Security breach

The route taken by most retailers is to tie-up with local
partners – often on a franchise basis. Abell says the structuring
of such a venture is crucial if retailers are to get the maximum
benefit out of their overseas forays. He recommends creating a
subordinate equity partnership where the retailer takes a stake
in the local business structure.
Retailers must then ask various questions, such as: Do they
give their partner various countries in each region and following
that, how do they manage quality control? It is also inevitable
that the legislation will be very different in each market.
For instance, in some countries it is illegal to import cotton
as they protect this part of their market, which will have serious
ramifications for fashion retailers. “In Malaysia and Indonesia
there are ethnic quota regimes, which means you have to have
certain shareholders,” adds Abell.
He prefers to develop the structure of the partnerships for
multi-channel businesses because this gives retailers the flexibility
to grow even if they start as a single channel proposition.
Abell says there have been major issues caused by merchants
creating an online operation that conflicts with the stores’ businesses
run with their partners.
Despite the challenges, such is the desire to venture overseas
that Tania Oakey, marketing director of Cegid, says as much as
80 per cent of the potential new business it is hoping to win will
be a result of its international capabilities.
The luxury goods companies in particular are keen to enter
new markets like Brazil and other emerging markets, which will
benefit Cegid in the future because it provides localised solutions
– for both fixed and mobile tills.
This involves incorporating all the specific local components
relevant to each market into each of its international implementations
– including fiscal, legal, CRM, accounting and language
requirements.
As it seeks to broaden its offer it recently localised its software
for use in Sweden and is set to open up in fast-growing
markets like Brazil, Russia and Dubai, which retailers are finding
increasingly attractive.
“Brazil is a huge local market but it is very complicated with
lots of localisation. We want to be one of the first to offer a
localised PoS solution in that market. Our key strength is to help
UK retailers go overseas. We helped Ted Baker go into Asia,”
observes Oakey, who adds that the company recently won the
business of Barbour as it seeks to expand abroad.
While Cegid recognises the requirement for localised payment
methods in retailers’ overseas stores, it is equally crucial to provide
the relevant payment options on a merchant’s online store.
Julian Wallis, head of sales for UK & Ireland at payments service
provider Ogone, notes: “There are lots to consider when expanding
overseas and the payments side is often left until the end.”
UK retailers have long assumed that all countries accept credit
cards, which is a serious mistake and proof that many businesses
still fail to understand local markets. By offering some of the
international feature
more popular alternative local payment types like iDEAL in The
Netherlands as well as other newer methods, Wallis says, retailers
can see immediate increases of 25 per cent in transaction
volumes.
With a rapidly growing number of payment types around
the world (Ogone has recently introduced onto its platform 10
new payment types for Brazil alone) the complexity and effort
required to adopt them can mount as each will require contracts
to be signed.
“Retailers will be aware of acquirer contracts with Visa and
MasterCard and it is the same with alternative payment types
[around the world],” says Wallis, whose one-stop-shop payment
platform Collect is Ogone’s answer for retailers.
He also suggests it provides competitive transaction fees
as the company has negotiated the rates on a collective basis
leveraging its higher transaction volumes compared with single
retailers.
Not one to have problems with its volumes for driving a
bargain with suppliers is Tesco. It is now of sufficient size and
experience overseas that it has the benefit of being able to take
the best innovations from different countries and to spread
them around the world.
New innovations
Situl Thakrar, programme manager at Tesco, believes new innovations
are not all fed from the UK outwards: “Other countries
are empowered to trial things locally – sometimes with local IT
partners – and to then share best practice [across the group].
Every market is very autonomous. China and South Korea are
well advanced so technology innovations are going both ways.”
He says the company typically looks to leverage its existing
technology base – such as its online order engine – and combine
this with some localisation (in terms of innovations) within each
of its overseas markets.
Very much at the other end of the scale is online furniture
retailer Made.com, which although only a few years old has
already opened up an operation in Paris. Ning Li, chief executive
of the online-only Made.com, says the division in France has the
same infrastructure as in the UK – except for the payments and
language elements.
But what is unusual is that its France customer services team
is based in London as part of a total customer services team
of 20. “Recruiting French people is easy in London. And with
Germany and Italy you can always find ex-pats here in the capital
too. It is very international. It would have been more difficult in
France to get English speakers,” he adds.
This suggests Li has already got his sights set on further
international expansion once the French operation has bedded
down, which is far from unusual in the sector. But it does highlight
both how broad is the church of retailers that are branching
out overseas for growth and how there are a great many
different ways to execute an international strategy.
RS
February - March 2013 RS 45