Research by distribution company Global Freight Solutions (GFS) has found that online retailers are exploring growth opportunities in markets outside of Europe in response to uncertainty around trade regulations caused by Brexit. Despite these ambitions, retailers cite delivery as their biggest challenge after taxes and duties.
The USA is the most desirable e-commerce growth market by far, with 64% of surveyed online retailers ranking the nation as their number one market for growth opportunities. Australia comes in second with 17% and China third with 13%.
The American e-commerce market is very mature and consumers are price-sensitive, which makes it one of the most highly competitive for new retailers entering the market.
In 2017, retail e-commerce revenues from apparel and accessories sales amounted to US$93bn and are projected to increase to US$138.7bn in 2022. However, retailers could be missing out on bigger opportunities in faster-growing but less mature e-commerce markets such as Latin America, Russia, and the Netherlands.
The research found that British retailers are prioritizing English-speaking markets and the USA and Australia came out on top as the most desirable growth prospects.
However, China secured the third place position with strong retail and consumer shopping profiles, despite the language barrier. Aside from the country’s e-commerce revenue potential – in 2016, almost a fifth of China’s retail sales occurred via the internet, compared to only 8.1% in the USA – the research shows that on the whole retailers are shying away from China more so than other culturally similar regions. This suggests a gap in local fulfilment and delivery knowledge of the region.
Regardless, in order to crack these markets, over half of respondents (52%) are looking to work more closely with external delivery experts and partners in the next 12 months.
At best, 1 in 3 retailers can attribute 10% of revenue to international business, with just 3% of British retailers solely attributing all of their revenue from international business outside the EU.
However, when carrier management and delivery is localized, this changes. In the years 2015 to 2017, GFS recorded a 638% increase in the number of international parcel deliveries to the USA within its customer base.
Neil Cotty, CEO of GFS, said, “The reality is that when retailers decide to take on responsibility for delivery on their own, whether domestic or international, multiple carrier overheads and the lack of robust parcel delivery functions are a real problem. Delivery is one of the most complex aspects of retail to get right on an international scale, so retailers shouldn’t be expected to add ‘delivery expert’ to the already many hats they wear.
“British online retailers need a partner that understands what ‘localized’ fulfilment actually looks like in order to accelerate sales growth and cultivate carrier relationships, while providing an understanding of cultural nuances and taxation.
“One GFS relationship gives you access to all of these services; but with the flexibility to tailor the services to your business needs, because ultimately, every retailer operates differently.”
