Earlier this week, I spent a couple of days in Warsaw, Poland, where I was invited by my colleagues from Google Central Europe to their annual retail event, Retail @ Google CEE. A gathering of +120 executives from the retail sector coming from +10 countries in the region. During the conference, we covered several topics on international growth in the e-commerce sector. My mission was to reflect on the role that localization and customer care is playing in companies overall export strategy.
I also took advantage of my stay to get to know first-hand the digital transformation and international expansion models of some of the local companies and understand more in-depth the operational barriers they face when expanding internationally. There was no much time for sightseeing, but I found a spot into my packed agenda to taste some delicious pierogi (dumplings) in the lobby of the hotel.
However, if there is something I would like to highlight from this trip, it is one of the main takeaways that both, me and the attendees agreed on: one size does not fit us all.
In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars, and e-retail revenues are projected to grow to 4.88 trillion US dollars in 2021, according to Statista.
With this trend in mind, it seems evident for retailers that export is no longer an option, but one of the most effective ways, together with the digitalization of their business models, to pave the way for boosting a healthy and sustainable growth.
For years, companies in the retail sector have faced the dilemma of having to choose between standardization and localization in their internationalization processes. However, in the era of personalization, where companies are expected to take into considerations historical purchases information to offer customized recommendations in future interactions, standardization seems far from being a good strategy to acquire and retain customers.
While standardization has helped retailers to expand efficiently, homogenizing the needs of consumers, creating economies of scale and generating a significant reduction in costs in the short term; localization has allowed some of the industry leaders to differentiate themselves from their competitors and gain market share by designing bespoke strategies focused on local consumers needs. This has been the case of Nike, who used innovative localization strategies in order to build its presence in emerging markets.
In China, Nike had previously struggled with unsold inventory and an unenthusiastic reception to product launches. The response has been to cultivate a more premium brand by reducing inventory and repositioning its stores to appeal to China’s growing middle class. With this new approach, they even designed specific products by location. One of the shoes launched in Shanghai came to include a Chinese symbol 申 (shen1), an abbreviation to refer to Shanghai, along with their famous swoosh to get closer to the local audience. The shoe also included the text “Luwan Never Gone 310103”, which refers to the former district of Luwan, now part of the Huangpu district and seen by many as the spiritual home of Shanghai fashion and culture.
With Nike’s revenues growing between 27% and 35% in China, between September 2015 and April 2016, its new approach leveraging on localized experiences seems to have paid dividends.
Localization should be seen as a gradual strategy instead of a dichotomous variable: to localize or not to localize. Not all retailers have the resources, know-how, and technology of companies such as Nike, but they can conduct less complex market analysis that help them better understand their local customers and adapt their products and services to local particularities.
Why is it so important for retailers to offer localized experiences when they enter international markets?
Customers only interact with content in their own language.
If we assume that international consumers speak or understand our language, or what is the same, behave based on the tastes of our local market, our preferences, and trends, we are entirely wrong. There is a positive correlation between localized content and the likelihood that consumers will end up making a purchase.
For years, both pure players and traditional retailers have leveraged on their digital presence to drive traffic to their websites and physical stores. A 2017 Forrester research on the prediction of sales influenced by digital media, shows that almost 30% of the $ 4.5 trillion spent in physical stores was impacted somehow by online activities (social media, search) or mobile devices. On top of that, according to the Common Sense Advisory, Can’t Read, Won’t Buy: Why Language Matters on Global Websites, 72% of consumers spend most of our time on web pages in our language, which makes to seem unlikely that retailers that have been able to gain a competitive advantage in their sector, have not offered localized experiences when expanding beyond their borders.
Understanding is more important than saving money.
More than half of consumers are willing to pay more for a product if the brand provides them with information in their language. According to the Common Sense Advisory research, 56% of consumers said that obtaining information in their language is more important than the price. Price wars have always weakened the structure of both companies, ours and the competitors, so maybe it’s time to take a look at the competition and check in how many languages they have localized their site.
Localization goes beyond a simple translation.
It takes more than translated content to sell your products globally. Around ⅔ of consumers visit websites in English monthly, but only 25% buy regularly on those sites. We can fairly say that localized content is just the tip of the iceberg. The fact of not offering a full localized experience to your international customers (prices displayed in their local currency, favorite payment methods or agreements with their preferred courier companies) is stopping them consumers from purchasing from your brand.
Turning your website visitors into buyers requires more than a simple translation of the original content on your local site. It implies adapting your user experience (look-and-feel, payment methods, customer service and international logistics, among other aspects) according to the international market specifities. Just the same way one size does not fit us all; we do not all speak the same language. Assuming that your products or services will work beyond your borders without any regional or local adaptation, may not be a good idea. However, a localization strategy should never make your brand lose its identity. Localizing is ultimately about building trust with your global audience and showing your consumers that your company speaks their language and understands their cultural norms. In an era in which personalized experiences along the customer journey are synonymous with success, make me think that localization is a safe bet for retailers planning to expand internationally.
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog author and do not represent those of people, institutions or organizations that the author may or may not be associated with in professional or personal capacity, unless explicitly stated.
Thanks to Lo Ken for donating his photo on Unsplash.