From Reals To Rubles: Emerging Economies Setting Pace For Global E-Commerce Growth

By Craig Reed, Pitney Bowes

Cross-border e-Commerce transactions represent a huge opportunity for U.S. retailers. According to eMarketer, there are more than one billion digital buyers spending about $1.5 trillion dollars online[1]. The vast majority of purchasing power, two thirds, lies outside the U.S.[2]

To tap this opportunity, retailers can no longer just look to Canada, UK and Australia. They need to look at emerging markets, where ecommerce is taking off at record pace. 

Opportunities

Consider Brazil. With a $2.25 trillion GDP, Brazil now represents the world’s seventh largest economy[3].  In São Paulo alone, there are 20 million people, which is two thirds of the size of Canada’s population. 

However, the local infrastructure and supply in Brazil is way behind larger developed markets and big brands tend to be located in Western countries. Therefore, developing countries are looking elsewhere to access goods they can’t get locally.  With the 2016 Olympics, Brazil may become an even higher priority on some brands’ list of new markets to enter.  

Also, despite the current geopolitical risks and ongoing tensions between Russia and Ukraine, Russia is another big global ecommerce frontier.  E-Commerce is expected to grow to $36 billion by 2015 there as consumers gain access to broadband and credit cards[4].

For years, U.S. retailers ignored the country because of payment and delivery issues, but now they’re moving in to take advantage of Russia’s increasingly wealthy and Internet-savvy population of 70 million Internet users (the most in Europe)[5].

Challenges
In Brazil, U.S. merchants need to know what imports are prohibited including pre-owned merchandise, antiques and precious stones. They also need to know when to apply import duties, the Industrialized Product Tax, the Merchandise and Service Circulation Tax and other tariffs; and how to comply with country-specific forms, country-specific product coding, and local shipping rules.

Russia is also challenging from a duties and taxes standpoint. The large under-current with commerce is spurring growth in the number of parcels going through Russia’s customs systems. Therefore, control of goods and collecting duties are important. Russia Customs change regulations quickly and frequently — sometimes even overnight — to adapt to new inbound flows of goods.

Five Pillars of Success
To help reduce these challenges, U.S. retailers should consider the following:

• Provide visibility into the fully-landed costs at checkout, including all taxes, duties, tariffs and fees. Also, consider showing prices in local currencies.
• Offer cost-effective ways to get merchandise to shoppers within 10 days so they don’t shop somewhere else. Also, provide local market shipping options from reliable carriers, and tracking services.
• Provide an easy-to-understand process for returns and after-sale service. For example, you may or may not want to ship goods back to the U.S.  Liquidating returns in country and reimbursing buyers is one option.
• Accept a variety of credit, debit and e-payment vehicles since preferences will vary by market. In Brazil, localized payment options are vital since it’s a large installment payment culture. If you ignore this, you could miss a large portion of the market.
   
• Localize your site experience. Unless you are prepared to provide end-to-end support in a specific language, English might work best. 

While it may not be possible to build all of these capabilities or expertise in-house, U.S. retailers can still provide a seamless online shopping experience by working with global ecommerce providers who specialize in this.  With minimal set-ups, rapid integration and limited up-front investments, these providers can help retailers successfully enter one or many new emerging markets.

Craig Reed is the Vice President of Global E-Commerce at Pitney Bowes Inc. In this role, he oversees the overall strategy, sales, and business development of Pitney Bowes’s Global Ecommerce business. The company’s international e-Commerce solutions and cross-border parcel services help retailers create a seamless online purchasing and shipping experience for consumers, reduce the challenges associated with international e-Commerce, and grow their businesses around the world. Reed also oversees Pitney Bowes’s partnerships with online marketplace providers, e-Commerce aggregators, and systems integrators. He joined Pitney Bowes in 2005 through the acquisition of Borderfree’s Clearpath Technology. During his tenure at Borderfree, Ltd., Reed was president of the company, and held a variety of additional senior management roles in business development and operations. His experience also includes working as a senior management consultant at Monitor Company, a global strategy consulting firm, in Ontario, Canada.