Grow Your Brand Globally Online
For beauty products retailer Estee Lauder, the constraints on luxury spending in the United States brought on by the recession forced it to rethink its growth strategy. With a tightening domestic market, the high-end brand looked across the Atlantic for revenue opportunities. In particular, e-commerce was targeted as the vehicle for this global expansion.
With a presence in over 140 countries (over 200 websites in 40 countries) and sales outside the U.S. accounting for 60 percent of the company's $8 billion in annual sales, it's safe to say that Estee Lauder has accomplished its goal. In a keynote presentation at last week's Internet Retailer Conference & Exhibition in Chicago, Dennis McEniry, president of Estee Lauder's online division, discussed how the company did it.
Get it right at home first
Before looking to sell overseas, get your e-commerce model right in your home country first, McEniry said. Estee Lauder operated an e-commerce site in the United States for nine years before launching its next site in the United Kingdom. And then it waited two more years before rolling out any other sites in Europe.
You have to understand the local market — consumers’ needs, regulatory issues, category mix, pricing, taxes, etc. — then you can look regionally and eventually globally. One size doesn't fit all, McEniry said.
International growth of mobile
One thing Estee Lauder has learned in the course of its research of international markets is that mobile commerce is exploding, particularly in Japan. In fact, mobile penetration is outgrowing the rate of PC-based sites, said McEniry. Mobile devices and technology differ from country to country, so you must understand the local market's technology when developing your mobile sites.
The same line of thinking applies to your international search and social media strategies. For example, be aware of the restrictions on Google if you're planning on selling in China, McEniry warned. In the BRIC nations (Brazil, Russia, India and China), Facebook and Twitter aren't the big social media players.
For Estee Lauder's 29 individual brands, each has its own social media strategy. While all are designed for consumer engagement, they accomplish that in various ways. Its M-A-C brand of cosmetics, for example, uses Twitter as an outlet to give fashion updates; Bobbi Brown provides makeup advice on the social platform. Lauder's consumer engagement via social media isn't limited to Americans: Seventy percent of M-A-C's Facebook fans are from outside the U.S. Don't launch a foreign social media campaign from the U.S., advised McEniry; do it on a local level.
Leverage scale where it matters most
This is Estee Lauder's strategy when it comes to growing internationally. Here's how the retailer segments its tasks:
local — payment, privacy, delivery, language, marketing and social media;
regional — distribution, development, speed to market, strategic partners, consumer insights; and
global — best practices, strategy.
Payment processing is a prime example of a task best handled on a local level, said McEniry. In the U.S., nearly 100 percent of online transactions are completed with credit cards. But that differs in other markets where Estee Lauder hosts e-commerce sites. In the U.K., bank transfers are the norm; in China, it's a form of PayPal; and in Germany, it's an open invoice system (i.e., a promise to pay), where retailers send products without recieving payment first. And there's actually less fraud in Germany than in the U.S., McEniry said to an amused audience.
In addition to payment processing, there are other retail characteristics specific to individual countries that Estee Lauder learned as it grew internationally online. In the United Kingdom, consumers are able to name the day they want their order delivered. In fact, Estee Lauder allows customers to change delivery dates via text message. And in Korea, privacy laws state that retailers can't expedite customer data outside of the country.
McEniry wrapped up his presentation with four takeaways that all retailers should consider if beginning to explore the possibility of selling internationally online.
- Understand your e-commerce opportunities; they may not be the same as offline.
- Do your research on local markets before entering them.
- Start with payment and delivery in each market.
- Evaluate the effect of privacy in each market.