News and Views
 

- February 25, 2008 -

 

U.S. Retailers Take Their Business Virtually All Around the World

 
  BrainTrust Panel Discussion Question: How significant an opportunity are sales made online to consumers in foreign markets for U.S.-based retail businesses?  
 

 

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Each business morning on RetailWire.com, retailing execs get plugged in to the latest industry news and issues with key insights from a "BrainTrust" of retail industry experts. Here are excerpts from one of these unique RetailWire online Discussions, along with results from RetailWire.com's Instant Polls.

 
       
 
 
     
 

By George Anderson, Editor-in-Chief, RetailWire

The weak dollar makes the U.S. a good place to shop for foreign consumers and now those that don't have the time or resources to jet over can buy from American retailers that are opening up their online operations to accept orders from parts around the globe.

According to The Wall Street Journal, Amazon.com, Bluefly.com, Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue, Blue Nile, Abercrombie & Fitch, Coach and Macy's are currently shipping goods to markets outside the U.S. or moving in that direction.

A survey conducted by Forrester Research last year for Shop.org found 41 percent of retailers operate internationally. Of those without international operations, 23 percent planned to begin in 2007 and 38 percent planned to get started this year.

There are some challenges to serving customers in foreign markets, however, including taxes, import duties and shipping. According to the Journal, retailers sending product overseas will often calculate and collect the various levies based on the market. To offset shipping costs, some retailers are setting up distribution centers inside foreign markets.

Discussion Question for the BrainTrust panel: How significant an opportunity are sales made online to consumers in foreign markets for U.S.-based retail businesses?

 

RetailWire Instant Poll Results:

 

RetailWire BrainTrust Comments:

You have to weigh the shipping and fees associated with international shipping against the cost of the good--it's easy for a luxury item to absorb the additional costs because it's still small compared to the overall price of the item. But if it costs $20 to ship a $10 item, those costs will probably be too high to balance out the weaker position of the dollar--a $20-equivalent item in another country is still a better deal than a $10 one here if it costs another $20 to ship it.

However for retailers that want to expand internationally but have been hesitant about it, this may be a good opportunity to test the waters without having to commit anything as big as a DC on foreign soil. It gives you an opportunity to see where the demand is, and helps you prioritize which markets to open next.

-Nikki Baird, Managing Partner, RSR Research

Joy Joseph, Director, Business & Consumer Insights, Information Resources, Inc.
Geographical factors can play a significant margin-reducing role, but retailers that are effectively able to source their products globally have a better chance here.

What do you say? Send us your comments here

The economics of exchange rates and purchasing power parity are such that no matter how weak the dollar is presently, it will be a long time before goods that are considered moderately expensive in the US are not prohibitively expensive in the world's fastest growing consumer markets. That said, the middle class in these economies are becoming more and more affluent, and are demonstrating a corresponding appetite for branded goods, which represents an opportunity.

Geographical factors can play a significant margin-reducing role, but retailers that are effectively able to source their products globally have a better chance here.

Of course quality may become an issue, but several retailers have successfully leased their branding on locally sourced goods by using strict quality control guidelines.

-Joy V. Joseph, Director, Business & Consumer Insights, Information Resources Inc.

Every so often, a new profit opportunity appears on the horizon.

It's a key measure of a retail management's IQ: how quickly do they perceive a new opportunity and how quickly do they profit from it? Thousands of eBay sellers ship internationally. Any retailer serious about e-commerce can ship internationally without much trouble. Yes, there may be some new procedures, but if they're labor intensive, you can surcharge those folks. After enough volume, you can contract with foreign outsourcers for overseas facilities or build your own.

Ignoring foreign customers is a key Sales Prevention strategy.

-Mark Lilien, Consultant, Retail Technology Group

Read the entire story and RetailWire discussion at:

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12745

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