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Online Retail: Cultural Differences in e-Commerce and e-Retail

Online Retail: Cultural Differences in e-Commerce and e-Retail

As the retail market continues to suffer under the crippling effects of the current financial crisis, retailers (especially in the UK) are turning to new strategies to expand their businesses - export and international sales through online commerce.

How many though have considered the impact of cultural differences on the chances of their success?

According to Paul Skeldon in his article ‘Crossing Channels, Crossing Borders, Crossing Cultures,’ (Internet Retailing Jan 2013) he states that there are two ways for a company to grow.

One way is to ‘squeeze’ more out of existing customers; another way to boost profits is to turn to new markets abroad. Many retailers have already grasped the importance of foreign expansion, especially those that sell their products online.

And this doesn’t come as a surprise, given the annual European growth in online consumerism. In 2012, the expected growth of ecommerce sales was 16 per cent, with 240 million European consumers buying their products online. Even in the UK, online sales were expected to grow 14 per cent; however, even greater opportunities are to be found on the continent. Eurostat has predicted that the online growth in Poland, for example, will be a staggering 24 per cent!

Shane Fitzpatrick, Managing Director at Chase Paymentech, agrees that these figures should definitely not be overlooked: ‘These trends present great new international opportunities for CNP (customer not present) ecommerce merchants.’ He also believes ‘timing has never been better,’ as the events in 2012 (the Olympic Games, the Queen’s Jubilee) have sparked a renewed interest in British products.

However, retailers cannot expect foreign customers when all they have done is translate their website; cultural differences imply a more thorough approach. Thus the reason experts always stress people need to "localize" not "translate" the content of their websites.

There are a number of challenges that are to be met when offering online products to foreign customers. Many of these challenges are cultural, such as taxes and tastes, but the distribution of goods can create problems as well. And what to think of the fact that consumers might not want to do business with a foreign company?
However, the most obvious challenge that lies in conquering a foreign market is language.

Current technologies have made this challenge a lot easier than it was even 5 years ago. Eric Abensur, CEO of Venda: ‘You simply need a platform that can populate different sites based on where the customer is from.’ This is easier said than done as translation isn’t simply transferring words from one language into another but involves the translation of the context and meaning of a text as well. Abensur suggest companies start their expansion in countries with which you share your language. This saves a lot of language trouble!

Not all countries have the same approach to online shopping; in fact, Abensur believes that there are even great differences to be found in Europe itself.

This means ‘merchants need to adapt to the local shopping habits in each market and build consumer trust by translating websites into local languages or offering additional payment methods.’ This goes to show that retailers that wish to tap into new markets are not only confronted with language issues, but with broader cultural ones as well.

An example of these cultural challenges are payment methods and taxation. The way people wish to pay for their shopping differs greatly; Abensur: ‘In France it is only debit cards. In Germany it is more of a direct debit like culture, while in China they tend to do cash on delivery – and usually not until they have unpacked the goods and tried them out.’ Choosing the wrong payment method may thus cost you clients and money.

Technology can be quite a demanding issue as well. Not every country is as ‘technology-savvy’ as we in the UK are, and not everyone uses the same technologies to do their online shopping. Tunde Cockshott, creative consultant at Amaze: ‘Technologies differ across territories and are influenced by many factors: the nature of the telecoms market, the maturity of the broadband infrastructure, the impact of historic legacy technology and so on.’ Companies thus have to properly research demographics and technologies and social media used in the market they are aiming for.

This research means investing some money in the expansion of your business, and it is probably not the only debit entry! According to Tony Bryant, Head of Business Development at K3 retail, the biggest costs come with trying to unite all separate elements. Ryant believes companies should merge their customer databases per country into one, big international one, which could mean re-engineering must take place. He agrees this is a costly operation, and ‘only works if you look at how to get the best route to market and use the technology available cleverly to achieve what you want.’

Once they’ve successfully entered a market, Skeldon says there is no time for retailers to rest on their laurels. No, they should actively try to maintain the customers they reeled in.

Kyle Lacy of ExactTarget’s marketing and research department, states that new consumers ‘could un-engage and start ignoring your communications at any moment.’ Re-engaging your costumers is hard, even without having to deal with cultural issues, but Lacy thinks businesses shouldn’t just let customers walk away without a fight.

Skeldon believes there are many cultural bridges that have to be built in order for online companies to market their products successfully.

However, he believes these problems are not that different from the challenges retailers face when entering their home markets for the first time. It mostly comes down to logistics and acquiring a loyal consumer base while keeping costs as low as possible. As these are familiar problems, retailers shouldn’t let language or any cultural barrier keep them from reaching for the sky.


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