Expanding internationally via online is a massive growth opportunity for UK retailers

Selling online to international markets is the biggest medium-term growth opportunity for UK retailers, recent research from OC&C, in conjunction with Google, has demonstrated.

International online sales already stand at £5bn, but we expect a further £23bn of sales to be opened up in the Next seven years. Over the same period, domestic online sales delivered to home are expected to grow by £14bn, domestic click-and-collect will add £17bn, and purchases by international tourists visiting the UK will increase by £2bn (all these figures exclude food and two-man deliveries).

The potential is highlighted by the international search traffic already received by UK retail brands. This is growing at double the rate of domestically originated searches.

Smaller brands are doing especially well, receiving on average 47% of their search volume from outside the UK. Sectors experiencing high international traffic levels include luxury, apparel, health and beauty, sports, entertainment and electricals.

“Smaller brands are doing especially well, receiving on average 47% of their search volume from outside the UK”

 

The UK is sought out because of attractive brands, reliable service and fulfilment, and favourable exchange rates. Indeed, our research shows that at present the UK has the largest online retail “trade surplus” of any country.

Export stars include Asos, Burberry, Net a Porter and Boohoo, as well as non-fashion retailers such as Chain Reaction Cycles, The Book Depository or PhotoBox. Of the UK’s top 100 non-food retailers, 74 already deliver internationally. But the route to success requires a sequence of capability-building.

First, retailers can estimate the readiness of export markets from current search volumes and online market size, in addition to operational factors such as shipping costs, tariffs and payment processing.

Partnering with marketplaces such as Amazon, eBay, Asos, Farfetch or Etsy offers a low-investment route to test and build uptake. Awareness-building strategies tend to differ by country, usually mixing paid-for sources with near-free social networking, PR and events.

As a second step, localisation and personalisation are proving necessary, not just in website translation but in brand presentation and ranging. Pricing models may need to evolve over time.

A strategic decision whether to ‘skim’ or ‘go deep’ in a market often determines the investment in local infrastructure.

And brands such as Burberry or Clarks are integrating international multichannel between flagship stores, conventional wholesale outlets and digital marketing and sales.

Compared with the conventional route of laying down costly real estate, today’s internationalisation opportunity for UK retailers is faster, lower-risk and potentially more profitable than ever before.

A phased approach can be taken, and response can be measured and tested before heavy resource is deployed at a local level.

But speed and flexibility are vital, as markets are opening up on an explosive scale.

Selling through established international marketplaces such a Asos can be a way of reaching overseas consumers