This is part two in a series of videos designed to expose ambitious brands and retailers to the insights of experts, as we take a look at the future of independent retail. With this video you'll gain insight into the benefits and best practices for international expansion, with some fantastic advice and tips from our vastly experienced panel. Watch part one here.
Recorded at Brightpearl’s Emerging Trends In Independent Fashion Retail event, this discussion was held between the Bay Area’s leading retail minds: Tim Schulz from BigCommerce, Robert Gilbreath from ShipStation, Mika Uehara from SF FASHTECH and Angela Tsay from Oaklandish. The panel was chaired by James Scott of Brightpearl.
Alternatively, watch the panel discuss “Buyer Expectations Around the Retail Delivery Experience.”
“Let’s think about expansion outside of geographical boundaries” James begins, “how does a retailer in the fashion industry go about expanding internationally?” Within seconds Tim Shulz chimes in with “well it’s kinda a nightmare, just don’t do it.”
Though spoken in jest, all good jokes contain some truth, and the message is clear: it’s not an easy task.
But in spite of this, Tim concedes “we all know that with 1-1.5 Billion people coming online for the first time in the next 4 and a half years, over half of this growth coming from emerging markets, and with shopping being such a fundamental use-case of the internet, it’s something that retailers will definitely want to figure out.”
The growth of ecommerce and international trade has encouraged a significant rise in the success of small and medium sized businesses on an international stage. Many new opportunities are becoming available at the click of a button, and those who get it right are storming ahead. “We saw 2 day shipping started to really take off in Brazil after the world cup because of the infrastructure changes” as it opened up a whole realm of possibilities for retailers.
But how does a retailer seize these opportunities?
Alibaba and international expansion
Alibaba is revolutionising the game. Facilitating international trade via web portals, they have taken a lion’s share of the Chinese market boasting over 80% of the nation's online sales by September 2014.
Tim Schulz of Bigcommerce reveals “we’re currently talking with them about how sellers in China can distribute their goods more effectively through the curated lense of US SMBs.” With the help of drop shipping and buy-in-bulk models, retailers retain control over their end of the retail experience, ensuring the branding, positioning, marketing and merchandising of the goods that come over from China is consistent. The same is true of the other way round, as US brands are increasingly enabled to sell into the Chinese market.
The complexity of managing international trade for an SMB is daunting for most, but Tim is sure that the international growth of ecommerce is breeding a new range of startups who facilitate international trade by alleviating the difficult hurdles. At which point “the same rules apply as with inter-state shipping. You’re going to have to consider margins and what selection of your catalogue to sell into each market, paying close attention to local laws and such.”
Reverse seasonality, marketplace experimentation, knowing your value
“I’ve heard from many fashion retailers that reverse seasonality could be useful” James Scott opens to the panel, “so at end-of-season here you can take all of your overstock and - instead of selling it for a dollar a palette - you can sell it into the Australian market where this same season is just starting.”
Robert Gilbreath’s role at Shipstation gives him a lot of visibility into the movement of goods around the world. He responds “we see folks using fulfillment services in those other countries.” Whether this be through ‘Fulfillment by Amazon’ or ‘Shipwire’ type tools, “instead of marking down and selling by the pound, [retailers] are shipping out” to foreign markets.
These kinds of services can be expensive, Robert advises, but provide “a good way of experimenting with a new country and see what is going to work there whilst keeping their shipping costs down.” These services provide a good launch-point for ambitious retailers, enabling them to experiment before they expand. “We see it all the time where they’ll start with one of these services and then begin taking off, going direct and then finding their own warehouse space” Robert adds.
Mika Uehara from SF FASHTECH agrees. Citing Alibaba’s strong growth in China, Mika likens them to eBay and Amazon: “because China is such a big market, people are starting with these platforms and marketplaces, then moving to their own ecommerce sites and retail stores after testing the market.”
James Scott reflects on his experience working with independent retailers with Brightpearl: “with independent retailers the products you are selling are, by definition, not mainstream products which you could get at another retailer in that country. So you’re not going in there competing on price, you’re providing a hard-to-get-hold-of product in that area” he comments. And whilst providing unique products to a foreign market is far from “a walk in the park”, it is still a good way of covering the extra shipping costs when moving into a new region.
Keep your eyes peeled for more video coverage from the event coming to the blog soon, or check out the previous video here.