Zia Wigder, Pricnipal Analyst and Research Director at Forrester Research moderates the discussion.

While I don’t want to overwhelm with data, to understand why there is so much interest in two markets in particular – China and Brazil – a few numbers provide perspective:

• In Asia, 41% of all online users live in China. Similarly, in Latin America, 41% of all online users live in Brazil. According to CNN Money, China and Brazil rank as the world’s two largest emerging economies in terms of GDP: China at $7 trillion (second only to the U.S., at $15.1 trillion), and Brazil at $2.5 trillion (that’s on par with the U.K.).
• Forrester expects the Chinese online retail market to grow from $94.6 billion this year to $159.4 billion in 2015 (this includes both the business to consumer and the consumer to consumer markets). While smaller than China, the Brazilian online retail market is the largest by far in Latin America, and will grow from $11.9 billion this year to $22 billion by 2016.
• In both countries, online consumers across all age groups are shopping online, though on average tend to skew younger than in the U.S. Most online buyers live in major metropolitan areas. Mobile penetration is very high in both markets – though shopping via mobile phone is not yet common practice. Non-local retailers entering China and Brazil will face markets dominated by local players – global retailers have yet to become a major contender in either. Furthermore, consumers are accustomed to cheap or free shipping (so much for that as a differentiator!). And while multichannel shopping is not really in place yet, Zia’s take is that there is much growth ahead on that front.

So – sounds like lots of potential for retailers exploring e-commerce opportunities outside their home markets? Panelists Angela Kapp of Shenzen, China-based Hui She Shang (The Luxury Club) and Gastao Mattos of Braspag in Brazil say yes – but it’s important first to understand the local market, customer preferences, culture, payment systems, logistics, and regulatory issues in order to succeed long term. While I cannot do justice in a single blog post to the wealth of information that the panelists provided today, herewith are a few highlights:

How do Chinese and Brazilian consumers shop online? Gastao noted that Brazilian shoppers are driven by promotions, and that free shipping is common practice. Brazilian online retail for now tends to be dominated by categories such as consumer electronics and computer-related goods. Brazilian consumers mostly use credit cards to buy online, and installment payment plans are a “promotion driver, but with a high negative impact on margin,” per Gastao. Social media is very popular in Brazil, but so far has had a low direct impact on online sales.

Angela emphasized that in China, price comes first and foremost, and competition on price is “fierce”. Chinese consumers buy a wide variety of products across categories: fully 25% of online sales in China are for apparel and footwear, including children’s apparel. In terms of customer service, consumers mostly use online chat, with only 20% of consumers using email (or “EDM – electronic data mail”, as it’s referred to in China). Union Pay estimates credit card usage in China at just 15%, so third party payment systems dominate the market: Alipay leads with over 200 million accounts. Social media is very popular (even without Facebook!) but tends to be more content sharing sites such as market leader Sina Weibo, as well as Qzone and Tencent.

How about the competitive marketplace? As noted earlier, local players dominate both markets, and even for global players such as Amazon (newly entered in Brazil), competition will be high. With prices for goods in mainland China 30 to 50 percent higher than in other markets (even Hong Kong), Angela sees international brands succeeding partly via their expanding network of stores around China, allowing them to develop a multichannel experience.

What about fulfillment logistics? Gastao pointed out that e-commerce sales are growing more than 25% annually. There are only seven logistics companies in Brazil involved in e-commerce, and the trouble is that their growth is not keeping up with that 25% market growth. In China, local courier players dominate outside Tier 1 cities. Angela noted that 360Buy “has perhaps the best system, with more than 14 warehouses, covering 200 cities and 120 collection stations.” The Chinese government also has laws in place to let consumers easily make returns.

As Angela remarked at the very outset of this session, “We [US businesses] tend to want to drive the agenda. [Instead,] listen first, learn first.” Wise words, indeed.

So, if you thought that consumers might be ready to take a break from all that online shopping of late, history would indicate – likely not. For the week between December 27, 2010, and January 2, 2011, comScore calculated that online retail sales in the U.S. topped $2 billion. This year, Google expects the holiday 2011 shopping momentum to continue right on through the second week of January. And this isn’t just a U.S. phenomenon – IMRG in the U.K. is forecasting that U.K. online consumers will spend a tidy GBP186.4 million on Christmas Day this year, followed by another GBP367.8 million on December 26 (and that’s almost double from the same day last year). It stands to reason, then, that if anyone thought we were in for a little breather, in fact we all need to proverbially buckle up, as the ride’s not over yet. A few tips based on this research:

Continue to invest in search for the next several weeks. Google last year found that searches for “sales” and “returns” peaked on December 26 in both 2008 and 2009. With Christmas falling on a Sunday this year, December 26 this year is a public holiday, so it’s a fair bet that customers will be heading into stores and online.

Christmas Day is a golden day for social media. On Christmas Day 2009, Experian Hitwise found that Facebook edged out the main Google page for “most visited site” (unlike the other 364 days of 2009). Similarly, last year IMRG found that, in the U.K., “…Facebook received more site visits than Google as people logged on to wish their friends Merry Christmas.”

Move that excess inventory – but also showcase new merchandise. Get customers excited with fresh, new products (and with which to spend their newly acquired gift cards), especially as they consider which “it” items to invest in for 2012. Let customers easily share ideas, looks and comments via social media outlets.

Cater to returns and exchanges. Make sure your website makes returns and exchange information clear and easy to find, right from the home page and key landing pages, and make sure store locator information on mobile devices is easy to find.

For additional ideas about post-holiday shopping campaigns, see also the 2010 white paper from Listrak.

This year at Shop.org we delivered 13 webinars (eight regular webinars and five for May is Marketing Month) as an additional member benefit and more than 1,200 of you registered!

After every one of our webinars we asked attendees for feedback, which we use to guide the content we bring you in the future. So here it is, our very own Shop.org 2010 “Best Webinars” list, links to the playbacks, blog recaps, and my favorite statistic or lesson from each.

1. November 15, 2010: The Obstacles and Enablers of Mobile Commerce
Sucharita Mulpuru, VP & Principal Analyst, eBusiness, Forrester Research Inc. and Andrew Koven, President, E-Commerce & Customer Experience, Steve Madden Shoes
No time to watch?  Here is a quick blog post recap.
One of my favorite mobile stats presented: Large retailers (those with more than $100 million in annual revenue) are investing approximately $465,000 in 2010 on mobile initiatives.

2. September 14, 2010: 10 Most Common SEO Mistakes Retailers Make
Speaker: Stephan Spencer, Co-author, The Art of SEO
No time to watch?  Here is a quick blog post recap.
My favorite SEO mistake from Stephan: Making assumptions about customer vocabulary – i.e. hoodie versus hooded sweatshirt.

3. January 27, 2010: 10 Lessons Learned in 10 Years Selling in Europe
(Playback available for both Shop.org and NRF members until January 26, 2011)
Speakers: Ulric Jerome, Executive Director, Pixmania.com and Zia Daniell Wigder, Senior Analyst, Forrester Research
An eye-opening statistic from Pixmania: Europe is very fragmented and needed a customized approach with 27 countries / 27 nationalities / 19 languages, 493 million inhabitants, different rules on VAT, different rules on recycling fees, and more!

Remember, Shop.org members can register (it’s free for everyone within your organization) to watch the playbacks of these webinars – or one of the other 13 listed on the webinars page.  Enjoy!

• KPIs. Always important for benchmarking and budgeting, the report explores a laundry list of online retail metrics, from site conversion and shopping cart abandonment rates to repeat customer activity and costs per order for marketing, customer service and fulfillment. You’ll find not only averages across all retailers surveyed, but also segmented by retail business model and annual online Web revenue size. The report also delves into profitability for online retailers, exploring expense levels and how profitability continues to evolve.
• Multichannel management. As the report notes, “the perfect multichannel organization is still a work in progress.” With much work yet to be done, progress is happening: for example, four out of five retailers surveyed share branding and product imagery across channels, and two-thirds use emails to promote store coupons and in-store events *and* have at least one executive with cross-channel responsibilities. By contrast, measuring the influence of different channels on one another appears to be (still!) in its infancy. No doubt you’ll find it interesting to see how your own retail organization compares.
• Global expansion. It is fascinating to see so many US retailers – big and small – start to embrace the idea of selling to customers overseas. In this report, we explore topics such as key markets served, how retailers ship to, service and manage returns for overseas customers, and the degree to which retailers are developing their sites to speak more directly to those customers. Whether you already sell to other markets or are just thinking about the opportunity, these findings will provide concrete guidance on numerous aspects of venturing beyond your home market borders.

As always, I look forward to your feedback and thoughts on this research.

Retailers everywhere know the importance of protecting consumer data along with the damage – from both a monetary and branding standpoint – that a breach creates. So it seemed especially fitting that our first official blog post during the Summit feature a Q&A with Souheil Badran, eCommerce Solutions Division Manager for First Data. In his Q&A, Souheil discusses key trends in the world of alternative payments, shares advice for retailers on the best way to get started when expanding globally, and provides insights on how executives can protect their companies from fraud.

What are some of the key trends you’re watching in the world of online payments?

First Data's Souheil Badran

Some of the big trends that we are seeing right now are the shift away from credit cards as the primary form of online payment, merchants’ desire to find new ways to grow their business and the concern over more complicated PCI requirements and customer data storage.

Something different from a few years ago – due to the recession, tighter credit markets and higher consumer debt – is people have become less willing or able to spend using their credit cards. This is making payment alternatives like PayPal, Bill Me Later, eCheck and debit much more popular payment options that merchants should offer their customers. Each one has distinct pluses, but the bottom line is consumers will need options; otherwise, they will abandon purchases and merchants will suffer with less sales.

We are also seeing is a growing concern over data breaches and customer data storage. PCI compliance rules are getting more and more complicated. Every day we are seeing more news about encryption and tokenization solutions that can help address these needs. Being able to provide merchants with a solution that removes the burden and stress of adhering to the PCI compliance rules and the headache of storing this card data on their own systems will only become increasingly more important to online retailers.

Many retailers see global expansion as a huge growth opportunity, but international expansion can be daunting. What advice would you give companies looking into this? What’s the best way to get started?

Deciding to take your online business global is not a one-size-fits-all approach anymore. In the past, merchants simply set up a single website and drove traffic to it from all over the world. Another approach retailers can consider is cross-border eCommerce. Setting up an international business or cross-border eCommerce website is a complex endeavor. Most successful merchants will say it’s worth the effort, but newcomers could face a few unexpected challenges such as dealing with the global network of acquiring banks, legal and regulatory concerns, the different payment types and taxes, currency conversion and fraud, and credit risk prevention.

One way to implement this approach is to select a consolidated, single provider, which alleviates the expertise merchants must have on local laws and regulations relating to transaction reporting, processing payments, handling returns, chargebacks, and collecting value-added taxes (VAT). By doing it themselves, merchants must know all the regulations and idiosyncrasies of each country, expanding the complexity associated with setting up their business. Some of the benefits merchants gain through this model is faster time to market, more rapid expansion into subsequent markets, reduced maintenance and personnel costs, simplified reporting and reduced fraud and risk.

At this week’s Summit, executives from Groupon and Facebook will discuss their company’s “disruptive business models.” What other companies do you see as disruptive to the online retail space?

I see the disruption coming from both traditional providers as well as new companies. At the center of it all is interest by consumers to continue convergence of the mobile device, which will ultimately result in electronic payments in online and brick-and-mortar retail environments being conducted on the mobile phone. This will only fuel the importance of social media in driving purchase behavior.

From a payments perspective you’re going to see new ways that providers will try to enable an easier, more convenient way for consumers to transact when and where they want.  You have seen it recently from STAR and Obopay in providing ways for financial institutions to offer a fast, secure and convenient way for their customers and members to send and receive money using their mobile phones. Similarly, AMEX and Foursquare launched a new app that lets users track items they want to buy, upload photos of purchases and provide comments, which extends efforts already in place to retain customers within their own card environment. These may not specifically be “disruptive technologies”, but they are examples of how we are seeing the payments space evolve from the disruptive technologies you mention.

What is the biggest mistake you see companies make when it comes to protecting data?

I think merchants who take a proactive, comprehensive approach through the adoption of a tailored fraud and risk management solution will ultimately protect their business and increase profitability. Online merchants face continued challenges in finding and implementing a solution that adequately mitigates fraudulent orders, protects sensitive cardholder data, meets the requirements of PCI compliance and other industry regulations, and that does not slow or impair business processes or decrease profits. Merchants also risk incurring damage to their reputation and brand, and the consequences associated with loss of trust from customers are difficult to overcome. Merchants simply cannot ignore the impact of fraud to their business and their bottom line.

Looking ahead, how do you see online retail changing over the next five years?

Mobility and the convergence of virtual and physical worlds with a common access point is going to be a huge driver in how consumers transact with retailers. We are already starting to see the shift from eCommerce to mobile and this trend is likely not to slow down. Consumer demographics, like age, have a lot to do with this trend and, as a payments provider, we need to ensure that we enable the access points and provide the capabilities for retailers to maximize the shift to mobile retail. Consumer behavior will also be driven by retailers’ ability to take advantage of the mobile device by delivering value directly to the consumer. An example is offering things like relevant incentives or messages to consumers when they are in the proximity of the product or service provider.  This is analogous to the modern version of checkout lane product placement. Really the opportunities are endless as the technology matures.

With an abundance of alternative payment options in the market, what should merchants consider when developing an online payments strategy?

The research that we see shows that alternative payment methods are getting more and more of the consumers’ wallet. They are less trusting and reliant on credit cards. They are looking for ways to use things like PayPal or Google Checkout that simplify the process and provide new options. eCheck is also popular and we are seeing a rise in the desire for online debit as customer credit is not as strong or as available. As consumer preferences shift away from credit, online merchants should understand and implement an alternative payments strategy that is aligned with their business size, type and demographics.

Providing alternative payment options is shown to increase average order value, as they can offer customers access to additional sources of credit. In addition to improving sales and customer satisfaction, offering extra payment options may provide new opportunities for merchants to reduce their total cost of payments. It is important to note that each new payment option a merchant decides to offer comes with its own fees, settlement and funding time frames, authorization requirements, risk management features and chargeback handing processes.

How can retailers protect themselves – and their customers – from data breaches and fraud?

A few things come to mind as fraudsters continue to become more sophisticated in their attacks. One is technology is now available to help merchants securely keep payment card data isolated while allowing access when needed. Some of the newer technologies, such as tokenization, eliminate the need for merchants to store card data at all—and as a result can dramatically reduce the cost and complexity of PCI compliance.

Another is to look into tools that enable you to score transactions using multiple data points to set parameters. These data points don’t have to be just about the transaction detail like card number or CVV or AVS but can also monitor velocity behavior, bill to/ship to address, email, phone number, IP address, device ID and even product SKUs.

What advice would you give a retail executive looking to boost holiday sales this year?

I think one of the main ways to help boost holiday sales this year is to ensure your website can handle the Cyber Monday spike. The Monday after Thanksgiving is a key online shopping day, so you want to make sure your site can handle a spike in traffic and provide a streamlined shopping and payments experience to both new and seasoned users.

Another is to accept an array of payment types. This way your customers can pay the way they desire, making it easy for them to purchase goods and services on your site.

Also, fraud scoring tools can help in making the right automated decisions quicker and more effectively during high-volume periods so that you are able to accept more good orders and reduce the number that may result in chargebacks.

One last tip I’d like to mention is setting your customers’ minds at rest by assuring them that their transactions will be safe, which goes a long way in increasing sales and winning repeat business from your customers. Make sure your site displays the appropriate security marks (TRUSTe, VeriSign, etc.), so shoppers feel confident they are protected and won’t abandon their shopping carts.

Click here for pictures from the event.

Kate Terry, EVP Global Ecommerce, Tommy Hilfiger USA. Kate, who has deep e-commerce experience from companies such as Coach, Polo and Kate Spade is in a newly created position, EVP, Global E-Commerce, based in Amsterdam.  This new role combines global e-commerce and marketing for the direct  business, which had been separate prior to Kate joining.  The goal is to grow the e-commerce business to 20-25% of the store business.

Kate has overseen the creation of a new structure, which adjusts the mixture of functions being centralized vs. de-centralized.  The object is to centralize areas to gain efficiency and brand consistency, but to keep the local flavor where it’s most important.  And, to separate ego-authorship from local expertise.  I love the term, ”ego-authorship,” which is meant to describe situations where people are given decision-making authority as a way to give them a voice, which Kate believes is not the right reason to give someone decision-making authority.  Below is how some of the functions at Tommy are distributed:

• E-Commerce Platform – de-centralized, there is a different platform in the US than Europe
• Merchandising – 65% overlap / 35% local
• Service – 65% overlap / 35% local
• Marketing – 55% overlap / 45% local
• UI – 100% overlap

Cyriac Roeding, co-founder of MOBshop, made a bold statement about mobile that captured the audience.  “The future of online, is offline.”  He first made the case for the massive growth of mobile Web usage – particularly in the U.S. and primarily due to the iPhone.  He then discussed how the mobile Internet will change the in-store experience forever including the ability to drive foot-traffic to the store, close sales and increase loyalty.

Hiroshi Mikitani, CEO of Rakuten. He is the founder of Rakuten and built the company without any venture capital.  It was the first time most people in the audience heard the story of Rakuten, which is the #1 e-commerce company in Japan.  Amazon in Japan is 20% the size of Rakuten, a rare spot for Amazon, as it is the market leader in most other parts of the world. The Rakuten business model is to be a selling platform mainly for SMEs.  They currently have revenues of nearly $4 billion (and facilitate much higher gross merchandise revenue).  He gave an extreme example of an egg farmer on the Rakuten platform that sells $300,000 in fresh eggs per month.  The eggs he sells are fresher because selling directly to consumers is weeks faster than using the traditional distribution system, which, also addes a 70% mark-up after they pass through the various distributors. The farmer’s margins are so high that if the eggs arrive broken, he will resend them with no questions asked.  Mr. Mikitani also described how the Rakuten Eagles, the Japanese professional baseball team he purchased, supports the Rakuten business model by creating ongoing brand mentions due to the media coverage of the team.

Mr. Mikitani also spoke about the future of e-commerce.  He believes that Southeast Asia is poised to bloom and will be a bigger market than China.

If you’re interested in following global e-commerce topics, feel free to join the Global E-Commerce Summit group on LinkedIn.  You can also subscribe to the NRF Global SmartBrief free daily email newsletter.

Click here for pictures from the event.

François Momboisse Vice President of EMOTA and Susanne Czech, Secretary General of EMOTA, opened the Summit and shared data on European and French e-commerce:

• Europe is expecting 12% e-commerce growth in 2009
• French e-commerce is up 25% in 2009
• Average order value is down
• 23.5 million online buyers in France, which is up 44% in the last 3 years
• C2C commerce such as eBay and Priceminister are enormous in France – market leaders

Overstock.com CEO Patrick Byrne followed with a thought provoking keynote presentation that was a mixture of the Overstock.com business and Mr. Byrne’s concerns about the U.S. capital markets.   He painted a dim picture of the next 10 years, and when asked where he invests his money given his concerns about the economy he said that it is a combination of Overstock.com stock and gold.

Allan Christiansen,  CEO, Telmore, shared his thoughts on how to build “extreme customer satisfaction.”  Telmore answers 80% of customer service calls within 20 seconds, far faster than its competitors.  One of his most compelling quotes was that “customer loyalty is not how loyal a customer is to a company, but how loyal a company is to a customer.” 

Stay tuned for more blogging from the event.  You can also follow the event on Twitter (hashtag #GES09).

We’ve heard a lot of questions and discussion this year – notably at the Annual Summit a few weeks ago – about international e-commerce. There’s a (rapidly!) growing set of literature and research on the topic, from the just-published J.C.Williams Group study “International E-Commerce Expansion Benchmark Study” to a raft of resources that Troy Brown at Demandware made available via this blog earlier this year. For a slightly different view on the subject, I highly recommend reading also Scott Silverman’s interview with eBags’ Peter Cobb on why they decided to pull out of Europe for now. And if you’re really serious about the subject, no doubt you’ve already registered for the second annual Global E-Commerce Forum, this year held in Monaco (playground not just of the generic “rich and famous”, but now also savvy e-commerce executives from around the globe!).

We’ll keep you posted on future resources for Shop.org members on the subject, and would like to hear from you your thoughts on the subject, including what kind of research would be helpful to you on the subject going forward.

We’ll wrap up the series of posts we’ve pulled together this year on international e-commerce by highlighting some of the dialogue that the study stirred up.

One of the best comments came from a CEO-guy across the table who attended the session where Jim Okamura hit the highlights of the study and interviewed the esteemed panelists.  He had that slightly worn look one has at the last session of the last day, but he was totally into the idea of going global.

Finally he looked over at his VP of e-Commerce and said “Let’s just do this.”

The International Growth Story

Chris O’Neill, who runs Google’s retail practice, was a welcome opening host for the session.  He set that stage nicely by commenting that:

• Well over 50% of Google’s growth is from markets outside the U.S.
• In order for Google’s CEO to approve any program, it must have a global plan
• From an organizational perspective, discussions about international initiatives often revolve around the trade-offs between centralization and de-centralization

What should we watch for on the international front? According to O’Neill, innovations in payments “in a world without the financial payment infrastructure the U.S. takes for granted.”

And stay tuned for how machine translations will fulfill the vision of a border-less e-commerce landscape and where advancements in analytics will leverage data to understand international customer needs that are not being met.

A New Chapter in the Customer Experience Saga

Of the many barriers the study highlighted, the one that requires the most urgent attention is the generally poor online experience that most international shoppers encounter, an ironic similarity to the early days of e-commerce in the U.S. the study points out.

Another key finding was that an expanded range of strategic options has replaced the “all or nothing” mindset that until recently prevailed among international strategists.  Each option has its own different risk/reward profile and collectively, they provide online retailers and consumer brands greater strategic flexibility, which is critical in today’s challenging retail environment.

A “middle” stage of international e-commerce expansion is emerging, which the study calls the “Participatory” stage.  Aided in part by the emergence of “sell-and-ship” solutions providers, this stage offers online retailers a low-cost, low-risk way to dramatically improve the international customer experience while also ramping up global sales.

Global Logistical Expertise is Evolving Regionally

An interesting ancillary finding emerged on the expo floor at the Summit.  As one visited the vendors that are opening doors to international e-commerce, one found that those with logistical expertise currently tend to specialize in different regions of the world.

Not surprisingly CanadaPost/Borderfree excels in Canada while Pitney Bowes (e4x/fiftyone’s logistical partner) delivers the goods throughout Europe.

Access Technology Solutions has built a sophisticated network of trade channels and customs brokerages throughout Asia-Pacific. In fact you can ship express packages from the U.S. into Japan for about what it costs to ship from California to New York. And it can get there quicker.

Meanwhile Borderjump/Aeropost is fulfilling thousands of international orders daily throughout South America.  Look for some consolidation in this sector in the year ahead, but for now, choose your market and go with the strongest player in that region.

Social and Mobile: Hot Panel Topics

No way can we hope to pack in highlights from the report’s findings plus insights from the panel session at the Summit into this no-longer-short post.  Several quick take-aways for you.

One of the biggest challenges of going global is balancing existing brand equity/controls with the need for local relevance.  The panelists agreed that tracking and measuring brand equity is tough globally, especially in the Asia-Pacific regions.

However, social media is evolving as a means to cost-effectively tap communities and facilitate word-of-mouth ─ and by doing so, to better understand how to adapt brands to local market preferences.

Panelists also agreed that having a mobile strategy is an essential component of going global.  Depending on which international market you target, expect 20% to 40% of the traffic coming to your site to originate from mobile devices ─ and plan for women to over-index on mobile.

Organizational Catalysts?

The panelists provided advice for e-commerce professionals trying to push their leadership to go global.  After conducting initial market assessments, focus on understanding the types of payments that are locally relevant.

Accept that payment models will not be one-size-fits-all.  In China, expect to accept at least five types of payment.  In Germany, more than half your holiday orders may go out with an open invoice.

Next Stop: Monaco, October 26-28th

It’s always intriguing when you put almost a year into conducting a study and then it’s done.  But of course research is never really done, in fact, we’ve barely written the first chapter of the international e-commerce expansion story.

The next chapters will provide different viewpoints.  The Shop.org Global e-Commerce Summit will offer a diverse collection of best practices and insights from leading global e-commerce professionals outside the U.S.

And look for a quantitative study exploring international e-commerce expansion from the J.C. Williams team next spring, with a focus on how online merchants of different sizes are mastering global e-commerce.

Until then, enjoy the International E-commerce Expansion Benchmark Study, the most uncreatively-titled report out there today.

Thanks,

The J.C. Williams Group

If your company is already conducting cross-border e-commerce, the reasons for attending this event are clear – you’ll tap into the most impressive gathering of global e-commerce executives in the world.  If you are one of the many U.S. online retailers looking at overseas expansion as a growth opporunity, you may also want to consider attending.  (And, if you’re a Shop.org member, you’re eligible for a substantial discount on your registration fee.)

There are two keynote speakers that stand out for me and who I look forward to hearing speak at the event.

Hiroshi Mikitani, Chairman, Founder and CEO, Rakuten

The first is Hiroshi Mikitani, Chairman & CEO, Rakuten.  If you aren’t familiar with Rakuten, you should be.  You may know them as the parent company of U.S.-based LinkShare.  But, they are also Japan’s leading Internet company with 2008 revenues of more than 2.7 billion USD.  They have a fascinating array of Internet businesses is Asia including in the No. 1 shopping portal and they recently purchased a 67% stake in Thailand’s largest e-commerce company.  Mr. Mikitani is the charismatic founder, chairman and CEO of this global Internet powerhouse.  In addition to their Internet interests, Mr. Mikitani also arranged for the purchase of the Rakuten Golden Eagles, a baseball team in Japan’s Pacific League.

Paul Delaoutre, Chairman and CEO, Galeries Lafayette

The other keynote speaker that has piqued my interest is Paul Delaoutre, chairman and chief executive officer of Galeries Lafayette.  Up until recently, pure-play ecommerce companies have represented the lion’s share of French online retail revenue.  Not anymore.  Major French retail brands are now flexing their e-commerce muscles and leveraging cross-channel strategies.  Galeries Lafayette is leading this trend.  It’s rare to find U.S. retail CEOs from large stores with hands-on e-commerce experience and even more rare outside of the U.S.  But, that’s exactly what Mr. Delaoutre brings to Galeries Lafayette.  Prior to coming to this famous French department store, from 1999 to 2004, Mr. Delaoutre was CEO for La Redoute, a leading mail order company in France, which he transformed into an international company as well as a web driven company.

Visionary keynote addresses from Mr. Mikitani and Mr. Delaoutre are just part of the reason to consider being a part of this event.  The full agenda includes e-commerce executives from Denmark, German, The Netherlands and more.

And, did I mention that this event is in Monaco?  By the way, thanks to some of the lowest airfares and hotel rates in recent memory, a trip to the Global E-Commerce Summit in Monaco is much less expensive than you think.

I hope to see you in Monaco later this month.

Macy’s foray into global retailing:

In February of next year, we’re opening our first international Bloomingdale’s in Dubai. This will get our toe in the water on the subject of international expansion. We’re doing exploratory work and we’ll get our first sense of it in February. You can argue that the timing is not perfect but of course, these decisions are made years in advance. I think the same is true now – if you make a decision today that you want to open a store in some other country, you’re looking at 2-3 years from now. You must be looking forward to possibilities. In our case, international expansion is one of the topics on our mind.

The importance of rallying around a cause:

You can’t do a bazillion campaigns – you have to pick your shots. We ask our customers and our employees and try to zero in. We did some focus on Earth Day and breast cancer has been a big issue for us. Over the last 12 months, we’ve raised $4 million for national parks association, $6.5 million for Reading is Fundamental, and our Make-A-Wish “Believe” campaign from last holiday season raised over $8 million in the last year.

I think it’s important because a lot of these nonprofits are really hurting right now. For the Come Together campaign specifically, we learned that the food lines are growing by 30% in America. People are showing up [to food banks] in suits and career apparel…pounding the streets, trying to get a job.

These subjects are important. I think doing them right, picking your shots and doing them big is the way to go.

His “trigger moment” on the purpose and power of the Internet:

I made zero money on the rush before 2000 when internet stocks were going like crazy. I really honestly did not get it. I just said, “How do you have a sustained business model that doesn’t make any money?” There wasn’t a business model that made any sense. At that point, it was books and CDs. I would say that I had my intentions but I knew a different kind of business model had to occur. Of course that’s happened.

About eight years ago, I was speaking at an NRF conference in New York and I was asked a question from the audience. I’ll never forget this guy – he was a retailer and he said, “don’t you worry that by focusing on macys.com that your customers will start shopping there instead of your stores?”

“No!” I said. “What I’m worried about is that they’re going to shop somewhere else online and not with me. That’s what I worry about.”

There’s definitely a consumer who loves to shop online, and we’re not going to move her. So I’d say about 8 years ago, I put the gauntlet down and said, “we’re not just going to be into this, we’re going to be aggressive.” And I feel really good about all that we’ve built.

Why he doesn’t tweet:

About nine months ago I registered but I’ve intentionally never tweeted. I think that it’s fascinating first of all to watch people who apparently have all this time. I don’t.

Whether Twitter is here to stay:

I think it will be here to stay if it remains authentic. I worry that some of the people you follow are busy. I worry that the authenticity gets lost.

His philosophy on negative reviews:

If you start getting bad reviews on a particular product…guess what? The product is bad! It’s not the customer.

To me, all product reviews are good. When they’re bad, you have to get it off the site, get rid of the product. We do that.

Macy’s localization approach:

I think the biggest change we’ve undertaken is consolidating to one organization structure based in New York City but supplementing needs with 69 districts around the country. We have 17-20 people living and working in 69 cities, they supervise 10-11 stores. They’re in each of those 10 stores every other week. That’s when we’re getting close to our customer. Feeding that information through the technology we’ve developed is gigantic. I’m just so confident that’s going to pay dividends as we begin to execute over the course of time. In the 20 cities we localized a year ago in May, those stores are out-performing the rest of the country. To me, that’s the biggest transformational change we’ve made.

Whether the customer has fundamentally changed:

That’s a big question. I don’t know the answer and you don’t either. We’re going to look back at this time and say how great this was that we were in this era. People will say the economy is bad in 2021 and you’ll be able to say, “Well, I remember back in 2009…now that was a tough year.” You’ll be able to say you got through that.

I think the customer clearly changed this past year. Think about the Lehman Brothers collapse, the beginning of the end of the world. Shortly after that, retail was clearly affected. Consumers figured out this was not a short-term issue. It did have a fundamental change on the way people felt about job security and personal wealth, whatever income bracket they were in.

Historically, consumers have returned to their shopping habits of the past. They like the quality of the clothes they’re wearing, they like the brands, the handbags that they’ve carried. Historically, they have come back over time. Of course everybody’s questioning whether this will be that same experience or not. You can predict all you want, but none of you know.

What we have to do is adjust to how she does choose to shop. In stores like ours, I do think that we can win both ways. We can win over the customer who is trading down or can win over a customer with a brand like Coach and its Poppy collection.

If department stores are dead:

When I graduated from college at the University of Arizona, I decided to take this job at Bullock’s, and a professor said, “Aren’t department stores dead?” That was 1975.

The business we’re in is challenging and I believe there’s going to be a market share challenge for the next year to 18 months. There’s no reason to believe there’s going to be a hockey stick rebound for our economy because the jobs aren’t there to support that kind of growth. But I do believe that a department store that offers all of the convenience and is focused on obvious value not only can survive but also has a chance to thrive in the future.

Of what he’s most proud:

After being with Bullock’s for a year and a half, I was hand-writing transfers from one store to another and I was really bored. And so I went to the head of HR and I said to Gene Ross, “listen I’m bored to death.” He had this sign in his office that said, “Bloom where you are planted” – which I took to mean, basically, shut up and get back to work. I can honestly say that ever since that moment, my perspective changed. I focused on the job I was in instead of focusing on my next job, and things just kind of worked for me.

But the bigger your job gets, the more you get the credit. I have a great team and the only way you can get things done is to surround yourself with really great people. I am super-fortunate to have a team of hard-working people and I’m most proud of that.

This week, we’re “Talking With…” Terry Lundgren, who started his career as a trainee with Bullock’s department stores in 1975 and is now the Chairman, President and CEO of Macy’s, one of the most iconic retailers in the world. Here’s what Terry had to say about Macy’s plans for the holidays, what he loves about retail, and the importance of business leaders listening to young company talent.

You’ve been in the retail industry since 1975, when you started out as a trainee with Bullock’s, a division of Federated. We know the industry has changed dramatically, but what remains the same?

When I was a buyer at Bullock’s in Los Angeles, I knew every store manager, every department manager and most of the best sales associates. I even knew the guys in the distribution center because I needed to make sure that my merchandise received priority placement on the delivery trucks, especially when I was running an ad in the newspaper, which was often. I could stay very close to the customer with all of these points of contact. But my span of control was only 20 stores and they all were within a 90-minute drive or a one-hour flight.

With our My Macy’s initiative, we are recreating a version of what we had 30 years ago – reduced span of control for district merchants and district planners to be in stores constantly, listening to the voice of the customer. This close connection to our customer was, and always will be, the key to success for any retail organization.

NRF’s back-to-college survey found that department stores remain the shopping destination of choice for 18-24 year-olds. Has Macy’s made a conscious effort to reach out to young adults?

Absolutely. We work hard every day to bring a high level of fashion and excitement to our juniors and young men’s businesses. We’ve also stepped up our assortments for young professionals just entering the workforce through brands like BCBGeneration, as well as through more premium denim and other products that appeal to this younger generation. We just launched Rachel Rachel Roy exclusively at Macy’s, which is targeted to this young customer and it is selling extremely well. We are reaching out to this customer through social networking, including Facebook and Twitter, as well as local fashion and culinary events. Our national advertising, which features design celebrities such as Sean Combs and Jessica Simpson who have product in our stores, positions Macy’s as a preferred destination for younger shoppers.

Can you share any thoughts on the upcoming holiday season?

Especially in this tough economy, we inspire customers during the holidays and encourage them to “Believe” in the spirit of the season. Last year, we asked children to bring their letters to Santa to any Macy’s store and place them in our special letter boxes. More than 1 million of them did so, and we contributed $1 million to the Make-A-Wish Foundation, making us the largest single contributor to this fantastic organization that grants wishes to children with terminal illnesses. We will have a similar focus again this year.

The holidays are a very special time in our society, and it’s a time when Macy’s really shines – beginning with the Macy’s Thanksgiving Day Parade. Millions of people around the world also watch “Miracle on 34th Street” at Christmastime. And this year, we are going to launch a new animated movie based on a true story of a little girl named Virginia who seeks to discover if there really is a Santa Claus. Macy’s is a part of the fabric of the holiday season in America and we take our role very seriously – not only as a place to shop, but also as a place to experience a magical time of the year.

When you received the Gold Medal Award at NRF’s Annual Convention several years ago, you talked about the importance of cultivating young professionals within the Macy’s organization and said you meet with a select group of young talent on a regular basis. What have you learned from those meetings and have you made any changes because of them?

I learn a lot each time I meet with a group of associates who are early in their careers with Macy’s. I work hard to devote at least 30 minutes a week to them, and it is among the most rewarding things I do. These individuals are brimming with good ideas and insights we can apply to our business, and we do take action on them. For example, the development and rollout of the BCBGeneration product for young career women, as well as the Rachel Rachel Roy launch, were directly related to a meeting of my “Breakfast Club.” The group told me we had a gap in our assortment for this younger working customer, which included our own trainees and assistant buyers, and we moved very quickly to fill it.

Even in the midst of a challenging economy, Macy’s continues to grow. Was the decision to continue to open stores in this environment a difficult one?

I’m going to be perfectly honest with you. We planned these new stores a long time ago so they were already under construction when the great recession began to hurt the economy. Our focus today is to drive higher sales from existing locations. That’s the objective of our My Macy’s localization strategy. But we also are pursuing a few select opportunities to open new stores where Macy’s and Bloomingdale’s are under-represented. There are very few new shopping centers being built or opened today in the U.S. In the future, we have a number of potential avenues for growth, including overseas, and we are opening the first international Bloomingdale’s in Dubai in spring 2010. But right now, our energy is being focused on increasing comp store sales. We believe there is a lot of opportunity to take market share and to grow Macy’s and Bloomingdale’s in the locations where they already do business.

To whom do you look for inspiration?

Internally, I look to our own people. There is so much energy and enthusiasm within our company today, in spite of the economic environment. I truly believe that we have the best and the most talented team in the entire retail industry at both Macy’s and Bloomingdale’s. We have always had a good team but today we have a spectacular team and they have a great deal of respect for one another. Our people have great ideas and a tremendous amount of passion for the business. I get excited and inspired every time I visit a store or talk to a group of our people.

Externally, I take whatever time I can to talk and listen to the senior leaders of other great American companies, especially those in consumer-driven industries. I am involved with a couple of outside organizations and have developed friendships with some of the most respected CEOs in the country. They always have a lot of great insights and I consider myself a student of business, so I just eat it up. I would like to think that they get a little something from my own insights and experiences at Macy’s and Bloomingdale’s.

Tell me something that’s especially vivid from your first days at the company.

I was recruited to Bullock’s in Los Angeles as I was graduating college at the University of Arizona. I had several other job offers, but what struck me about Bullock’s was the unbelievably talented people I met in the interview process and potentially would be working with and for. That’s what attracted me to retailing and what has kept me in this industry.

Retailing thrives on smart, aggressive, fast-moving people who know how to spot and capitalize on opportunity. You are responsible for your own P&L statement early in your career as a buyer or a store manager. I am very proud of the fact that Macy’s, Inc. is known for having the very best training programs, which in turn has attracted the best people in retailing.

Give us a snapshot of something attendees might hear during your keynote next month at the Shop.org Annual Summit. [Shop.org retail members, remember to claim your company's free pass to the Summit by August 14.]

I’ll be talking about the power of multichannel retailing – the convergence of stores and online. It’s something we’re doing very well at Macy’s. Our multichannel strategy mirrors the strengths of Macy’s – fashion, brands and excitement. I plan to talk about the opportunity to capture more of your customer’s open-to-spend.

You’ve spent more than 30 years in retail. What do you like most about this industry?

The constant change. You can’t stand still in retailing. You must always be innovating and pushing the envelope. The competitive landscape is always changing. The customer is always changing and evolving, and so must we. I like being challenged in this way. I just love this business. It’s a privilege to come to work every day and do something I absolutely love to do, even in this very difficult economic environment. We get our performance review every day at the cash register. I love the challenge because I know our strategy and our organization structure is right and we have the talent to win.

How do you unwind?

I enjoy spending time with my family and my friends. I also have always played sports. I love the friendly competition. These days, I prefer golfing – it’s easier on my knees than basketball. I enjoy exercising in the early morning and I’m also an enthusiastic spectator when it comes to football, baseball, basketball, tennis and just about every other sport.

If you could take five people in the world to dinner – past or present – who would you take and why?

Funny you should ask. At Macy’s, we have a drive this fall that encourages people to “Come Together” over dinner to raise funds for local food pantries around the country. Our plan is to contribute at least 10 million meals for those in need. In this spirit, I plan to have dinner with a group of those well-known celebrities whose merchandise is sold at Macy’s – Jessica Simpson, Queen Latifah, Mariah Carey, Usher, Martha Stewart, Emeril Lagasse, Tommy Hilfiger and Donald Trump – so we can set the example in raising funds. They all will be appearing in the Macy’s television commercial this fall to promote “Come Together” and to help eradicate hunger in America.

Finish this sentence: “I can’t start my morning without…”

Some kind of exercise followed by a Grande Black Pike Place (Howard Schultz will know what that means) and reviewing the previous day’s sales report.

To give a little background on the poll itself – the Shop.org Blog Poll is not “research” per se in the traditional sense, but rather provides a snapshot in time on a given topic. Anyone – whether retailer, vendor / supplier, consultant, or myriad other entities involved in e-commerce – can participate in the poll. For each of these two questions specifically, we encouraged poll takers to cast multiple votes (“top three” or “check all that apply”). With those caveats in mind, here’s what Shop.org Blog Poll participants had to say of late:

International Expansion. An ongoing development consideration within our industry, we asked “Where are you most likely to expand your e-commerce reach in the next few years? Please pick your top three.” Of a total 36 votes, just three indicated that they plan to focus only on the US market for the foreseeable future. By contrast, Western Europe (10 votes) and Canada (8 votes) each hold considerable appeal, perhaps partly bolstered of late by improved exchange rates for US retailers.

Where else might e-commerce players be heading in the next few years? Asia (excluding China) and Australia / New Zealand both hold appeal (four votes each), followed by China, Eastern Europe and/or Russia, and the Middle East (two votes each). Latin America, which Forrester analyst Zia Daniell Wigder recently opined “…is one region that remains largely untapped by US-based online retailers”, appears on the drawing board for just one poll taker so far.

Current economic circumstances notwithstanding, it looks like e-commerce is poised to become increasingly globally oriented in coming years.

Marketing Initiative Resources in 2009. As the annual Shop.org Marketing Workshop gets underway next week, we asked Shop.org Blog readers “Which of the following marketing initiatives are you devoting more resources to in 2009, compared to 2008? Please check all that apply.” Much like the broad Shop.org Blog audience itself, the 20 total votes were widespread. Keeping in mind the snapshot nature of this poll, it appears that video and mobile advertising are not getting more resources this year than last (and last year those resources might have been small to begin with, at least for some). On the other hand, social networking sites (3 votes) and blogs (4 votes) look like they may benefit. More “traditional” online marketing tactics and tools, however, could also be getting additional resources this year, including affiliate programs and organic search.

On May 5, we’re releasing the 2009 State of Retailing Online (SORO) Marketing Report to Shop.org members and other retailers who participated in the 2009 SORO Survey 1. Conducted with our partner, Forrester Research, and now in its 12^th year, this research will lend perspective and benchmarking on how the online retailer community specifically is tackling online marketing this year.

This week’s blog poll:  tell us which topics you would like Shop.org to tackle in an upcoming Webinar this year!

As always, I welcome your feedback, as well as ideas for future blog poll questions.

Best – Fiona

In the last month alone, Costco has announced plans to open in Australia while eBags has shuttered its UK operations (for now). When it comes to expanding globally, it seems like some retailers are jumping in with both feet and others are pulling back substantially to focus on core business operations. I imagine there isn’t a one-size-fits-all approach given this economy, but how can retailers know what choice is right for them?

The dichotomy you describe is certainly one that has emerged from the current economic crisis. Some retailers are viewing the global recession as a wake-up call to diversify revenues and expand beyond domestic borders; others are saying there’s no way they can justify a risky international investment in such uncertain times.

While there’s no foolproof way to determine which strategy makes sense, internal factors are as essential to determining when and where to go global as external ones. Retailers must ask themselves questions such as: How much international traffic is there currently on my site? Do I have existing international fulfillment capabilities that support other channels? How strong is my brand recognition in international markets? Does my company have international staff I can tap into to help operate the new business? Is my company flexible enough to change its offering based on learnings in new market(s)? The answers to these questions can help dictate how successful an international expansion is likely to be. Retailers also need to make sure they’re not overestimating the revenue potential in new international markets – in most cases, it’ll take several years to break even.

As a person who studies web globalization, what are your insights on how US online retail affects retail around the world?

While non-US brands are increasingly impacting global retail, there’s still a lot of leadership in the online retail space coming from the US. Features such as ratings, user reviews and, increasingly, recommendation engines are commonplace on US retail sites, yet they do not tend to be as widely deployed in other markets. US-based online retailers are eyeing these features as a way to differentiate their global offerings from those of local competitors.

However, companies in all regions of the world are challenging the US when it comes to online retail innovation. In France, electronics giant Fnac paired online video and chat functionality to create a unique customer service experience. In China, Tencent’s QQ coin gained enormous popularity and became the poster child for the power of virtual currencies. On the vendor side, Israel continues to produce innovation in areas such as online payments and security. Retailers should not look only to their domestic peers for innovation and opportunities, but rather take a more global view.

Here’s a hypothetical for you: A retailer has a limited amount of money to invest in a new global initiative this year. How should they spend it?

If the retailer hasn’t started shipping internationally, that can be a good way to start. We recently published a report on this topic since it’s been such a key area of interest for our clients this year. The cost of entry is low – a key factor during these economic times – and both site traffic and shipping data provide direction on international demand for products. The upside can be significant: retailers often see a revenue lift in the range of 10% after introducing international shipping. There’s no doubt that a localized, transactional site is the only way to fully mine the potential of any market, but international shipping can be a useful step for companies not yet ready to make a more significant investment.

Where are retailers’ missed opportunities abroad?

Latin America is one region that remains largely untapped by US-based online retailers. I understand the local market challenges and the fact that most companies want to look at the largest online markets around the globe, but when it comes to market saturation, you’re looking at much more intense online competition in Europe and Asia than in Latin America. Two markets – Mexico and Brazil – account for over half the online users in the region and rank as two of the US’s top 10 global trading partners, yet only a handful of US online players have any presence at all in these markets. The head of an ad network in Buenos Aires recently asked me why European online businesses were showing such an interest in Latin America while American ones weren’t.

Walk me through a typical day in your shoes.

Let’s take a typical day in the office rather than one on the road. I try to spend an hour at the beginning of the day reading through the news and industry updates. I’ll then work on a research report – either by interviewing key companies in the space, analyzing data or writing – and spend a few hours on consulting and advisory projects. Recent projects have involved assessing online markets around the globe, calculating potential revenues from shipping to Canada and evaluating different e-commerce platform vendors.

A typical day is also likely to include inquiries with clients as well as briefings with vendors or other companies in the global online retail space. Our goal is to learn as much as we can about the industry from as many sources as possible. New developments come from all over: last week, for example, I met with a machine translation company whose background is in the intelligence community, but whose technology is now being deployed for user reviews and online customer service.

At what point did you know you wanted to pursue this career?

I’ve always had an interest in international issues, especially in applying ideas and businesses models developed in the US to international markets. I’ve been at Forrester (and formerly Jupiter) for 11 years now, but my early career was spent at different diplomatic and educational institutions in Europe and Asia. I enjoy my work at Forrester immensely since in many ways it combines both the diplomatic and business worlds: you can’t simply replicate your current initiative in a new market and assume it’s going to resonate with a local audience.

Tell me about the most unexpected experience you have ever had traveling abroad.

That’s a tough one! I guess my most unexpected lodging experience was after a summer spent teaching economics in Uzbekistan. A friend and I planned a trip to Samarkand, but our guide decided to ignore the itinerary and instead booked us at a hotel outside the city that had recently served as a house of ill repute. Let’s just say the décor had not exactly been updated to reflect the new ownership.

How do you unwind?

I live in New York City but grew up in New Hampshire, so I still try to make time for outdoor activities on weekends. I love to ski in the winter and hike in the summer with my three kids. I also read a lot of non-fiction. I’ll pick up anything that introduces me to a topic I don’t know much about.

You founded a program entitled 12 Hours of Dialogue. Can you tell me a bit about it?

The program involves a series of video-conferences between young professional women in the US and their counterparts in North Africa and the Middle East. The goal is to introduce and connect women who would not otherwise have contact, and to help counteract some of the negative stereotypes that may exist. We discuss everything from our family lives and career aspirations to the best way to combat poverty and global warming. We’ve gotten very positive feedback from participants in both locations and are gearing up for our third year this fall.

I’ll use my last question to pick the brain of a frequent traveler. Finish this sentence, “When traveling abroad, never forget to bring…”

Essentials in your carry-on luggage! I once spent a week in Iran trying to adhere to the local dress code while my bags bounced between different European airports. And my former boss had to present to a client in Mumbai in a borrowed, oversized suit and sneakers when his flight was delayed and his luggage lost en route. It’s so rudimentary, but I’m amazed how many seasoned travelers still make the mistake.

Shop.org members, connect with Zia:

• Facebook: Zia Daniell Wigder
• LinkedIn: linkedin.com/in/ziadaniellwigder
• Blog: blogs.forrester.com/ebusiness_strategy/

Peter: Our plan was to form a beachhead for the EU (we chose Cambridge, UK), establish the UK business, then roll out to the 400M potential customers in continental EU. We would roll out to the rest of the EU with the team of ten we had in the UK.  We got the UK part up and it was actually working quite well (125 brands, 10,000 bags all drop-shipped directly from the brands).

Scott: Can you give me a general overview of why eBags decided to shut down its UK operations and put a hold on EU expansion?

Peter: It’s a complicated question and answer. It would have required a few more years for the UK business to be profitable, which was acceptable during the pre-meltdown days, but the environment has changed and there is much more uncertainty. eBags probably is experiencing what a lot of companies are going through right now. Taking a look at each area as an entity and determining whether to keep it based on its ROI. The issue was whether we wanted to spend the internal Denver resources on IT, customer care, translations, financial reporting, web design, etc. for each country we rolled out to or whether there was more upside in focusing on solidifying the strength and market share of the eBags USA business with those same resources (a common dilemma within companies). As you know, our business model is drop-ship and we have 550 brands and 42,000 products on eBags USA so we feel that our model is superior, especially during these times when other retailers are slashing inventory.

Scott: What lessons did eBags learn from this experience?

Peter: In reality, entering a new country makes it a startup business and it takes several years to become profitable. One reason is that the sales have to scale to cover the fixed costs. Also, entering a new country a site has to generate visitors and unless a brand already has high awareness, the fastest way is through keyword search. As you probably know, expensive keyword search is ok when it is 15-25% of the sales mix but when you start out in a geographic area with minimal traffic and no email list, keywords tend to be 80% of your marketing spend and sales. Tough to justify during these difficult times. Every retailer looking at the EU will face this (unless it is Amazon, eBay, Walmart, etc. who might have instant awareness).

Scott: Do you think other online retailers can be successful in Europe and do you have any plans for resuming eBags’ EU expansion?

Peter: Time will tell, but our feeling is that it is doubtful that other bag retailers will have much success in the EU over the next few years and we will be able to re-visit the EU when blue skies return and some of our competitors have vacated the category.

Scott: Retailers are usually willing to share their successes, but some of the best lessons are drawn from setbacks or when things don’t go as planned.  On behalf of the entire Shop.org community, I want to thank you for being so forthright and sharing this very helpful information.  I strongly encourage other people to reply to this blog with additional insights they may have about online retail international expansion in today’s economy.

Making the Decision

• When trying to decide if you should expand, talk to your customers. Are they aware of your brand? Do they understand it? Are they advocates? Try to determine if there is enough of a global base to build upon.
• Take a close look at web analytics to determine how many people are coming to your website from other countries. Realize that, as a company, you are likely not monetizing any of that traffic. Make strategic decisions on how to leverage the people who are already coming to your website.
• Get good counsel. Legal fees are often massive, the panelists agreed, but it is imperative that retailers prepare themselves ahead of time for what they can and cannot do legally.
• Be realistic. The decision to go into an international market may take a long time to pay off. As Jim Okamura from J.C. Williams Group summarized, “this is not for the faint of heart.”

Planning

• While it’s possible to push the button and begin shipping to other countries virtually overnight, a more structured approach generally takes about four to six months to implement.
• Plan for a different set of customer expectations. Jake Bailey from Overstock.com mentioned that customers in the UK were accustomed to having sales taxes included in the price of the item instead of having it added in when the sale was complete. (The company didn’t realize this until customers started complaining.) He suggested that companies make sure their systems are flexible enough to tailor components by geography or country.
• Product descriptions and marketing messages do not always translate well. After the information is translated, have someone from inside the company double-check the language to make sure it’s saying what you mean.
• Don’t forget about expatriates or military personnel who may live abroad. Many of them will buy and ship to their families in the US, or their families will want to buy and ship to them. Those groups could be a powerful ally in expansion.
• Consider creating an FAQ section where international inquiries will be routed. Also consider having a specific customer service number and email address for international customers to contact.
• Germany was mentioned several times as a country that is difficult to crack. Norway and Brazil were also mentioned.

Execution

• Realize that, for some potential customers, you’re just another start-up. While customers in Canada knew of Overstock.com, said Bailey, customers in Germany and France had never heard of the company. Keep that in mind in all communication, and take time to teach a customer your brand.
• In all cases, under-promise and over-deliver, especially when it comes to shipping. If you can deliver the merchandise within a week, customers will likely be satisfied.
• If you run into a problem you don’t know how to fix, go straight to the source. Michael Ross, who worked on global expansion of UK retailer FigLeaves.com, found that contacting customers to ask for assistance with shipping or for other insights was “cheaper, more accurate and more useful than lawyers.”

We have numerous new speakers (Bob Thacker, SVP Office Max, Alfred Lin, COO Zappos, Bradford Matson, CMO, Bluefly), returning favorites (Avinash Kaushik Analytics Evangelist, John Squire, Chief Strategy Officer CoreMetrics, Sam Taylor, CEO Oriental Trading Company), and many networking opportunities including our newcomers reception, Opening Night Reception and Dinner on Monday, Vendor Retailer Case Study Roundtables, and Birds of a Feather Roundtables in the EXPO Hall. 

We are covering numerous innovative topics such as how consumer behavior will change during the economic recovery and what retailers needs to do about it today, disruptive business models for the new consumer, the eCommerce platform of the future, how international expansion can stimulate growth, and case studies showing how innovative retailers can be even in a recession.

I am especially excited for our new Innovation Contest presentation at the end of the day on Tuesday and I wanted to congratulate our winners which include Bazaarvoice, Richrelevance, SLI Systems, Vcommerce, and Ordermotion.  

For everyone coming, I am excited to see you in Orlando.  For everyone who could not make it, please follow our live blogging, Twitter Feeds, and drop me an email after the event, and while it will not be the same, we can share some presentations and talk about what you missed.  

Thanks!

Larry Joseloff

VP, Content, Shop.org

Some powerful sessions around Digital Retailing we have helped line up include:

· Global Strategies for Multi-Channel Success with Laura Wade-Gery, CEO of Tesco.com and Direct & Tony Stockil, CEO of Javelin Group, Ltd.

· Optimizing Your Organizational Effectiveness in a Complex Multi-Channel Company moderated by Patti Freeman-Evans, JupiterResearch and featuring panelists Angela Kapp from The Estee Lauder Companies and Bill Bass, CEO, Fair Indigo.

· The State of Retailing Online with Sucharita Mulpuru from Forrester Research.

· Six Pixels of Separation with Mitch Joel, President of Twist Image.

· The Digital Channel: Retail’s New Growth Engine with Kelly Mooney, Resource Interactive and Kevin Ertell, Borders, Inc.
Part of this session on January 14th will cover great research from Shop.org and Resource Interactive on emerging site features for online retailers, underwritten by Sterling Commerce. Download your copy of this original research.

We will bring you some of the highlights of these sessions in the coming days. Until then, feel free to check out the NRF BIG SHOW Blog for session and event previews and streaming video of select sessions. If you are joining us at the show, please leave us your feedback on these digital retailing sessions.

On an international plan: Lenk mentioned that Gap already has stores in many international markets and that the company was “actively evaluating when to support those markets with ecommerce,” he said. “Don’t be surprised if you start to see us do some things there.” He also mentioned that “the UK is a fantastic market and is growing like crazy.” Read: Gap hasn’t announced an international ecommerce plan yet, but you could hear about one soon.

On the phrase that the “web is a company’s biggest store:” Lenk seemed put-off by this common analogy because he said that thinking ”degrades the importance of the web.” In addition to using the internet as a sales channel, he said, it is also the best marketing program that a company has. And, unlike print and television advertising, it’s marketing that actually makes money, instead of costs money.

On cross-channel sales attribution: While the company does not reward store associates for online performance or online staff for store performance, the conversation is being had among executives.

On how to “break the rules” if you’re only in middle management: Lenk suggested that those in ecommerce who might not yet be the big decisionmakers “find an evangelist” within the company, like a CIO or CFO, that will help sell new ideas to company executives. However, he said, it’s nearly impossible to be innovative if upper management does not want to invest in new ideas. “If the top people don’t want to hear it, you may stall,” he said. “Start hoping for a new CEO.”

On the possibility of the website’s universitality (having all Gap’s websites under one roof) causing cannibalization among Gap brands: In today’s economy, Lenk acknowledged that some of Gap.com’s customers may want to “trade down” to Old Navy. However, he said, that’s no reason not to combine all brands into an easy format for customers to access. “Don’t get hung up on the idea of customers trading down within your brands,” he said. Besides, if the customer can’t find something at Gap.com, the company would much rather that customer visit another one of its brands than a competitor’s site.

Lenk also provided a more optimstic perspective on the “trading down” concept. “Customers are aspirational,” he said. “They really like to think about trading up.” In fact, Lenk said, since combining Gap.com, OldNavy.com, BananaRepublic.com and Piperlime.com, the biggest winners have been Banana Republic and Piper Lime: the brands with the highest price points.

On social media: Lenk acknowledged that the company has experimented in the social networking world. Saying that some in the company have “skepticism” while others have “hope,” Lenk admitted that he isn’t sure how powerful social media will be for Gap. But he did say that the company was learning and testing to understand the value of sites like Facebook.

On customer feedback: The company has not yet integrated customer feedback on its site. Unlike other companies that sell merchandise from many manufacturers, Gap’s merchandise is its own. Lenk said that selling executives on the idea of putting both positive and negative feedback on the site is “a harder sell because, emotionally, it’s a bit of a hurdle,” but he acknowledged that customer feedback is very important and that it could help the company “do what we do.”

On free shipping: Shop.org members have been talking about the value of free shipping for weeks, so it was no surprise when this question was raised by an audience member. When asked his perspective of free shipping, Lenk smiled, then remarked that talking about free shipping was “always a painful discussion.” He conceded that Gap falls in the middle of the pack on the free shipping debate, offering free shipping on occasion but relying primarily on its flat rate shipping, offering to ship any order from one or multiple Gap websites for a flat $7. He said that customer feedback on the flat shipping rate has been strong and that they’re willing to pay it.

On loyalty programs: An attendee asked if combining the brand’s websites also meant that loyalty programs were combined. In fact, Lenk said, the company integrated the Banana Republic credit card into all of its brands several years ago. Customers can use the card at any Gap website to pay for merchandise and earn and redeem points. he said that integrating the Banana Republic credit card into all of the brands was the company’s “first step in breaking the rules” and that the process was hard but worthwhile.

On technology: “If you’re going to be an ecommerce leader, you have to be willing to invest in technology,” Lenk said. “And you have to be willing to invest in it every year.”

Our roundtables consistently rank as one of the most valuable content areas for our Shop.org conference attendees.  At this year’s Annual Summit, we will be having our roundtables occur immediately after a breakout sessions has concluded and in the same room as the breakout session.  The information for the roundtables are now online, so please feel free to take a look at all of the topics and moderators.  We are also dividing the tables into Intermediate and Advanced level tables to best help meet your content needs.  Thanks to all of the industry experts who have volunteered their time to be roundtable moderators.

The “Doctor Is In” session at the Annual Summit (where attendees can reserve 20 minute individual tutorial sessions with industry experts on a variety of topics including merchandising, product presentation, and usability) are starting to fill up, but we still have some appointments still available.  Some of our Doctors with some time available include:  

• Beth Temple, Senior Conulting Director, Creative Good:  Web’s Best Practices
• Jay Dettling, SVP Acquity Group:  Multi-Channel Strategy
• Michael Amar, Entrepreneur:  European Expansion Strategy
• Adam Michelson, Director E-Commerce, Optaros:  How to Monetize Web 2.0
• Suzanne Hader, Principal, 400 Twin:  Marketing and Merchandising for the Aspirational Customer

Thanks everyone and you can reserve your 20 minute time slot with these along with all of our available doctors online, by simply selecting the doctor of your choice, looking at their available time slots, and click “Register”.  Don’t wait until the show as many of these slots are filling up fast and we will close online reservations next week.

 Looking forward to Vegas, and please let me know if you have any questions or comments.

Larry Joseloff
joseloffl@shop.org