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A World of Goods

In spite of the risks, there are lots of great reasons to start thinking about going global.
December 1, 2003
URL: http://www.entrepreneur.com/article/65568

Sure, e-commerce is hot here in the United States-but it's also gaining serious momentum overseas. Globally, the number of Internet users is growing, with the fastest growth occurring in the Asia-Pacific marketplace. In fact, in the next few years, just 21 percent of all Internet users will be from the United States, according to a December 2002 report from research firm IDC.

There's a strong international market, and e-tailers are noticing-especially since the number of Net buyers is also growing. There were 106.4 million online buyers worldwide in 2000, says the IDC study, and that number is expected to hit 464.1 million by 2006.

The international market "is a growing market in terms of potential for e-tailers," says Ellen Garbarino, a professor of marketing who specializes in e-tailing at Case Western Reserve University's Weatherhead School of Management in Cleveland. But doing business overseas can be difficult. "You have local competition, weak infrastructure [and] differences of culture," she says. "And when you try to take something as immature as e-tailing and [transfer] it, it's even more difficult."

Risks and Rewards

There are inherent risks in any global strategy, but that didn't stop Barewalls Interactive Art Inc. from taking the plunge. When this print and poster e-tailer in Sharon, Massachusetts, decided to reach out to international customers, it had the advantage of being one of the first poster e-tailers to market overseas. Says CEO and co-founder Lorne Lieberman, 31, "Relationships and word-of-mouth [were] built, allowing us to have a presence [overseas]." Thanks in part to its global efforts, the company's sales increased by 20 percent between 2002 and 2003. Today, most of Barewalls' overseas customers reside in Australia, Canada, Japan, Korea and the United Kingdom.

But not every e-tailer has the luxury of being the first to market. Luckily, other factors can work in your favor-such as selling specialized products, niche merchandise, collectibles or one-of-a-kind products that "can't be easily made or had in [the] local market, such as products for left-handed people or handmade baby items," says Garbarino. Barewalls, for example, offers a wide variety of obscure images and photography.

A great way to attract foreign customers to your Web site is to offer second and third language versions of it; a Google search will help you find applications and services to translate text and convert currencies. Also, design a shopping cart with common symbols that explain its usage, which Barewalls has done. Just remember: Translation and currencies are only the tip of the iceberg. The true challenges with international expansion are to provide fast, affordable shipping and distribution.

You also need to be familiar with the culture of the overseas market you wish to enter-otherwise, it's best to partner with someone local to the area. "You get people who speak the language, who know the culture, and who know what will or won't sell [there]," Garbarino says.

Barewalls, for instance, joined forces with an affiliate in Korea, which operates www.barewalls.co.kr. In this arrangement, Barewalls sells posters through this partner, who designed the Web site and markets and sells directly to Korean consumers. The benefit is that the contact knows the market well.

But no matter how you find your partner, make sure to review his or her overall business plan and check all references before signing on the dotted line. Partnering with the wrong company could devastate your business.

A Question of Fraud

Despite opportunities overseas, some companies shy away from doing business outside of the United States because of e-commerce fraud. After all, the fraud-detection systems that work in the United States-like credit card companies' address-verification systems, which verify the billing addresses and credit card numbers of cardholders-don't work for international e-commerce customers.

But don't let that stop you from entering the market. By staying aware of the red flags, you can go far in protecting your site from fraudulent orders. Always watch for big orders from new customers, products shipped to an address different from the billing address on the credit card, or new credit cards. If an international order exceeds the average order size, for instance, authenticate it by sending an e-mail or making a phone call to the person who made it. "We use our intuition," says Lieberman. "Sometimes, something just looks fishy. It's always worth it to check into it, and the earlier we catch it, the better off we are."

Despite risks, many e-tailers are still taking the plunge into international markets. After all, if you sell the right product and take the necessary precautions, going global could be a gold mine.


Melissa Campanelli is a marketing and technology writer in New York City.