Essec Business School

As countless researchers have pointed out, the growth of the Internet as an information and commercial medium allows any company, regardless of its size or location, to reach out and transact with customers globally. However, with many e-commerce efforts originating in the United States, how well are companies prepared to cater to the global nature of e-commerce?

Indeed, at one time the majority of Internet users and thus potential shoppers resided in North America, pushing companies to cater almost exclusively to this market. But according to Peter O’Connor,  the recent and rapid growth of Internet penetration and e-commerce revenues in Asian, African and the Arab world is encouraging North American companies to adapt.

“With their original home market beginning to stagnate,” he explains, “these companies are looking to tap into rapidly growing, international markets. However, this will require them to adapt the way in which they operate to new countries and cultures.”

But while many companies already provide online content in languages other than English, even the best performers are failing to take their internationalization efforts deep enough into the purchase process to facilitate international clients. How can North American firms improve their ‘global e-readinness’?

Improving Global e-Readiness: How Tos

Suffice it to say that companies hoping to serve a truly international customer base need to take the linguistic, culture and social differences of local markets into account. Professor O’Connor explains the key steps to achieving this:

“First, companies need to understand their customers. Different customers have different priorities, buy different products / services, want to pay in different ways and react differently to marketing initiatives.  Responding to these differences requires local knowledge and a deep understanding of the culture of customers in the market(s) they wish to enter.”

“This includes speaking to customers in their own language. Everyone speaks English but few customers want to shop in it. Insisting that they transact with you in English thus is doomed to failure.”

“That said, it can be complex responding to this need. For example, Hispanic speakers in the US use a different version of Spanish to those in Spain and even to a certain extent to those in South America.  Everyone understands each other, but to be successful at selling to them you have to localize to each different dialect.”

“When you consider countries such as India, where there are multiple primary languages and dozens of regional dialects, you begin to understand the scale of the problem facing companies wishing to be global players, and also perhaps understand why in these rapidly developing commerce markets local operators tend to be the leading commerce companies.”

But being global is more than just language.  Companies also need to adapt to local ways of doing business. This may be something as simple as facilitating payments using methods other than Visa, Amex and Mastercard, or finding a way to make deliveries that match the habits of the local population.

“In China, Japan and many other countries, many people prefer to pay in cash,” explains Professor O’Connor.  “A global company that insists that people pay with credit cards is thus unlikely to be successful, particularly when competing with a local one that finds a way to facilitate such cash payments.”

“The logistics of delivery can also be a decisive factor.  E-commerce grew quickly in the US partly because of the rapid, efficient and cheap delivery system provide by companies such as DHL and FedEx.  The same is not true in other countries, and again global players need to be both flexible and innovative in order to penetrate new markets.”

Above all, preparing to serve an international and culturally diverse customer base means tailoring the online user interface to local needs. Ultimately, you want to make it as easy and as intuitive as possible for customers to do business with you.  That means adapting to them, not expecting them to adapt to you.

“In the Western world we read from left to right and therefore expect the menu to be on the left hand side, we like screens to be relatively uncluttered and we have a preference for muted, almost pastel, colours.  Simplicity is key.  However in other parts of the world this is not necessarily true.  To make people feel comfortable, it may be better to place the menu on top, or on the right.  Asian web users in particular like 'busy' screens with lot of activity and a lot of closely formatted text, often with what we consider garish colors.”

“Indeed, colours have different meaning for different cultures. While green in the western world is associated with tranquillity and being eco-friendly, it can mean greed or unfaithfulness for other cultures. While white in the West means cleanliness and purity, it is often associated with death in Asia.  You also need to be careful with the use of icons or other pictorial elements which can have different meanings from one culture to another.”

Ultimately companies that get their electronic globalization strategy right usually have many different versions of their website, each adapted to the needs and cultures of local populations.  In the absence of this approach, consumers do not adjust – they adopt the path of least resistance and use the sites that seem most appropriate and natural to them.

“We have seen some very large Online Travel Agency companies such as Travelocity come to Europe and effectively fail as they did not understand European customers.  Similarly, if you look at the large developing travel markets of China, India, Brazil and Russia, its local players who dominate.”

Local knowledge and local ways of doing business always win out.  To be successful, global companies need to adapt and tailor their e-commerce initiatives to the specific needs of the populations being targeted.