The Secrets to Identifying New Global Markets
Discovering new markets to serve online isn't as hard as you think. Our SVP and analyst share MotionPoint's exclusive insights.
MotionPoint’s Globalization Platform supports more than 1,000 localized websites, which serve millions of customers around the world every day. This provides incredible visibility into online consumer behavior, thanks to the wealth of data these sites generate.
We're able to compare this information-such as traffic, engagement and conversion metrics-across many markets to learn how customers behave and shop, depending on where they live. We use this information to help our clients determine how their sites are performing relative to what we'd expect in each market.
Equally important, we also use this data to help our customers figure out which global markets to target next.
MotionPoint clients that leverage this invaluable data have had the most success growing their global businesses. One client-a $5 billion retailer based in the UK-is a great example. This company first targeted the Russian market in February 2012. Over the next three years, it launched localized websites to serve 40 more global markets. International online sales have soared; they grew by 60% last year alone.
How can companies smartly identify and capture new online markets? What metrics should companies understand before they expand to serve global consumers in their preferred languages?
We spoke to Charles Whiteman, MotionPoint’s SVP of Client Services, and Eric Watson, a Global Online Strategist with our Global Growth team, to learn more.
Examine Traffic and Sales
A solid first step in identifying new markets is to examine your company's existing website traffic. Which cross-border markets is the traffic hailing from? By looking at the these geographically-based visits, conversion rates and average order values (AOV), you'll often find expansion-worthy markets quite quickly.
"This can provide helpful information and surprises, especially if they're markets you're not really focusing on," Charles explains. "This is valuable market intelligence. Those are real people, with real money in their pockets. Use that information to identify which markets to engage; it's evidence that your offering resonates with that market."
It's also a signal that the market may be underserved by local retailers. Case in point: We recently examined the performance of an e-commerce site, measuring its sales from consumers in Mexico and Canada.
At first glance, Canada seemed to be the superior market. Customers there had recently purchased about $600,000 in products. In contrast, Mexican e-shoppers had generated $400,000 for the company. However, by examining other metrics, it quickly became clear that Mexico was a far more attractive market to target for expansion. AOV from Mexican consumers was nearly double of what Canadians were spending. Further, the Mexican consumers' conversion rates were higher, too.
The data was intriguing. Were the Mexican shoppers spending more because they didn't have specific brands in their local stores? Were the order values higher because these Mexican shoppers have higher-end tastes?
“It provided great fodder for a fruitful conversation with the company, and some great marketing insights to help achieve the company’s growth targets in Mexico,” Charles says.
Cross-Reference with Trusted Sources
Examining your website's traffic and sales for new-market opportunities is an excellent first step, but it shouldn't be the last. We recommend examining authoritative third-party data to help inform your decisions.
We use AT Kearney’s Ecommerce Retail Index to better understand the future macroeconomic landscape, and as a foundation for our own authoritative MotionPoint Index™, which ranks the attractiveness of global online markets. Like AT Kearney, we base our rankings on criteria such as a market’s GDP growth, consumer credit, online payment methods, global shipping fulfillment and more. But we also examine other factors such as MotionPoint’s client performance in these markets, and in-market competitive analysis.
Our rankings differ from AT Kearney's and others because of our proprietary perspective on global markets. For instance, China-which regularly appears as a Top 3 hot market in these reports-ranks a bit lower in the MotionPoint Index. Why? Competition is fierce in China, which can make it more difficult for foreign merchants to penetrate the market.
Further, Chinese consumers love to shop at “virtual mall” e-commerce sites such Tmall, rather than transacting directly on localized, branded retail sites.
“One need only look at how Uber recently sold its Chinese operations to a local ride-share provider to see how intense the competition can be,” Charles says.
Global Growth's Eric Watson agrees. "While China is certainly an attractive market for a variety of reasons, it may not be the logical next step for your business," he says. "The strengths of your company or your offering may more closely align with another, smaller market."
(China isn’t the only market where we break rank with other analysts. Our perspectives on Japan, Russia, Poland and other markets are also quite different. Learn more in the MotionPoint Index, available in our free four-part Trendbook e-book series.)
Big Fish, Small Pond
In fact, we’ve found that many businesses achieve greater international success when they enter smaller global markets, not larger ones.
Take one MotionPoint retail client, which sells more products online in Slovakia than it does in Germany. It also moves more product in Hungary than it does in Italy. At first glance, this seems impossible; the online markets in Germany and Italy are more than 20 times larger than Slovakia and Hungary!
However, our data and experience reveal that these smaller markets often have less in-country competition. Fewer domestic retailers usually means local consumers are underserved. This boosts consumer demand for cross-border solutions.
Poland, for instance, is estimated to have around 12,000 online domestic stores. In contrast, France has around 140,000. It's much harder to stand out in that French crowd. Instead, a company that optimizes its website for underserved Polish consumers will often see a greater lift in traffic and sales. Their local options are simply less attractive.
And companies can gain far more than new customers and revenue in these smaller markets, Eric suggests.
"Succeeding in these less-demanding markets allows for your company to learn how to overcome challenges such as handling returns, social media campaigns, and customer engagement," he says. "Once these best practices have been discovered and documented, it becomes much easier to tackle greater challenges-such as larger, more competitive markets-in the future."
Adds Charles: “We recommend focusing on one or two markets at a time, generating the best possible business results in those markets, and then repeating the process with additional markets.”
Intriguing Markets to Consider
And what might those markets be? A list of the Top 30 hottest online markets can be found in our free Trendbook e-book series, but here are a few to consider:
Mexico appears high on the MotionPoint Index, and with good reason. Last year, e-commerce transactions in the country were up 37%, and revenue was up 67%. Internet penetration remains on the rise; we estimate that 3 million Mexicans were added to the online population last year. Given the close geographic proximity to the U.S., Mexico also represents an especially attractive market for American companies.
Some member nations of the Visegrád Group (aka the "V4": Poland, the Czech Republic, Hungary and Slovakia) also ranked in the Top 30 of the MotionPoint Index. These markets are ideal for risk-averse companies keen to expand into new online markets. Thanks to the V4's thriving economies and business-friendly governments-combined with its rapid adoption of the Internet, smartphones and online transacting-there's a lot to love.
The United States
The U.S. represents an attractive market for domestic and international companies, too. Many British businesses have found success serving the general U.S. population via e-commerce websites. The U.S. Hispanic market is also worth engaging: it's growing faster than the non-Hispanic average, and is online- and mobile-savvy. Next year, Hispanics' buying power will reach $1.7 trillion. It's smart to serve these customers in Spanish: over 75% of Hispanics speak Spanish at home.
MotionPoint has extensive experience helping companies identify new global markets to engage online. In fact, more Global 2000 companies use MotionPoint to power their global growth than any other provider. Contact us to learn more.
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