With the UK still in limbo in terms of EU trade deals, there’s bound to be uncertainty amongst retailers about how best to proceed. The EU has been a trading staple for British retailers over the years, but with that relationship now changing, it’s understandable why eCommerce businesses feel the need to look further afield.
Where to trade?
In 2018, the EU was the UK’s largest trading partner, making up nearly half (46 percent) of the UK’s exports. While British businesses will undoubtedly still trade with EU countries, the added duties and taxes imposed on the UK when trading with EU countries makes it a less straightforward proposition than before, adding further complexity to retailers’ supply chains. As such, British Etailers will understandably consider their options, and will most likely look elsewhere to make up a percentage of their revenue.
As part of our research with marketplace experts, Tamebay, we discovered that 76 percent of UK retailers expect to grow international revenue in the next few years. And of those interviewed, 64 percent named the US as their number one market for growth opportunities. The US seems to be an increasingly attractive proposition for UK Etailers, but why is that exactly?
The allure of US marketplaces
The US is an obvious choice for British brands looking to expand their horizons. The eCommerce market is a huge one, and with the common language and cultural similarities, it’s a sensible option for obvious reasons. With so many shoppers flocking to US marketplaces you can see why there is a desire for UK businesses to try and take a share of the spoils.
Amazon Marketplace made approximately £140 billion alone in 2018, and that’s with the likes of Walmart, eBay and Google Shopping for competition. As a seller, you want to go to where the customers are, but UK eCommerce brands should be wary. While selling exclusively through the biggest marketplaces may seem prudent, it’s not the best way to approach entering the US market.
Diversify your marketplaces
It’s important to make the larger marketplaces a part of your retail strategy but to rely solely on them would be to miss a trick. There’s definitely value in being on the likes of Amazon, where millions of people are searching for products a day – but there’s always the danger of being lost in the crowd. It’s difficult to make a lot of noise and establish yourself as a brand in a new country when there’s so much competition.
It also might not be the right fit for your brand. For instance, if your brand sells luxury clothing, Amazon is unlikely to be the best choice. Buyers interested in luxury fashion will seldom look to a large, multi-purpose marketplace for that need. In fact, they’re far more likely to go to a smaller, specialised fashion marketplace, as they know it aligns with their brand proposition and their product lines will be relevant for that particular site.
Furthermore, by taking the time to carefully select a smaller, more targeted marketplace, UK Etailers can gain a competitive advantage. More and more UK businesses are making their way onto US marketplaces, and over time, they will discover the more niche marketplaces. The ones that establish themselves on the specialised markets early will reap the rewards, while others battle it out on the Amazons and eBays of the world.
Expertise is needed to capitalise on the opportunity
With Brexit looming, Etailers are rightly looking towards new opportunities to reach buyers that they perhaps haven’t been able to before. US marketplaces represent a great opportunity to do exactly that. Alongside the larger, household names, there’s a stream of smaller, specialised competitors such as Newegg or Tophatter, that should be a key part of any UK retailer’s expansion plans. But while there is a cultural similarity between the UK and US, it’s not as simple as just signing up and selling.
It’s critical that retailers get the logistics right. Brands live or die by customer reviews, and more often than not – the feedback is about delivery. It therefore follows that retailers need to be confident that their delivery partner is robust and can be trusted to get the final mile delivery experience right for every customer, every time. This is not purely dependent on service level performance but also on that partner having both the local knowledge and a network of local final mile providers in order to meet customer expectations around breadth and choice of delivery options in line with cultural preferences. It goes without saying that the same applies to returns.”
By Daniel Ennor, Commercial Director at Global Freight Solutions