japan £550
6. Italy £411
7. Germany £394
8. Canada £383
9. Spain £299
10. Brazil £158
Countries like the UK and Australia have good internet penetration and usage as their population has access to the internet via mobile devices, home laptops and PC’s . Other factors contributing to a high ecommerce spend per user includes strong wages, employment opportunities, and vast national technical investments in online support and structures.
Australia has become one country that fashion brands have expanded into rapidly over the past 5 years, with Hollister, Asos, Apparel and Boohoo to name a few creating an online presence without having a bricks and mortar presence in the country. With a strong economy and trade relations, Australia has become a hotspot for international trade, close to some of the biggest clothes manufactures in the world, these being India and China. It has become one of the most exciting and investable countries to be in for online brand and web development.
At the moment the western countries are leading the way online with the highest recorded internet users, but as internet usage reaches its limits in the UK and America, countries in the east are likely to see a greater shift in the number of individuals using the internet as global population increases. China currently has an estimated 468 million user’s current with a predicted growth of 140 million by the end of 2013. India currently has 101 million users likely to increase by 200 million.
A nation with higher internet usage will likely see an increase in the ecommerce wealth and spend of the average person living in these countries. Many Eastern countries may have low internet spend per user, but they have several millions more internet users than UK, France and Australia, making them a very attractive prospect for brands looking to expand into an online new market which has not been established yet.
The top 5 countries to have the largest predicted ecommerce growth
Considering all the factors previously discussed; population growth, internet penetration, ecommerce wealth and online opportunities these are the top five countries likely to attract global brands into foreign markets, as they are predicted to have the largest ecommerce growth by the end of 2013:
By 2013, India will have tripled the amount of internet users in its country, even with one of the lowest ecommerce spends per users, and it is predicted to have a 4.7 billion growth in its ecommerce wealth making it one of the biggest opportunities for online brands in 2013 and beyond.
With a rise of 22 million internet users, Brazil will see the 2nd predicted highest internet growth with an estimated 3.5bn to be added to their ecommerce wealth. Brazil has almost five times the average annual ecommerce spend per users, with India putting in a very comfortable position for investment.
China already has one of the largest rates of internet users on the plant, this accompanied with the fact that they are likely to have the second largest predicted growth of internet users in the world. Estimated at 140 million means they are going to be a dominate force online, potentially aided by their strong industrial production capabilities.
Seeing an ecommerce growth of 2.6 billion internet usage, Russia’s population will grow by more than 40% and as it has tripled the amount of the average internet spend per user the largest country in the world is likely to pick up speeds as brands invest in naturalisation.
Not having the greatest time economically but having an established 2.6 billion ecommerce growth due to increase in the number of people using the internet and shopping online should help distil some confidence in traders.
Italy will be one of the markets to see interest from businesses looking to penetrate a fragile and a weak online market. Traditionally shopping on the high street is a large part of the Italian culture, as economic pressures have capped spending more and more, and nationals are seeking more affordable ways of shopping with fashion brands licking their lips in the hope to attract the attention and disposable incomes of the fashion capital of the world.
In the search for profit, foreign markets can offer an online business the chance to expand and grow into a market quickly if a strategy is followed and implemented correctly. The importance of a strategy based around naturalisation is vital, web development and SEO can play a vital role in the success of any online expansion into a foreign market that has a different culture and/or language.
Businesses looking to develop an online strategy should consider the benefits of mother tongue translation over computer generated translation. Human translation will always be more affective and natural, having someone that can speak several languages can help a brand create correct and compelling content, avoid language faux pas, and help keep brand consistency through translation.
Brands in the past have often been ignorant to cultural differences resulting in a brands credibility being tarnished. Cultural sensitivities need to be exercised across the board, not only online but through all marketing, advertising and PR activities. Success in foreign markets is largely down to an online businesses ability to adapt its service and interfaces to reflect the requirement of its audience. Optimising a website for multinational use can have its pitfalls, subdomains
About the author and Search Laboratory
A graduate in Marketing & Advertising Karl Young is a part of the award winning off page team at Search Laboratory. Ranked amongst the fastest growing technology companies in the Deloitte Technology Fast 500 EMEA in 2012, Search Laboratory is a marketing agency specialising in Pay-Per-Click (PPC), search engine optimisation (SEO), conversion optimisation and website analytics.