Tag: Countries

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So, You Want The Happiest People on Earth for Customers? Denmark is your market!

So, You Want The Happiest People on Earth for Customers?

Denmark is your market!

The United Nations World Happiness Report (yes, there really is such a thing) has rated Danes as the happiest people on Earth two years in a row!  Who wouldn’t knowingly choose inherently “happy” customers over “unhappy,” ones?  If we start our review of the Danish digital marketplace with the realization that we may be dealing with some of the most pleasant people on the planet in Denmark, then surely it is worth taking a closer look at this countries business potential.

All of the countries located in the European Union are “graded” on five criteria for rating their capabilities with regards to the progress they are making in terms of digitalization.  Each Member State is graded on their progress in connectivity, human capital, use of internet, integration of digital technology and digital public services.  This data once correlated is referenced as the DESI or Digital Economy and Society Index.  Would you like to guess which country ranks first (1st) among the 28 current EU Member States?  If you guessed Denmark you would be correct!

Great Danes…..ARE the Big Dogs of Internet Use!

Danish citizens are the most advanced of the EU Member populations regarding the use of the Internet.  Fully 88% of the Danish citizenry actively do their banking on line and no less than 82% of them shop on a regular basis on line! Interestingly, in what many see as a juxtaposed position only 26% of domestic SMB’s sell their products or services on line and less than half (47%) of Danish enterprises shares business information over the internet.  In short, most astute non-Denmark based digital retailers would classify this as a “target rich environment.”

At the end of 2014, fixed broadband was available to 99% of the homes in Denmark.  Even with regards to mobile broadband connections, Denmark leads the EU average (42% vs. 30%).  For regular, daily internet users….93% of the Danish population reports that they rely on the digital marketplace for almost half of their purchases.  Hence, Denmark ranks highest in regular use of the internet among EU Member States, displaying a strong propensity of its citizens to use a wide variety of services and equally varied level of online shopping.

Of the Danes that report on-line shopping for products, nearly half of them did so cross-border or internationally.  For that reason, internet retailing in Denmark continues to attract attention from both consumers and companies.  Strong value growth continues to expand regarding internet retailing primarily due to the slower expansion of traditional “brick & mortar” store-based outlets.

Denmark’s physical construction standards and regulations are much like the rest of EU Member States.  It can be a time consuming and daunting task to build traditional retail outlets.  For that reason, it appears that many established physical retailers are now beginning to turn more aggressively towards digital retailing to support their market share expansions.

Land of Lego’s

Denmark has a mixed economy that is classified as high-income by the World Bank.  It ranks 18th in the world in terms of GDP (PPP) per capita and 6th in nominal GDP per capita.  Denmark’s economy stands out as one of the most free in the Index of Economic Freedom.  It is the 13th most competitive economy in the world and 8th overall in Europe.  Not to mention Denmark is where Lego’s were invented!

The country ranks highest in the world in worker’s rights and according to the International Monetary Fund, Denmark has the world’s highest minimum wage.  Interestingly, Denmark has no minimum wage laws in place.  Wages are set by the market place and nudged along with the help of strong labor unions.

While 76% of Danes polled support globalization, as of late there has been a slight resurgence of nationalism resulting in a degree of skepticism of the EU among the Danish population.  With the exception of Denmark’s close trading partners like Germany, Sweden, Norway and the United Kingdom…..Denmark’s consumers have been slower to warm towards global cross-border retail markets.

This means that for successful penetration into the Danish digital retail-marketplace, a U.S. based SMB would do well to find a domestic partner “in-country,” to work through.  Since the Danish Krone is still the currency of choice used in Danish transactions, confidence in your foreign exchange provider is imperative.  We would suggest that you speak to your Mosaica Account Representative for more information about currency transactions with the Krone.

With the United States not even cracking the “top 10,” as an import partner with Denmark, American products are not as common as one would believe in the domestic market place.  This means that it may also be worth developing domestic partnerships within countries that are in that “top 10,” import list for Denmark.  As an example, it may be more effective if you are working with a digital marketing partner in Germany…..who can then more effectively sell your goods in Denmark!

Danes are a stout and honest people.  They are known to be welcoming and friendly……and why not, they are the happiest people on Earth.  If you choose to do business in Denmark it is worth noting that as a general rule, Danes are frugal and look for great “deals,” when purchasing on-line products.

Don’t be surprised if they attempt to “negotiate,” pricing and shipping during their transactions.  Remember, just because they play with Lego’s and are very happy people doesn’t mean they aren’t willing to haggle to get a better deal!

 

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Ecommerce in Spain Vs. The Running of the Bulls

 

Ecommerce in Spain

Vs

The Running of the Bulls

 

No doubt Spain is the most undervalued ecommerce market currently in Europe.  For a variety of reasons, the population of Spain has only recently begun to really embrace online shopping with any veracity.  Research indicates that ecommerce totaled 12.73 BILLION Euros for the year 2013…and expectations are that the digital marketplace in Spain will come close to 30 BILLION Euros in sales in 2016! This growth is even more impressive when one keeps in mind that the population of Spain is only 47 MILLION people.

Cross-border ecommerce sales in the last many months have demonstrated a tremendous margin of growth.  Fully 40%+ of Spanish consumers digital transactions were on websites in other countries in Europe…while 15% of sales came from overseas visitors shopping on Spanish websites.  While the total number of Spaniards who have bought online remains low at 31%, much of this number is accounted for due to the imbalances that exists between the diverse geographical (and demographical) locations that exist in Spain.

As an example, only 20% of consumers in the Spanish Canary Islands shop on line while that figure rises to at least 40% in Madrid.  When you combine those sales volumes with the relatively low average “spend” in Spain (865 Euros compared with the European annual average of 1243 Euros) the opportunities (and potential) for the Spanish digital marketplace are huge.   Case in point, a recent survey from Nielsen has shown that Spain is leading the UK, Germany, France and Italy when it comes to consumer intentions to purchase online goods and services through mobile devices.  Fully 38% of surveyed respondents in Spain claimed this was their intention, compared (as an example) to only 25% in the UK.

La Venta El Hecho!

Over 60% of the Spanish population are internet users with that number growing on a daily basis.  While that percentage is not in the same class as many of Spain’s European neighbors…..it does however reflect the tremendous potential for future growth in the Spanish market.  It is hard to not envision the increase in digital sales as the other 35-40% of the population gains access to the internet.

One of the other indicators that Spanish consumers are slightly behind the times is the percentage of their online sales that are still paid for with cash.  While 37% of their purchases are paid for with credit/debit cards…….fully 23% of their online transactions are still consummated with “cash on delivery.”  The balance of their digital purchases are handled through micropayment services, banking or wire transfers or installments.

For 2015, most digital marketplace purchases with Spanish consumers can be divided into the following product categories:

  • Fashion – 65%
  • Travel – 59%
  • Electronics – 55%
  • Tickets –      54%
  • Books/ CD’s- 46%

In the last decade, Spain had to deal with a national financial crisis that all but crippled much of their traditional retail industry.  However, the impact of their derailed economy was barely visible in their ecommerce sector.  In fact, the ecommerce industry was one of the few sectors that experienced double-digit growth during that time.  It has continued to grow at unprecedented levels ever since…and while a lot of Spanish ecommerce shoppers place cross-border orders, the majority of their digital transactions are still domestic in nature.

The most popular ecommerce marketplace stores are:

  • El Corte Ingles,
  • EBay
  • Amazon
  • Mil Anunacios
  • Segunda Mano
  • Lets Bonus
  • Groupon

From reviewing the above websites, you will notice that many of them are deep-discount type marketplaces.  This is because the Spanish consumer still tends to think of internet shopping as the place to go for major savings when it comes to product purchases.  It is only viewed by the better-off consumer as a place to shop for international, premium or luxury type products.  It would be fair to say that ecommerce in Spain still has a bit of a “blue-collar,” slant on its consumer driven focus.  While it is expected that this may change in the near future, today digital Sellers should embrace this market and work to exploit those types of product transactions.

What Does the Future Hold for Ecommerce in Spain?

As Spain continues to overcome the structural issues in the quality of their telecommunications networks, it is expected they will rapidly develop their digital ecommerce (shopping) consumer base.  As of 2016, they are still considered rather immature in the technical aspects of their digital processing networks.  It is not uncommon for even their governmental digital infrastructure to reflect ongoing performance issues.  Much as the case that you can’t expect a Department Store to thrive if their bathrooms are not fully functional and their Point-of-Sale system is unable to process transactions…ecommerce in Spain will never have the opportunity to reach their potential until the digital networks they rely upon are stable and performance capable.

When analyzing online spending in Europe in general, it is helpful to compare it to online spending in the US.  This perspective allows a better understanding of how a country in the EU compares functionally with US based Seller expectations.  The US is still the leader in online retailing compared to Europe. With a similar population to the eight countries surveyed (UK, Germany, France, Sweden, Netherlands, Spain, Poland and Italy), 62.3% of the US population were internet shoppers compared to 49.6% of the population in the Europe in 2015.  Out of the eight European countries, Spain’s level of participation rated higher than only Poland and Italy’s.

The Spanish consumer is generally at thoughtful and conservative shopper.  They gravitate towards domestic products that support their own national economy.  This does not mean that they do not purchase any cross-border products as of course they do.  However, the typical Spanish consumer is a very patriotic person who if given the choice to purchase the same product for a similar price of equal quality……will choose a domestic product over an imported one.  These consumers are a proud people who are deeply rooted in national traditions and therefore are very supportive of their local and regional merchants.

Running With the Bulls…

For that reason, we would caution ecommerce Sellers to approach the Spanish digital market from one of two specific perspectives.  First, if you are interested in selling your goods to consumers in Spain, one would be wise to research the needs of the marketplace to ensure you are offering products that are not readily available through domestic merchants.  You may find that if the Spanish shopper cannot easily find a domestic version of your products, they will of course make cross-border purchases if the product is needed or desired.  Second, it may be wise to “partner” with a domestic digital web store in Spain to sell your products through.  By approaching the Spanish marketplace with your products through established Spanish merchants (even digital ones) you will not be perceived as in competition with domestic merchants.  On the contrary…your products will be supporting domestic based merchant sales!

Selling cross-border products in Spain is similar to the historic tradition of the “running of the bulls.”  Most Spaniards will never actually run with the bulls themselves, but all citizens of that grand country relish and embrace the spirit of that annual event.  Hence, while not all Spanish consumers are current ecommerce shoppers, it can be said that most consumers believe digital web-based merchants are the future of consumerism in Spain…as long as it is domestic in its base.

 

 

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Japan: Land of the Rising Sales!

 

Japan…..

Land of the Rising Sales!

Japan has an extremely large ecommerce market that generated approximately $80 BILLION in sales in 2015.  When you consider that Japans population is only 127.3 MILLION, and approximately 76 MILLION of the general population shops online…..it means that each ecommerce shopper spends over $1,000 a year!  This makes Japan one of the most prolific ecommerce markets on the planet today.

Over 89% of Japanese consumers have participated in mobile commerce activities on their Smartphones or tablets.  Japan rates third globally in mobile app usage, at an average of 40 apps per Smartphone and ranks highest globally in paid app usage at 18+ apps per phone.   In fact, 22% of online shopping in Japan was conducted through mobile devices.   For that reason, it is imperative that any ecommerce website developed for use in Japan……must be mobile commerce compatible.

The three biggest ecommerce sites in Japan are Rakuten, Amazon Japan and Yahoo Japan Shopping.  Combined, these three sites account for roughly 50% of total Japanese annual ecommerce revenue.  The three aforementioned sites are ecommerce marketplaces that allow third-party vendors to sell products on them.  The ease of setup and working within these marketplaces varies. Amazon is the most easily accessible for cross-border vendors who wish to sell products in Japan, followed by Rakuten and finally Yahoo Japan Shopping.

The main reason for these differences is the relatively elaborate process traditionally followed by Japanese companies for on-boarding new vendors.  Of course, Amazon with its roots based in the U.S. offers the relatively easiest setup and on-boarding process.  Yahoo Japan Shopping is not part of the U.S. based Yahoo Corporation.  In the 1990’s, a Japanese company called Softbank purchased the site and the Yahoo name for Japan, hence it is a Japanese based corporation.  Luckily, there are companies that will setup and on-board your products on your behalf in these marketplaces.  In fact, one of the less invasive approaches to on-boarding your products onto the marketplace Rakuten, is to “partner,” with an existing Rakuten vendor.  Such a vendor is already authorized by Rakuten to sell products on that marketplace; hence, this could be the simplest and quickest way to get your products into a legitimate Japanese ecommerce marketplace.  Of course, all three marketplaces have in-house departments to support and educate potential first time vendors to the Japanese market.

Strong Consumer Ecommerce Participation

Over 80% of Japanese consumers shop online on a regular basis. Incredibly, seven out of 10 Japanese consumers are registered on Rakuten’s website……which totals approximately 95 MILLION users.  It is online performance like this that encourages foreign retailers or manufacturers to enter the Japanese market.  Moreover, the average dollar value of online purchases in Japan are significantly greater that in the U.S.

An interesting aside regarding the main ecommerce marketplaces is the growth of the marketplace website known as Taobao.  As many sophisticated digital buyers and sellers now are aware, Amazon is no longer the world’s largest ecommerce site in terms of the numbers of visitors.  That honor now goes to Taobao, a Chinese online marketplace that is growing faster than any other digital marketplace today.

Once a product is selected on a digital marketplace, fully 44% of the time, it will be paid for with a credit card.  Other payments are accounted for with “Cash on Delivery,” Bank Transfers and convenience store payments.  Payment methods will vary depending on the type of customer engaged.  As an example, purchases made by a teenage shopper will most likely gravitate towards a convenience store payment process, as they may not have a bank account for wire transfers or a credit card.

World history scholars know that Japanese culture has always prided itself on patience and vision.  Japanese corporations do not develop business models for the next year.  They look at the next five, ten or even 30 years.  It is this long-term view and pragmatic approach to business that makes them so formidable.  However, that does not mean that the Japanese consumer, while patient, isn’t interested in the fast delivery of their purchases.  Japan is a small country.  It is not as big as the State of Montana.  For that reason, most shipping/ deliveries are fast.  In fact, if an order takes more than two days, customers expect an explanation from the merchant.  Of course, international shipments are provided more leeway in regards to shipping.  However, it is still expected that reasonable time lines should be adhered to even with cross-border orders.

Honor, Integrity…..Loyalty

People in Japan value honor and loyalty above almost all else when it comes to doing business with a company or an individual.  If you want to build a loyal customer base in Japan, prove to them your integrity by meeting their expectations and delivering the goods they purchase from you……on time.  You can exceed their expectations by rewarding their loyalty with rewards programs and contests which typically include prizes and progressively larger discounts.

Online consumers in Japan greatly appreciate promotions and coupon type programs.  The Japanese are tremendously committed negotiators.  Their business culture is based on “securing a good deal.”  The Japanese consumer expects that almost all of their purchases online will be marked down to some extent.  Therefore, you will find greater success in building a loyal customer base by offering coupons or discount codes on top of the already marked down prices for your products.  You may consider that your most aggressive promotional discounts are offered to your loyal customers only, as this is appreciated by these “special” consumers.

Don’t think that Japanese consumers take loyalty, lightly or consider it a “one-way-street.”  In that regards, product returns are very low in Japan.  This of course drastically reduces the operational costs for most digital sites.  This makes selling on the large marketplaces much easier.  In fact, returns are so rare that some sites do not even publish a return policy!

In Japan, excellent customer service can be summed up by the two words, “honor and integrity.”  Japanese consumers interpret customer service as a reflection of your companies honor and integrity.  Since the Japanese consumer is for the most part highly educated regarding their purchases, any issues or defects in the order are normally attributed to the manufacturer or seller. Therefore, they expect a polite, honest and thoughtful reception to any issues they may have.  As we stated previously, returns are very rare, so it should be relatively easy to satisfy their needs.  One important point that should not be overlooked though is that as an international manufacturer or retailer who is selling products in Japan, you should definitely have customer service representatives that are fluent in the Japanese language.  Fully, 99% of Japanese residents speak only Japanese.

The Japanese consumer market is as hungry for US products as the US market has traditionally pursued those from Japan.  It only stands to reason that cross-border ecommerce sellers would choose to enter the Japanese market.  Whether it be western wear clothing and fashions, cold weather gear or iconic sports memorabilia…the Japanese consumer has very specific tastes when it comes to American products.  If you do your homework, you will find that the Japanese marketplace is worth the effort.

 

 

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South Korea is a Smart Ecommerce Market!

South Korea is a Smart Ecommerce Market!

In 2016 South Korean ecommerce is expected to total nearly $38 BILLION (USD) and is projected to surpass the $50 BILLION (USD) mark by 2018. As the most popular mobile phone country in the world, fully 90% of South Koreans own a Smartphone.  This means that mobile ecommerce sales will continue no doubt, to increase at an impressive rate.

Let’s take a look at some “key” information regarding the South Korean ecommerce market to better understand what this opportunity truly represents.

  • South Korea is home to the third largest Asia-Pacific retail ecommerce market place.
  • Mobile (online) ecommerce sales have increased an astounding 64% over the past two years.
  • 5% of the population lives in urban centers, with Korean (97%) being the most popular language.
  • The country has the second highest digital buyer percentage in the Asia-Pacific region, with 65% of internet users currently shopping on line.
  • The two major holidays that bolster ecommerce sales are White Day and Thanksgiving.
  • Because of the small geographical size of the country and the high population density in their urban centers, South Korea enjoys exceptionally fast fulfillment rates.
  • The country boasts some of the fastest internet speeds in the world today, making online commerce particularly attractive.

Why are Ecommerce Retailers Here?

As technology has developed and become increasingly widespread, South Korean shoppers are relying less on local shops and more on digital storefronts.  Since the country boasts some of the fastest internet speeds anywhere in the world, online shoppers enjoy minimal interruptions with their internet service and find they are able to “cover a lot of digital ground,” in highly efficient  increments.

The two major “spikes” recognized by ecommerce sellers for South Korea takes place one month after Valentine’s Day on a gift-giving holiday known as White Day.  The second major spike in internet sales occurs during the Thanksgiving Day holiday in the US.  While South Koreans don’t observe the Thanksgiving Holiday, they do a great deal of shopping on line to take advantage of the deep discounts that occurs around the Black Friday phenomenon.  In fact, cross-border purchases from the US increased by 109% during the 2015 Black Friday Holiday.

Cross-Border shopping is most common among the digital buyers ages 25-34 (46%) and in households with children (45%).  South Korean online shoppers primarily buy from the U.S., Japan and China.  The main reason for shopping overseas (online) is a desire for the Korean buyer to secure better quality products at more reasonable prices.

Though South Korea is not a popular shopping destination, consumers in Singapore and China consistently purchase from the nation.  In fact, 21% of online shoppers from Singapore chose South Korea as a “top destination,” for shopping……and fully 16% of China’s web based buyers followed suit.

As South Korean buyers have increased their purchasing habits online, the top payment methods for these transactions have reflected the following trends; 52% of digital purchases are paid for with credit and debit cards followed by direct debit (16%) payments and then bank transfers making up 10% of those purchases.

One of the most notable ecommerce characteristics prevalent in South Korea today is the extremely fast shipping they utilize for commerce and online sales.  The nation has exceptionally fast fulfillment rates compared to other leading online retail countries.  Multiple online marketplaces have deployed initiatives to build networks of modern, new distribution warehouses throughout the various urban centers.  This allows for highly efficient delivery systems that are capable of consolidating products purchased from different sellers into one single box.

Top Selling Products

The South Korean consumer is a very intelligent and savvy shopper.  They gravitate towards unique and high quality products.  They are interested in premium quality, advanced formulation cosmetics as well as herbal remedies for various ailments.  They purchase travel-related goods and services followed by clothing and fashion products.  Household goods are also a very big retail vertical for these online buyers.  The aforementioned products make up fully 70% of their targeted ecommerce purchases.

The South Koreans also purchase high quality electronics, cellular phones and lap tops/ tablets.  These online purchases make up the majority of the rest of their ecommerce focus.  These intelligent shoppers also focus on discounted pricing and/or sale pricing on products.  They are not inclined to pay full price for anything.  This is not to imply they are cheap……..but only very frugal and cost conscious when it comes to their webs based shopping.  However, looking for the “best price,” while shopping in no ways means that the South Korean consumer will compromise on customer service.  On the contrary, the South Korean people themselves are very warm and service oriented.  For this reason, it is expected that they choose to be treated the same way when spending their hard earned currency.

Finally, shipping and immediate product availability count as two of the main qualifiers these consumers look for to “seal the deal,” when they are considering purchasing a product from a specific seller.  Interestingly, it seems as though they are willing to pay a bit more and wait longer for products from the US as opposed to products from Japan and China.  It is not known if this is solely due to the products themselves…..or if it is also related to the warm diplomatic ties the South Korean people feel towards the United States.  In any case, products from the US are the most in demand for the South Korean marketplace.

The Few Extra Steps……..

To be an ecommerce seller in South Korea requires you to take several steps to qualify to do business in their internet marketplace.  You must secure a certificate of business registration in South Korea; you must submit a bank statement to prove you are a legitimate business, a passport copy of the representative shown on the business registration and other additional seller information.  While the submissions of these documents may seem unusual, they actually are considered a positive by most other ecommerce businesses that choose to sell in this country.  It is expected that these additional requirements separate the legitimate, full-time sellers from the small “jobbers,” or part-time ecommerce “dabblers,” who may appear to compete with these traditional sellers.

South Korea is a big, competitive ecommerce marketplace.  Ecommerce sellers that are considering selling their products in South Korea should first carefully assess if their products are unique enough to separate themselves from the existing offering already available in the marketplace.  If after making that assessment they decide to move forward……..with the right amount of effort, they will not be disappointed if they chose to enter the South Korean marketplace.

 

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Sales in the Outback…Time to take your walkabout!

Want to Make Sales in the Land Down Under?

The 2016 Ecommerce market in Australia represents the second largest online population in the Asia-Pacific Region.  It hosts a highly stable economy and proximal location to Japan and China, and as such the market is expected to surpass $24 BILLION by 2018.  In fact, Australia is ranked number 10 in Global Ecommerce!

In addition, the Australian consumer is a smart and savvy shopper who has enthusiastically embraced online shopping.   As their internet “shopping quotient,” continues to grow, the average “Aussie,” has expanded their electronic capabilities to include real time purchases through their Smartphones.  In fact, by the end of 2015, 35% or all ecommerce transactions were completed on mobile devices.

Ecommerce sales are projected to rise by a minimum of 21% by 2018, making Australia a prime market for internet sales expansion.  Making this market even more desirable is that approximately 69% of Australian digital buyers make cross-border purchases…..primarily from the U.S., China and the U.K.  As expected, fully 87% of Australians utilize credit and debit cards as their primary digital payment method as opposed to online payment “capture” systems such as “POLi” (the Aussie version of PayPal).

Click Frenzy

Just as the U.S. has Cyber Monday during the Holiday Season, Australia was inspired to launch a similar ecommerce shopping event known as Click Frenzy.  This highly anticipated shopping period takes place on the third Tuesday of each November.  As a shopping day unique to Australia it has grown into a major revenue producing event, with the shopping day generating just over $200 MILLION in sales and the site receiving over 1.2 Million visitors in 2015.  Along with Click Frenzy day, the other main shopping days are Christmas and Boxing Day.  Altogether, end-of-year holiday sales in 2015 were record setting, Christmas and Boxing Day sales surpassing $2.5 BILLION!

When one considers the vastness of the continent of Australia, the relatively small population of 24 Million people would tend to diminish the positive aspects of the market as a whole.  However, when you consider that fully 89% of that population is urban in nature, with a rather low number of major metropolitan centers, the logistics of selling products in that market becomes very appealing.  Australians enjoy a high average household income of approximately $59,000 (USD) and reflect a young 37.6 years of age (average).  As 98% of Australians are fluent in English, we find that the three main provisions necessary for successful sales exists in the “Land Down Under,” namely an adequate disposable income needed to buy products, a technologically savvy shopping population  based on their average(young) age and the ability to easily communicate in the English language.

Cross-Border Popularity

One of the top six nations in online retail imports and the leading cross-border spender in the Asia-Pacific markets, Australia offers a tax exemption on foreign purchases under $765.00 (USD).  This Low Value Threshold (LVT) exemption allows Australian consumers to import duty-free products when they purchase from foreign retailers.  Furthermore, approximately only half of Australia’s retail (brick & mortar) businesses have an online presence, which of course forces digital consumers to shop abroad.  This cross-border trend is driven by younger adult shoppers, with those in the 18-39 age range making up 54% of cross-border purchases.

According to the National Bank of Australia, online retail spending in Australia increased by 10% to over $17.6 BILLION in 2015.  Comparatively speaking, this compares roughly to $562 BILLION in China, the country with the highest ecommerce sales and to $350 BILLION for the US.  While the Australian number may appear small, it is important to remember that Australia’s population is only 2% the size of China’s!   That being said, Australia has a higher internet penetration and Smartphone usage rate; with more than 90% of the population enjoying internet access.  Underscoring the ecommerce opportunity in Australia, research studies show that approximately 30% of consumers spend more time shopping online than in a physical store……and that number is projected to rise to 40% by 2018.

What the Aussie Ecommerce Consumer Demands!

There are several qualifiers that Australian digital consumers look for when they are shopping on line.  These qualifiers or requirements are becoming the informal standards that these consumers expect to find on the websites they choose to buy from.  If you can incorporate these concepts into your website design, you should find more visitors frequenting your online inventories.

  • Minimal Additional Sales Intrusions. Australian digital consumers do not appreciate being force-fed additional products for their consideration at the check-out.  They are linear shoppers and as such like to make their purchase with minimal additional “hassles.”
  • Clean, Simple Product Descriptions. The average Aussie consumer likes direct, no-nonsense product descriptions and purchase instructions. As copy and text writers have continued to develop more grandiose vocabularies, it has become apparent that Australian shoppers do not find such efforts appealing.
  • Video is Appreciated. Digital shoppers in Australia do appreciate video and audio demonstrations of products, especially technical ones in nature.  They should not be longer than 90 seconds if possible, but, detailed and well produced are essential.
  • Multiple Shipping Options. It will pay to develop multiple shipping options for your customers in Australia.  While most will not require expedited shipping options, all will look for products with the most cost effective shipping available.
  • In-Country Fulfillment. If you are looking for the single biggest advantage for selling your products in Australia, the best thing you can do is develop a relationship with a reputable fulfillment center in Australia.  Let the orders be processed in the US, but let them ship from your warehouse in-country.  While this may not be necessary to “kick-start” your ecommerce business in Aussie Land, it is worth considering if you want to take your business to the next level.

Australia is considered by many to be an oyster ready to divulge it’s pearl to online sellers.  With a population of easy going people who are smart, easy to communicate with, technologically savvy and financially capable to make online purchases, it should be expected that if you do not expand your digital sales on this continent……your competitors are sure to do so!

 

 

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The Mexican Peso: Foreign Fluency in Currency

The Mexican Peso

Foreign Fluency in Currency

Most economists agree that the majority of world currencies began their fall against the US Dollar on or around June 1st 2014.  At that time, the main reason provided for these drops in currency values against the dollar was the internationally depressed price of oil….which ultimately bottomed out in February 2015.  In many ways, crude oil prices have become the new “gold standard,” for international trade.

With oil devalued, oil producing countries faced budget imbalances that they were not prepared to endure.  Russia and Brazil had drops in the value of their currencies in excess of 60% and many Middle Eastern countries found themselves at the mercy of European banks to meet their financial obligations.  Mexico, being an oil producing country, also took the hit and by February of 2015 the Peso crested 19:1 against the US Dollar.

Don’t forget that the Peso has always been considered weak against the Dollar.  However, it was when oil began its downward spiral that the Peso took its hardest hits of the decade.  Then came the Brexit vote.   Many economists believe that the “second” fall of the Peso was based on the market instability caused by the British vote to leave the European Union.  While Brexit had nothing to do with Mexico, it still left investors rushing for the protection of US Dollar currency, thus resulting in yet another rise of the Dollar against the Peso.

A Weak Peso is not Always Bad……for Mexico

With the rise of the US Dollar against the Peso, Mexico has enjoyed a surge in exports to the US.  One of the bright spots for this currency differential for our neighbors to the South is that products manufactured or grown in Mexico are highly sought after by US consumers due to the economical costs associated with them.

To many economists, why Mexico is taking such a hit on their currency doesn’t make much sense, as Mexico will enjoy 4% GNP growth in 2016…..nearly double that of the US.  In an odd way, the fall of the Peso has stimulated economic growth by lowering the cost of Mexican produced products sold in the world’s largest consumer nation, the United States.  It is true that many other economic variables help to value a currency but GNP is considered a benchmark qualifier for currency valuation.

Quite frankly, one of the open “secrets,” regarding Mexico’s appeal to international manufacturers is the value of its currency that translates into lower employment costs, material costs and logistical expenses.  It is a fact that no manufacturing companies located in Mexico are moving to the US for many of the same reasons they are moving to Mexico.  There is a renaissance of manufacturing growth and service development taking place in Mexico today.  Therefore, the more cynical among us could say that the weak Peso is actually a good thing for Mexico at this time.  It is the current value of the Peso that allows Mexico to compete with China on many levels.

Is the Peso Poised for a Rebound?

The Peso will likely remain weak against the Dollar through the middle of November.  Administration changes tend to create nervous markets and we are now less than a month away from knowing the direction a new incoming Administration will take.  While many believe that a Democrat in the White House will help to stabilize the Peso, and a Republican win would further undercut the currency valuations…..there are other more calculated assessments that believe that once a Republican Presidency settled in, it would be more likely that both Mexico and the US would develop a more effective working relationship, thus potentially strengthening the Peso.

The bottom line is that while the Peso may be weaker than ever against the US Dollar, many economists believe they are lucky the situation is under better control than compared to other Latin American countries.  As the Mexican economy is reliant upon purchases from the US as well as their trading partners in China….. both with the deceleration of the Chinese economy and the less than robust US economy not purchasing as many products from South of the Border, that leaves only the oil production of their country to support its economy.

Most orthodox economists believe that the Mexican economy still appears relatively stable compared to others in the region.  Most major oil producing countries have slipped into recession with high inflation and in some cases hyper-inflation.  In Mexico, growth is sluggish, but not negative……and inflation appears to be under control as well.  Time will only tell, but it is expected that unless something catastrophic happens either internally in Mexico or on a Global scale, the Peso may not sink much lower than it currently is.  Only time will tell, but many economists and currency specialists are hopeful the worst may be behind the fall of the Peso!

 

Country, Ecommerce

Global Retail Sales… Canada & UK… Let’s Start with the Basics!

Global Retail Sales……

Canada & UK

……Let’s Start with the Basics!

If you are a frequent visitor to our MosaicaFX website, you know that we try and highlight different international markets by country or region at least every couple of weeks or so.  Our goal in providing you this type of information is to primarily help ecommerce based Sellers when it comes to them identifying new markets and the challenges each one of them may present when they enter that global marketplace.  While we will continue to offer those types of articles, we thought we would try something a little different with this one.  In this article we will touch on the Retail Sales markets of Canada and the UK.  As both of these countries are tremendous trading partners with us, they share several other similarities that make it logical to combine them in this research.

First, let’s touch on what exactly (Global) Retail Sales is defined as.  A retail sales report is simply the direct measurement of consumer activities as the retail level.  Higher retail sales activity (volume) is generally better for the country’s economy as well as for its currency.  Lower retail sales activity is considered a negative for its economy and it is not good for its currency.  Most economists equate retail sales with consumer confidence.  As consumer confidence is one of the excepted indicators of an economies overall health, it is expected that as a “base-line,” consumers will spend more money in retail sales if they feel their wages can afford it and they have an overall feeling that their employment is stable (for the time being).  Retail Sales is generally measured against “large ticket” and “small ticket” (cost) items.  They may include automobiles, appliances, electronics, restaurant meals, clothes, etc.  However, as a rule, they do not include essentials like medicine, medical services or devices, insurance, repairs and repair parts and other expenditures that would generally not be considered luxuries or nonessential items.  Think of it this way; if you don’t absolutely have to have it for health or safety (basic food, clothing and shelter) but you purchase it anyway, then that purchase is an indication of how you as a consumer feel about your personal finances and the economy at large.

“….the UK and Canada share many similar traits in retail.”

For the international Seller, Both Canada and the UK share many of the same traits.  They both are overwhelmingly English speaking with similar high-rates of education and employment for their citizens.  Both populations reflect similar concerns for the environment, love American made products and are in a general sense, easy people to get along with.  The family unit in both countries is structured (again) in a similar fashion averaging the same number of children in a nuclear family with both parents (on average) employed.

An interesting aside about the UK is that even after the Brexit vote, they have seen a jump in Retail Sales.  Published Retail Sales jumped by 1.4% for July (after adjustments), smashing expectations of just 0.1% to 0.2%.  They were actually 1.5% if you remove the recorded sales of fuel for the country which is even more impressive.  This is a significant example of how consumer confidence can override economists projections based on more logical assumptions about the market place.  Conventional wisdom was suggesting that the negative impact of the Brexit vote would dampen consumer confidence because “fear of the unknown,” generally has a negative effect on spending.  However, in this case it seems to have had the opposite effect.  Overall, it appears that enthusiasm for a pending (greater) free-market catharsis for the UK may actually energize certain marketplaces.  While a “jump” of 1.4% in positive growth may not seem to be a very significant data point, when you consider that world-class economists were actually foretelling negative declines for retail sales post Brexit, it becomes apparent that the current data is head-turning indeed.

Canada has also shown a very strong Retail Sales performance for the last several months.  Our Canadian neighbors increased Retail Sales by 2.70% when comparing June 2016 to June 2015…..and that was following an increase of 3.6% for May 2016 to May 2015! As you may realize, in Canada, the year-over-rear change in Retail Sales compares the aggregated sales of retail goods and services during a certain month to the same month of the previous year.  The latest data from Statistics Canada show that total Q2 2016 Canadian retail sales were up 3.6% year-over-year on a not seasonally adjusted basis.  However, even that was well off from the 5.6% increase for the first quarter of the year, so some economists say it appears retail sales growth is slowing down.  On the other hand, the 3.6% Q2 increase was still higher than any other quarter last year (2015).  Hence, it may be that the retail surge at the start of 2016 was an anomaly, and things are now unsurprisingly cooling off a bit.  If that is the case, at least retail sales growth appears to be settling in at a relatively favorable level.  The bottom line is total retail sales are up 4.5% after the first 6 months in 2016, which is a significant improvement on the 1.7% annual gain realized for all of 2015.

“….e-commerce x CA + UK = $$”

One of the newest “trends” in ecommerce business for new international Sellers is using Canada as a “Beta-Test,” model for other international markets.  When you consider that the UK has a population roughly twice the size of Canada’s, it makes sense to consider the other benefits of “beta-testing,” your international model on our closest neighbors to the North.

By setting up your international model as a Global Seller to “cut its teeth,” in Canada, you can “R&D” your sales platform in a more painless fashion.  While still learning to deal with international shipping, foreign exchange currency, foreign tax rates, customs, foreign customer service demands and different times zones (in many cases)…….you are able to do these things while still communicating in the English language and in a close enough geographic proximity to allow you to solve customer service problems (damaged, lost and incorrect orders) in a quicker (and less expensive) fashion!  Once you have honed your international sales system so as mistakes are at a minimum…….leapfrogging across the pond to your next international market that shares many of the same similarities is logical and relatively simple execution.

Hence, the “Crib Notes,” version of this article is simple.  If the UK (and eventually other European markets) is your ultimate goal, then consider testing your international model with customers in Canada.  You get all of the experiences of selling in a foreign country without the challenges associated with Greenwich Mean Time.