How to grow in a growing market

To know the consumer is to sell to them, no more so than in the current climate, says Martim Avillez Oliveira, Chief Executive Officer – UK and Europe, ESW, who also recommends that retailers and brands look further afield for new markets.

In all the current uncertainty in markets and politics, the fact is, despite a blip in the upward trajectory of online sales after lockdowns ended and consumers got back into store, online commerce continues to grow. As our A Brand Guide to International Expansion report shows, half (50%) of shoppers plan to increase online shopping in 2023, purchasing that will shift away from stores.

And not just at home, but abroad as cross-border commerce also grows, to more than $5.55 trillion last year. While consumers have reined in their spending in the current cost of living crisis, the proportion of their spending made online has not fallen.

However, there is no room for complacency, especially when a closer look at the figures reveals some interesting differences in shopping behaviours across the main age demographics - differences that demand retailers and brands invest more into understanding their customers.

For instance, younger shoppers are more likely to buy internationally. As the research shows, looking at the percentage of respondents who shopped cross border in the last 12 months for clothing, Footwear, Cosmetics, Luxury Items, or Electronics, 61% were Gen Z, while only 20% were Boomers.

A closer look at the figures also reveals that while there is growth in online shopping as a whole, there are particular regions where growth is unusually high. Countries with the highest percentage of respondents reporting they shop internationally were UAE (75%), Switzerland (68%), China (64%), Spain (63%) and South Africa (52%). The most popular purchase categories were clothing, luxury, consumer electronics and cosmetics.

To make it easier to sell to these potential customers, we’ve identified three shopper cohorts – Brand Super Fans, Power Shoppers and Bargain shoppers. Understanding how to sell to them is the key to unlocking their spend.

Super Fans are motivated by scarcity and exclusivity, not price. When brands identify their super fans, they can target them with full-price, limited-time or limited-quantity product offerings. Many want to be the first one to have the latest thing, while some want to be the only one to have it.

Power Shoppers are motivated by the convenience of online shopping and often go directly to a brand or retail site to buy. This direct interaction gives brands and retailers the opportunity to capture first-party data as well as sales, and utilise that data to create more personalised experiences that improve loyalty.

And Bargain Shoppers, while naturally price-sensitive, are no less valuable. Bargain shoppers will forego owning a newly released item to wait for a discount later. However, brands needn’t employ a slash-and-burn strategy to reach these customers and move merchandise. Today’s ecommerce solutions give brands the flexibility to take a customised approach to different market segments.

And retailers can cleverly navigate the differences between these shopper cohorts in order to optimise inventory as well as pricing. For instance, knowing that younger shoppers will wait for discounts is an excellent use of first party data to adapt operations by shopper type and territory.

Wherever these cohorts live and from wherever they shop, retailers and brands must build relevant shopping experiences across all cohorts and all channels. Relevant does not mean copying and pasting experiences from home markets onto new territories, but respecting local differences and supporting them with the right mix of payment methods, product mix, prices and fulfilment methods.

And because trust is an important element in the decision to buy, brands need to create experiences that are on a par with what local customers expect. Elements in this localisation include language and cultural factors such as image preferences, shopping seasons and sizing.

In order to achieve these capabilities, it is important that retailers and brands do not try to do everything themselves, but work with local business entities that have the resources and expertise to make transactions optimal for them and their customers.

Key takeaways for retailers and brands that want a bigger slice of the global online pie are : Prioritise speed-to-market, segment shoppers by motivations, not just demographics, Localise the customer experience from demand gen to logistics, Understand market-specific price sensitivity, Properly vet logistics providers and Clearly display shipping and return costs and policies

Download here the report for more insights.