How E-Commerce Is Expanding Internationally, One Package at a Time
Online shopping in the U.S. is growing at a fast clip, but retailers are realizing that another way to juice revenues is to open up their site to international markets — if they can manage the logistics.
“There’s an excellent growth opportunity for U.S. retailers outside the U.S.,” said Michael DeSimone, CEO of FiftyOne, a logistics company. “E-commerce is much more nascent [outside the U.S.], but our merchants are seeing extraordinary growth by building their brand with a new customer base.”
As it turns out, however, shipping and selling goods internationally is extremely complex.
First, there’s currency translation, then there’s the complexity of dealing with customs. And there are other considerations: For instance, a down pillow or a snakeskin purse may have to be cleared by the U.S. Department of Fish and Wildlife or require a permit if the animal is on an endangered list.
“The opportunity for a bad customer experience is very high, unless you have a repeatable process in place,” DeSimone said.
In other words, done well and executed efficiently, it can be a moneymaker, but if done poorly, you can hurt the brand.
FiftyOne helps U.S. retailers ship products to 106 countries worldwide, by assisting retailers with currency conversion and global shipping logistics, including customs and returns. It manages a central distribution in Columbus, Ohio, where all the packages exit and enter the U.S.
The New York company works with dozens of online retailers, including Macy’s, J.Crew, Overstock.com, Saks Fifth Avenue, Nordstrom, Pottery Barn, Gilt Groupe and Wet Seal. Since FiftyOne started focusing on international logistics, back in 2008, it has seen e-commerce start to take off internationally, DeSimone said.
Last year, the company’s gross merchandise volume, accounting for the total amount of all international purchases made, was $136 million, almost up twice from the year before, when it recorded $78 million. In 2009, its business totaled $26 million.
The biggest international markets for U.S. retailers today, FiftyOne said, are English-speaking countries such as Canada, Australia and the U.K. But South Korea, Brazil and Mexico are also all growing close to 50 percent year over year.
In addition, DeSimone said, the average order size increased to $265 in 2011, up from $237 the year earlier.
Here’s a graphic detailing some of the challenges in shipping internationally: