For years, the UK’s e-commerce market has been the strongest in Europe, and—until last month’s Brexit vote—was on track to reach $132 billion by 2018. M-commerce sales accounted for half of all UK e-commerce sales. The market’s “digital buyer” penetration is nearly 90%, the highest in Western Europe.
UK e-retailers have clearly had a good run … but in a post-Brexit world, these companies will likely face challenges. As we recently reported, if the UK and EU don’t reach a free trade agreement by the time Britain formally leaves the Union in 2018, fewer European consumers will likely shop UK e-commerce sites due to high tariffs and customs fees.
That’s bad news for UK e-retailers, many of which depend heavily on EU shoppers. Currently, European markets represent more then 50% of UK e-retailer exports, with France and Germany representing nearly 40% of that demand. These exports comprise a full fifth of the UK’s online retail economy—or more than 6% of the UK’s GDP.
The ripples of the Brexit referendum are already being felt. Last week, the International Monetary Fund changed its projections for the UK’s output growth. Mere months ago, the IMF projected that UK growth in 2016 and 2017 would increase by 1.9% and 2.2%, respectively. Those projections have been lowered by 0.2 and 0.9 percentage points. The Brexit “has thrown a spanner in the works” of growth on a global scale, one IMF director recently wrote.
This impact will be long-lasting, too. By 2030, UK household incomes will be negatively impacted by at least £1,500, one study says—though more pessimistic reports suggest they might be negatively impacted by as much as £5,000. In two years, the negative impact on GDP may reach -1.3%, another study suggests. This may reach -3.3% by 2020. By 2030, the negative impact on GDP may vary from -2.7% to -7.7%.
With so much on the line—both in the short- and long-term—UK e-retailers can’t afford to sit on the sidelines. Proactive action is required. If EU-based customers bail on buying from UK e-commerce sites in the upcoming years, much of the UK’s €174 billion ($191.5 billion) B2C e-commerce market will be at risk.
What can UK e-retailers do? For starters, they should take to heart what one UK Treasury spokesperson recently said: “The decision to leave the European Union marks a new phase for the British economy,” she said, “but the message we take to the world is this: our country remains open for business. We are the same outward-looking, globally-minded, big-thinking country we have always been.”
This is how UK e-retailers can protect their revenues and profits. They must continue to sell online-and they should diversify the international markets their sites can reach.
By serving markets far beyond the EU, UK businesses can offset any losses caused by a contraction of EU-based spending. They can also increase their mindshare and profitability by serving new customers around the world.
UK e-retailers can easily leverage proven technologies and authentic, culturally-relevant translations to expand into new online markets, and serve global consumers in their languages of choice. Years ago, this endeavor was technically complex and prohibitively expensive; these days, sites can be affordably translated and launched in less than 60 days.
(MotionPoint’s solution easily scales to launch localized sites to serve dozens of international markets. It also features technologies that boost these in-language sites’ SERP in regional search engines, and increase on-site engagement and conversion rates.)
Armed with such solutions, UK e-retailers can dedicate their attention where it’s needed most: identifying the right markets beyond the EU to serve.
As Export Britain, an online resource for the British Chambers of Commerce, advises: “The first step when thinking about starting or expanding your export business is to identify those markets which offer the biggest opportunity and gather as much information as you can, either remotely or from people on the ground.”
While we can't provide on-the-ground insights, we can certainly identify several hot, expansion-worthy markets where cross-border e-commerce purchases are thriving. Some of these findings hail from third-party sources, while others come from MotionPoint's exclusive data and insights.
Export Britain has identified Colombia as an ideal market for expanding UK companies, particularly those that provide technologies, products and services that can assist the country’s ever-improving infrastructure. The market’s sound financial policies and free trade agreements also reduce risk.
This jibes with our findings. When examining the performance of nearly a dozen Spanish-language sites we operate-noting the traffic, engagement and conversion hailing from Colombia-based consumers-we've seen impressive results. In two years' time, one international airline's Spanish site saw a 40% lift in traffic from Colombian consumers. Ticket bookings rose over 800% during the same timeframe. Another airline's Spanish site saw an increase of nearly 75% over a one-year period.
Conventional e-retail, such as fashion, also saw growth. One global fashion brand's Spanish site has seen a 26% increase in traffic and 41% increase in revenue from Colombia over the course of a year. A major UK fashion retailer's Spanish site saw a nearly 20% increase in traffic from Colombia, and 25% increase in revenue.
Mexico’s predictable, stable economic growth will make it the world’s seventh-largest economy by 2050, Export Britain writes, making it a market well worth serving today. Also compelling: its integrated supply chains, free trade agreements with over 40 countries, and opportunities for retailers and other sectors such as manufacturing and telecommunications.
MotionPoint's data supports this. Mexican cross-border e-commerce is thriving. We examined the performance of key Spanish-language sites we operate, which were originally launched to serve U.S. Hispanics. Nearly 20% of traffic for these e-commerce sites hailed from Mexican shoppers. This number rose to over 50% when we excluded other Spanish-speaking markets.
Further, Mexican e-shoppers are big spenders. Spanish-speaking U.S. Hispanics spend nearly 20% more per order than the U.S. average. However, Mexicans spend nearly 95% more per order than U.S. Hispanics do.
China’s recent industrial pivot has ushered in a predicted slump into the country’s economy—though it’s far from the “sky is falling” knockout punch some alarmist analysts claim. Despite the slump, things still bode well for UK businesses, Export Britain says. Indeed, food and financial services are uniquely positioned for success, the group says. Other analysts say China’s e-commerce retail sales will double by 2019.
We think China is a great market for UK e-retailers, too. Consumption is up. Chinese e-retail powerhouse Alibaba-which offers storefronts for domestic and foreign brands via its "virtual mall" websites-will soon surpass Walmart as the world's largest retailer. Chinese consumers spent nearly $500 billion on Alibaba sites and services last year alone. Overall retail sales increased by 10.6% in March, slightly above expectations.
Cross-border e-commerce is surging in China, too. It grew by more than 70% last year. This year, more than 15% of the country’s population will spend an average of $473.26 on cross-border purchases. By 2020, that will rise to a full 25% of the population—or 350.5 million people.
South Korea’s “always on” Internet-savvy population is crazy about e-commerce. UK companies in several sectors—including financial services, fashion, textiles and food and drink—have lots of room to grow in South Korea, Export Britain reports.
MotionPoint's experience complements these findings. South Koreans are very savvy cross-border e-commerce shoppers. Thanks to local retail monopolies that make online buying prohibitively expensive, Koreans will often buy from foreign e-retailers. Even with shipping costs, tariffs and unfavorable exchange rates, prices are usually much lower than buying domestically.
This trend—called jikgu—is growing. South Korea’s e-commerce imports grew five-fold between 2009 and 2013. 2014’s imports smashed through 2013’s $1 billion record. These smart shoppers are worth serving.
“Japan holds plenty of promise for businesses looking to operate in a large stable market,” Export Britain writes. “(T)he Japanese market is characterized by consumers with high levels of disposable income.” UK companies in the services, technology and manufacturing sectors stand the most to gain, the group says.
We’re bullish on Japan, too. We recently showcased the market in our Trendbook e-book series. We examined the performance of the 1,000+ localized sites MotionPoint operates, and combined those findings with authoritative third-party information to highlight growing—or exciting—online markets.
Japan easily made the list of our Top 30 hottest markets. It's an attractive market thanks mostly to the population's penchant for saving money-and its tendency to spend big in certain verticals such as mainstream and luxury apparel.
* * *
Read more of our Brexit coverage:
Chris Hutchins helps produce MotionPoint's marketing and sales materials.
MotionPoint는 세계 각지의 시장에서 새로운 고객을 유치하고 그들의 생활을 윤택하게 함으로써 세계적인 브랜드들의 성장을 돕고 있습니다.
MotionPoint의 플랫폼은 세계에서 가장 효과적인 웹사이트 번역 서비스일 뿐 아니라 혁신적인 기술, 빅데이터, 뛰어난 품질의 번역 및 국제 마케팅 경험을 하나로 결합한 턴키 솔루션입니다. MotionPoint의 접근 방식은 갈수록 경쟁이 치열해지는 온라인 및 오프라인 글로벌 시장에서 성공하는 데 필요한 품질, 보안 및 확장성을 보장해 드립니다.