Growth without borders - supporting e-commerce
The global boom in e-commerce is effectively redrawing the map for many businesses targeting international expansion. With consumers able to make purchases from whichever location and device they choose, previously hard to reach customer groups have become much more accessible. But while the world may be getting smaller, it’s becoming no less complicated.
Businesses have to strike a balance between standardisation of systems and processes to grow quickly, and delivering locally-relevant services which customers are used to. As a result, outsourcing has become a key strategy for businesses looking to expand internationally by selling online, as it provides rapid access to the scale, local knowledge and infrastructure that would take significant investment to develop in-house.
The UK is already an established leader in European e-commerce, with an estimated 37 million internet shoppers buying in a marketplace worth £78 billion, but the race to access new territories comes with new challenges.
Communication on the customer’s terms
With consumers now presented with a huge choice online, expanding businesses face an increased risk that any lapse in service could drive customers into the arms of a competitor at the click of a mouse. So, the absolute priority has to be creating an attractive, locally relevant user experience.
This presents a particular challenge in customer services, where culture is key. Customers will quickly be turned off if they experience language barriers or cultural differences in any front office operation, such as a contact centre. However, establishing customer service departments in every territory is neither practical nor efficient, particularly for brands which are selling smaller volumes across a wide international market. As a result, more and more companies are working with outsourcers to establish centralised customer service hubs. Often these are staffed by multilingual teams working around the clock to serve markets in different time zones.
This kind of centralisation is also key in delivering back office functions which enable businesses to operate without geographical limitations. For example, introducing global shared services is one way outsourcers are helping businesses to roll-out best practice and achieve economies of scale across international operations. By introducing common processes and IT infrastructure, team members in one location who have spare capacity, are able to prepare and support work for another territory, ready for when that market wakes up – relieving pressure points across the global network whilst ensuring tasks are processed in line with local market sensitivities.
E-commerce also has a major impact on infrastructure planning. Setting up a new overseas supply chain can be complex and expensive. What if a business invests in a new warehouse in one country only to find that there is untapped demand in another territory that it can’t efficiently supply? Growing businesses have found that working with an outsourcing partner which already has a presence in several core markets will reduce the upfront capital investment and increase the flexibility to move stock from one country to another depending on demand.
It’s estimated that half of all e-shopping baskets are abandoned at the checkout stage – much of which can be attributed to customers who have been put off by delivery charges or a lack of options, and may be looking for a better deal elsewhere. Outsourcing partners guarantee cost savings and efficiencies, for example through cheaper delivery rates provided by combined purchasing power. Having access to a network which can provide a wide range of delivery options, and multiple carriers, will help to keep costs down.
Payments without borders
Many firms are also turning to outsourced solutions to aid their growth plans by keeping ahead of the curve when it comes to the changing landscape of international payments. Already a complex and highly-skilled field, the advent of a number of frameworks which have been developed to facilitate cross-border transactions has introduced another consideration which businesses must address.
Due to come into force in February 2014, the Single European Payments Area (SEPA) framework intends to assist pan-European trade by making it simpler and cheaper to receive Euro payments. The opportunity presented by SEPA is that it will also allow businesses the capability to expand across 32 countries, and a market of 500 million people, without having to open country specific accounts, or establish local banking relationships.
However, many feel the concept has been “forced” upon them with little guidance on how to translate it to customers. For e-commerce merchants, simply enforcing the framework on a diverse consumer base will cause uncertainty that could ultimately affect sales volumes. Arvato Finance has worked with global businesses, including 1&1 and Facebook to develop payment platforms that embrace the opportunities offered by frameworks like SEPA but that also match what customers and businesses demand at a local level.
Cost-cutting will always be an important driver, but as consumer habits continue to change, outsourcing relationships are becoming much more focused around how global business processes can be transformed to support growth.
Celebrating 10 years
A decade is a long time in any industry, but it’s a lifetime in the e-commerce arena. Arvato has provided a wide range of financial services to Amazon, the internet industry pioneer, over the past 10 years. In that time, new local payment methods and geographies have been established; new areas of the business such as Kindle and Amazon Web Services have been added and additional services such as Subscribe and Save (Amazon Sparabo) have been introduced by Amazon. But there has been one constant: an obsessive focus on the customer by both Amazon and Arvato.